Planning a green future will ensure business’s survival

Published in The Scotsman, Monday, 24 November 2008

It is a question on the lips of every person with an interest in mankind’s most pressing issue. How has the economic downturn affected environmental action? Or, put another way, is today’s credit crunch going to worsen tomorrow’s eco-crunch?

The body-blows of the eco-crunch will start as rising populations, diminishing raw materials, water and land pressures will limit the resources available for consumption. Add to this the urgent need to limit global warming, through a transformational shift away from fossil fuels, and the eco-crunch will swing its right hook. The Climate Bill’s cap on greenhouse gas emissions, to an 80% reduction by 2050, will put us on a trajectory where only the most carbon-efficient businesses will survive all the rounds.

European leaders have been pondering this hard, and considered our lack of preparedness merited a wake up call. They recently urged businesses and decision-makers not to get distracted from eco-innovation and carbon reduction.

Closer to home, a group of business leaders, including Ian Marchant, CEO of Scottish and Southern Energy, has recently urged its suppliers to take action, by joining the Mayday network.

Helped by Scottish Business in the Community, a Prince’s charity, Mayday network members pledge to calculate their carbon footprint and reduce energy use annually. Public disclosure of progress is optional.

A positive sign of the times is that 20 businesses have signed up to the Mayday network in the last couple of months, whereas membership had been static for a year or so.

Admittedly, becoming a member of the Mayday network doesn’t cost money, not initially, at least.

Now, every business decision, brown or green, is being re-evaluated in the gloomier light of this autumn’s economy.

2degrees, an online community of carbon professionals, undertook a survey across

66 members, most of whom worked in large corporations.

Green strategies are still considered ‘imperative’ by 90% of the respondent’s CEOs.

In their eyes, opportunities to save money, including energy efficiency, have, if anything, become more attractive. This energy-saving imperative is also evident in research findings released by the Carbon Trust, a government-funded company. Of 850 business leaders surveyed, twice as many say reducing carbon emissions has risen up their agenda in the last six months than those who say it has fallen down (20% versus 9%).

However, in the 2degrees survey, there is little evidence of the investment in research and innovation needed to capitalise on tomorrow’s green consumer, and avoid the eco-crunch. Asked to list the top three priorities in their green business strategies, less than a third included ‘product innovation’. This was considered less important than efficiency, carbon reduction and communication.

There is a risk, 2degrees concludes, that some green business strategies are being limited to cost-cutting exercises which may also be ‘spun’ to improve brand perceptions.

An economic downturn will certainly reduce our carbon emissions in the short term. We, as individuals, will consume less, meaning lower carbon emissions from manufacturing (and shipping emissions from China). Business footprints will shrink as they twiddle the knobs on their heating equipment, turn off lights and look for other efficiencies.

Once we come out of the economic trough, however, the story changes. Lack of foresight means we our businesses have missed a year or two’s worth of green innovation. Other countries might surge ahead in the race for green technologies. Barack Obama recognises that big new state investments should be eco-savvy, and hopes for a green bounce in the economy, and millions of jobs in the process.

Thankfully, our renewables industries and the policy-makers recognise this, and have a longer-term perspective. Jason Ormiston, Chief Executive of green energy trade body, Scottish Renewables, said: ‘We are not immune to the financial difficulties facing the world economy but we believe that the fundamentals of the renewable energy industry in the UK are strong and that investment will continue. This strength is thanks to political support and in particular the guaranteed market for renewable electricity provided by the Renewables Obligation out to 2027.-

The need for this long-term view, become even more sharply defined in light of yesterday’s news. The National Intelligence Council, a leading American intelligence organisation, concluded in its latest report that the West’s power base will wane over the next two decades. It predicts a fragmented world, where conflict over scarce resources is on the rise. The eco-crunch writ large. Today’s emerging economies, including China and Brazil, are predicted to have more power.

To prepare ourselves for this future world, we need to aim high: self-sufficiency in green power (better still, net exporter); eco-product innovator; and low-carbon knowledge centre.

Mr Ormiston of Scottish Renewables strongly believes we could see a green light to the end of this recession, and beyond. But this will mean addressing problems head on, he says: -Government must help us tackle the barriers, like planning and electricity networks, and deliver the right climate for investment in renewables.-

Only with the foresight of the renewables industries, will other Scottish businesses ensure they have a part to play in the tempestuous climates of the future.

 www.climatefutures.co.uk