By Andrew Cave
The past 12 months have seen climate change rise even further up the social, business and political agenda. Social initiatives, such as the drive for energy efficiency in homes and the campaign to eliminate the use of plastic bags, have gained popular support in Europe as the importance of the climate change debate resonates strongly with consumers. Business leaders are increasingly realising that tackling climate change makes sound commercial sense, with 150 global companies including Coca-Cola, Shell, Gap and Nike signing an unprecedented communiqué calling for a legally-binding framework to tackle the issue. Politically the year ended with the eventual compromise deal at the Bali climate change conference.
But what was really achieved in the global battle against climate change in 2007? The Bali agreement has been hailed as one of the year’s major achievements on the issue, though not all campaigners agree. UK journalist and environmental activist George Monbiot said that the Bali accord contains no targets and no dates, poured scorn on its alleged achievement of agreeing new guidelines for the clean development mechanism and was sceptical of the view that the US will change its position on climate change when George Bush leaves office after the 2008 election. Whatever your own view on that debate, however, there has been other progress in 2007. Not least is the possibility that it may have been the year when the scientific debate about climate change was settled once and for all.
In November, the United Nations Intergovernmental Panel on Climate Change published the most authoritative and comprehensive report yet on the potential impact of global warming in a move that commentators said should establish that the warming world is a phenomenon beyond all doubt. Australia signed the Kyoto treaty, leaving the US as the only developed country outside the Kyoto process. China issued its first ever climate strategy, proposing policies to reduce energy intensity and increase the use of renewables. In Europe, where the European Union took more action in 2007 by committing to reduce emissions 20% below their 1990 levels by 2020, the climate change debate is increasingly being led by consumers. Nearly 60% of respondents in a 2007 survey of 2,734 UK and US individuals by Consumers International said they “often” reduce energy consumption at home by switching off appliances. Nearly half also often buy energy-efficient light bulbs.
Britain’s business community also responded to the climate change issue in 2007. Retailers such as Marks & Spencer are now putting environmental sustainability at the heart of their brands, while organisations such as the government-funded Carbon Trust led high-profile campaigns to encourage companies to not only go carbon-neutral but to police their supply chains to make sure their suppliers do too. Sir Stelios Haji-Ioannou, chairman of easyGroup, emerged as a perhaps unlikely leader of the business effort on climate change in 2007, arguing that climate-friendly business practice not only makes sound commercial sense but is a necessity for any modern company that cares about its impact beyond the boardroom. By flying newer and fuller planes, which emit over 20% less carbon per passenger kilometre, and by publicly voicing its support for green air taxes and developing a concept for an ‘Ecojet’ with aircraft manufacturers, the airline is making its voice heard.
“The climate change debate is over,” says Sir Stelios. “The science is proven and it is every industry’s responsibility to do something about it.”
In insurance, 2007 saw a growing number of eco-insurers offering green products, driven by consumer concerns about climate change. Since Co-operative Insurance began to offer its green motor insurance product in July 2006, Royal & Sun Alliance, Swiftcover and Climatesure and Yesinsurance have all launched eco motor insurance. David Neave Co-operative Insurance Director of General Insurance, said in 2007: "All the evidence points to consumers taking on board the issues surrounding climate change. More and more consumers are becoming environmentally aware and that influences what they buy, including the purchase of car insurance.”
In the wider commercial market, Lloyd’s is now a leader in insuring renewable energy initiatives, such as wind energy, waste-to-energy projects and flue gas desulphurisation plants.
So what direction will the climate change debate take in 2008?
The attitude of the US remains the key issue for climate change on the global stage. But even here there are signs of progress. The Virginia-based Pew Center on Global Climate Change says 2007 was a year of “absolutely unprecedented” climate-related activity in Congress, with more than 140 hearings and over 165 bills introduced on the issue in the House and Senate. It believes one of the most significant developments of 2007 was last January’s launch of the US Climate Action Partnership, which is calling on Congress to enact mandatory limits to reduce US emissions by 60%-80% by 2050 and has 27 major companies and six non-profit organisations on board. It also welcomes the Senate Environment and Public Works Committee vote in December to support the Lieberman-Warner Climate Security Act - the first greenhouse gas cap-and-trade measure ever to be reported out of a Congressional committee, as a “critical step” toward developing a national climate policy.
“Looking forward, it is clear that Congress is on its way to enacting an economy-wide cap and trade system,” says Pew Center president Eileen Claussen. “But what that piece of legislation will ultimately look like, whether it will be sufficiently stringent and cost-effective and whether it can be passed and signed in 2008 remains to be the seen.”
Elsewhere, with the climate change issue achieving genuine empathy with consumers, could we see a move towards zero-tolerance of climate-unfriendly actions in the UK and Europe, for example? Will carrying a disposable plastic bag, driving a “Chelsea tractor” 4x4 vehicle or failing to turn off computers and office lights at night turn the individual into a social pariah? Time will tell, but it seems clear that the corporate world at least is beginning to come under greater scrutiny. Already, there is sceptical talk of “greenwash” or attempts by businesses to position themselves as climate friendly whilst paying little more than lip service to the subject. Companies that want to be seen to be green will have to make sure they tackle environmental and climate issues in a comprehensive and meaningful way or risk being criticised for being half-hearted.
In addition, corporate action needs to recognise the importance not just of mitigation but also of adaptation, says Lloyd’s chairman Lord Levene, and partnership is key: “By working together, the insurance markets and the business community can play an important part in educating populations about how to protect themselves and their property.” But action is needed now, he emphasises: “The business community has to start planning now if it is to be robust enough to cope with the future impact on its properties and people.”
Finally, Mother Nature may well have her say. Commenting on 2007’s natural catastrophe losses, Munich Re’s board member Dr. Torsten Jeworrek comments, “The trend in respect of weather extremes shows that climate change is already taking effect and that more such extremes are to be expected in the future. We should not be misled by the absence of mega-catastrophes in 2007." Colorado State University researchers are forecasting a “somewhat above average” 2008 North Atlantic hurricane season with 13 named tropical storms, including seven hurricanes, three of which will be intense. While nobody would wish for it, another taste of what the impact of climate change might feel like could do more than anything else to really change public perceptions of the issue.
