Towards Low-Carbon Prosperity
Thursday 28th January 2010 - 4:00pm - 5:00pm
Towards Low-Carbon Prosperity
A paradigm shift to a low-carbon economy has the potential to drive forward the next chapter of technological innovation but it requires a third – this time green – industrial revolution.
How can low-carbon growth solutions be catalysed?
• Government policy is needed to encourage the growth of green technologies, carbon markets, etc.
• The business case needs to be made for low-carbon growth
• Developing countries can leapfrog the rest of the world by adopting low-carbon growth strategies
• Carbon emission reduction must be ingrained in company behaviours
• Corporate executives must be encouraged to go green, and those who already want to must receive support from middle management
There is no false choice between prosperity and a low-carbon economy. Indeed, some argue that prosperity will only be possible in the future with a low-carbon economy. If a shift to a low-carbon economy is inevitable, the challenge is how to accelerate the process. Among other things, this will require wholesale transformations of the water, energy and transportation industries.
The shift to green is already happening at a modest pace. One example is the carbon trading market in Europe. Industry insiders had hoped to see a jump in the market with a deal at the climate change talks in Copenhagen in December, but their hopes were dashed. Still, even though prices dropped in 2009, market activity was up.
Government policies are needed to encourage the growth of green technologies, carbon markets and other low-carbon solutions. For example, a reliable system must be developed for carbon pricing and reduction targets must be set. Without good government policies, including perhaps some incentives, the transformation will be very slow. As part of this process, the business case needs to be made for low-carbon growth. Greater efficiency in the use of inputs leads to lower costs and higher profits. For example, the financial savings on commuting and travel derived from homework and teleconferences, respectively, need to be touted.
Developing countries can leapfrog the rest of the world by adopting low-carbon growth strategies. These can range from the use of new technologies in large-scale construction projects to grassroots development efforts. In India, 80% of current infrastructure requirements have yet to be built, and 40% of all villages have no electricity. Smart grids and other efficient technologies can be put into place from the beginning. In Brazil, where deforestation is the greatest contributor to carbon emissions, the Amazonas Sustainability Foundation pays forest dwellers to refrain from cutting or burning down trees. It works with them to develop businesses using renewable resources and provides assistance to improve infrastructure and education.
Carbon emission reduction must be ingrained in company behaviours. Even after top executives adopt a green agenda, the response among employees can be slow. The result is that equipment and processes are designed in the old-fashioned way and later retrofitted to be more efficient. It is less costly and more effective to design everything correctly at the beginning. But for that to happen, green thinking must be ingrained into the DNA of the company. Managers must also understand the benefit of green practices to the company brand.
Corporate executives must be encouraged to go green, and those already convinced must receive support from middle management. Often CEOs who want to adopt sustainable practices are told by advisers and middle management that it is too costly or difficult. They need to be able to say with confidence that they will go renewable as soon as it is cost effective. At the same time, board members can encourage executives to take action by making bonuses based partly on meeting sustainability goals.
Luiz Fernando Furlan, Co-Chairman of the Board of Directors, BRF Brasil Foods, Brazil; Global Agenda Council on Climate Change
Robert Greifeld, Chief Executive Officer, The NASDAQ OMX Group, USA
Azim H. Premji, Chairman, Wipro, India; Co-Chair of the World Economic Forum Annual Meeting 2010
Michael Rake, Chairman, BT Group, United Kingdom
Michael R. Splinter, Chairman, President and Chief Executive Officer, Applied Materials, USA
Alan E. Salzman, Chief Executive Officer and Managing Partner, VantagePoint Venture Partners, USA
This summary was prepared by Bill Hinchberger. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.
Copyright 2010 World Economic Forum
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of the World Economic Forum.
Thursday 28 January
Keywords: low-carbon economy, sustainable economy, green economy
Recommended reading for: Global Agenda Councils on Economic Growth & Development, the Future of Sustainable Construction, the Future of Transportation, Sustainable Energy, and Climate Change
Alan E. Salzman
Chief Executive Officer and Managing Partner, VantagePoint Capital Partners, USA
Graduate, London School of Economics, University of Toronto, Stanford Law School and Vrije Universit...
Sir Michael Rake
Chairman, BT Group, United Kingdom
1974-2007, with KPMG; international roles including: 1986-89, Senior Partner, Middle East Practice; ...
Chief Executive Officer, The NASDAQ OMX Group, USA
BA in English, Iona College; MBA, New York Univ. Former: President and COO, Automated Securities Cle...
Michael R. Splinter
Chairman and Chief Executive Officer, Applied Materials, USA
1972, Bachelor's in Electrical Engineering and 1974, Master's in Electrical Engineering, University ...
Azim H. Premji
Chairman, Wipro, India
Graduate in Electrical Engineering, Stanford University. Since late 1960s, at the helm of Wipro; cur...
Luiz Fernando Furlan
Member of the Board of Directors, Brasil Foods, Brazil
Degrees in Business Administration and Chemical Engineering. 1976-2002, with Sadia including: Execut...