Future of the Environment

Why businesses are already acting on climate change

Yvo de Boer
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Future of the Environment

The recently published IPCC report shows that there is an increasing understanding of the science of climate change and an increasing degree of certainty around the extent to which we, as humans, are actually responsible for it – way beyond the boundaries of natural variation that we have seen in the past. In fact, scientists are now 95% certain that human activity is the primary cause of climate change.

The question I then ask myself, and the question that I would have for the rest of humanity, is: if you were told that there is a 95% chance that your house would be burgled this evening, would you wait until tomorrow to take action? How much certainty do you need in the political arena to take that next step beyond the Kyoto Protocol and really begin to seriously implement the two degree target that politicians decided on in Copenhagen?

With the release of this report, I do not personally think that there is a chink in the armour to be found. Nonetheless, people are looking for potential chinks. People are arguing that there has been a slowing in the rate of global temperature increase, which is perhaps the beginning of a trend in a different direction. In reality, whereas in previous reports the IPCC has indicated a band with the highest probability, now they are including a total range. So those are certainly things that people will be focusing on. But what is significant for me is the overall clarity of the message: if you are 95% certain that you’re going to be burgled tonight, you’re better off taking precautions today rather than tomorrow.

Actually, the business community by and large is not waiting for that final 5% certainty. I see the business community taking climate change very seriously, trying to understand how it is likely to be impacted by climate change and taking precautionary measures in order to mitigate that potential impact. At the same time, businesses are also seeking to understand to what extent a response to climate change can be turned to their advantage, and are putting products and services into the market that can flourish in a world where climate action is taken seriously.

What I see the business community highlighting is that there is a nexus, a relationship between, for example, climate, energy, food and water as trends that reinforce each other. Companies are concerned about security of supply, they are wondering where their cocoa, grain, sugar, beef, palm oil are all going to come from in the future, and questioning how they can readjust their business strategy to anticipate the changes. I am increasingly seeing the business community recognize that they need to understand how they are likely to be impacted by these trends and translating that understanding into business strategies that can turn a potential disadvantage into a potential advantage.

For example, Unilever has produced a washing powder that you only need to rinse once instead of three times. Not only does this save both water and energy, it also makes it much easier for people who still have to do their washing by hand. So this is an example of  a company that is seeking to put new products and services into the market that are fit for the future and recognize those megatrends and sustainability pressures.

People who are trying to find chinks in the armour of the IPCC report are to a significant degree those afraid they will suffer large economic or business losses if there is aggressive action on climate change. One of the challenges that we face is figuring out how we can make as many people and as many companies as possible part of the solution rather than the problem.

We need to think about assets that could be stranded as a result of ambitious action to address climate change. For example, in just a couple of weeks’ time, the next big climate conference will take place in Warsaw in Poland. Poland relies on coal for over 90% of its power generation. An important part of the question for me is: how can you make countries like Poland, which rely very heavily on coal, part of the solution?

Read more blogs on the environment.

Author: Yvo de Boer is the Global Chairman for Climate Change and Sustainability at KPMG International Cooperative, Netherlands.

Image: A Brazilian crosses the muddy bottom of the Rio Negro, a major tributary to the Amazon river, in the city of Manaus, October 26, 2010. REUTERS/Euzivaldo Queiroz/A Critica

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