The course to Copenhagen
In the run up to the UN talks in December, which will hopefully set a global deal for climate change, business leaders, top consultants, and environmental experts reflect on 2008 - and share their hopes and fears for the year ahead
Dax Lovegrove, head of business relations, WWF
It wasn’t long before it was clear that 2008 was going to be another healthy year of green wars between the supermarkets – who can be seen to be the most green? This is always encouraging for two reasons. First, because food is one of the areas where our footprint is at it’s greatest. And, second, retailers reach into the consumer psyche, to influence choices.
Although some retailers are still focusing almost all of their efforts on packaging and plastic bags, we have started to see broader engagement on sustainability. M&S’s Plan A, for example, has continued this year with detail and ambition.
Sadly, leadership in finance, energy, manufacturing and other sectors has been less forthcoming. We are still not seeing the shift of investments needed in the finance sector away from high carbon towards cleantech. Oil companies seem to be going in the wrong direction and expanding on even more carbon-intensive projects, such as oil sands, while steel, cement and other energy-intensive sectors have continually attempted to drag down action on climate change within the EU.
On the political front, however, things are looking up. There are still battles to be won in pushing back plans for new and unabated coal-fired power stations, as well as airport expansion, but the Climate Change Act is progressive legislation. China, India and others within emerging markets have been calling for leadership from high-polluting countries, and at last the UK’s act delivers. The legislation will be useful in mobilising similar action across the globe as governments go into the Copenhagen talks to continue negotiating the post-Kyoto system.
This year will be interesting, with governments looking at tougher action on climate change and rules to prevent further mismanagement within the financial system. The question is: will states use the opportunity to step in to curb further mismanagement within the ecological system? It’s increasingly evident a global ecological rescue package is required
This will need to be a year of greater vision and innovation in the public and private sectors with companies pursuing greener business models and dematerialising goods and services. We should start to see a greater shift from products to services – more car-sharing schemes over car sales, increased energy and water services over sales of utility units, and more recycling schemes that help with waste from one business being used as a resource for another. Business travel agencies, airports and airlines would do well to diversify to meet the demand for state-of-the-art video-conferencing facilities.
There is also another encouraging trend. The well-being agenda is attracting more interest among thought leaders, which is countering society’s preoccupation with GDP. The hedonistic treadmill is increasingly challenged and studies show traditional western earn-more, buy-more lifestyles are seen to be reducing our quality of life.
There will be winners and losers in an ecologically sound economy that benefits human well-being, and the tide is turning, with people wanting to be attached to organisations that are part of the solution rather than the problem. And it’s becoming increasingly obvious which is which.
Tia Williams, senior sustainability consultant, Colliers CRE
In the wake of Bush, the USA is making a U-turn on environmental issues – hoisting it from the bottom to the top of the political agenda. Obama has committed to engagement on climate change, with an agenda to weatherproof a million homes a year and invest $500 billion in clean energy to cut 80% of emissions by 2050.
This target matches the UK’s. Setting these targets is bold, but intent does not equal activity and mapping the path to such reductions will be the government’s real challenge. The biggest challenges facing the property sector are existing buildings, with most expected to be awarded an energy rating of D or lower, and establishing a clear and agreed definition of zero carbon.
Energy performance certificates will have an impact on the property market. But they are only the first rung of a long mandatory ladder and, when the subsequent data filters in, emission reduction measures will follow. Expect carrot-and-stick measures, such as rates cuts, to establish fiscal gains for greener buildings. As the legislation tightens, poorly rated buildings will become more costly to run and therefore less favourable within the market. While most occupiers may not yet pay more for a sustainable property, it is expected they will be able to demand lower rents for those that perform badly. Nevertheless, the current market is not a suitable testing ground in which to judge pricing differentials.
Meanwhile, the economic volatility will sort the serious players from those who see sustainability purely as a mandatory tick-box. Where a company or individual has commitment, targets, strategies and an understanding of the reasons for change – beyond reputation – sustainability will remain a priority and bring financial gain. For those who strive for the credentials without the commitment, sustainability is likely to be a non-issue.
Progress on sustainability will only come about if the government focuses as much attention on clear targets, pathways and investment as it has done with bailing out the financial system. The challenges we face could be much more damaging to our economy than recession.
Solitaire Townsend, chief executive, Futerra Sustainability Communications
It was a year of problems, 2008, and my fingers are crossed 2009 will be a year of solutions. IPCC reports revealing climate change is accelerating, the long slow death of Doha, and the short sharp start of a recession; 2008 hasn’t been an easy ride. Roll on a fresh start in 2009.
As a communications professional, 2008 also had its highs and lows. In the first half of the year, green and ethical messages were so hot everyone wanted in on the act. Some great campaigns were rolled out in the frenzy of green as the new black. But many not so great campaigns jumped on the bandwagon. Last year could uncharitably be dubbed the year of greenwash. The Advertising Standards Authority upheld almost double the complaints against green advertising as the year before, and both France and the USA fast-tracked new green claims legislation. By the autumn, consumer trust in sustainability messaging was down to an abysmal one in ten. One tiny silver lining of the recession: only those who really mean it are spending precious cash on sustainability messaging. We should see trust rising again in 2009.
In fact, 2009 already feels like it will be a rather serious year. I helped launch the Regional Greenhouse Gas Initiative (RGGI) in the USA recently. As the first mandatory carbon cap and trade in the USA, RGGI was a watershed moment for the American media. With Copenhagen on the horizon and a new man in the White House, media coverage of climate change will come down from the rafters.
This is our chance to demonstrate sustainability is competitive, core and, well, sustainable. It’s in the emerging markets this is already the norm. Over 2008, we’ve been in Brazil, Russia, India and China (BRIC). In early 2009, we’ll release results from the largest ever survey of attitudes to climate change; a survey of more than a million Chinese. But it’s in Brazil I’ve seen the most exciting indications.
My greatest hope for 2009, however, is an articulated vision of sustainable lifestyles. We know what we’re trying to avoid, but we don’t yet know what we want. Without that vision, business struggles to set direction, consumers are hesitant to change behaviours, and even governments seem to lack conviction. My sources tell me that more than one major initiative is planned to fill that gap in 2009. Watch this space.
Ian Cheshire, group chief executive, Kingfisher
It has been a tough year for businesses and consumers alike, and at Kingfisher we anticipate tough times ahead, especially in the UK.
The government’s plan for a fiscal stimulus to stave off the recession has received mixed views from the retail sector. But, overall, we support the intention to encourage consumer spending and at the same time stimulate the economy. We are also delighted the EU has responded to the economic downturn with a recovery plan that includes proposals to boost the demand for green energy products through a reduced rate of VAT. We want to make products that help families cut their energy bills and live sustainably, as well as to help the UK meet its climate change objectives.
We would, however, like to have seen action on the high level of corporation tax and business rates, which are set to rise significantly ahead of inflation next year.
In the current economic climate, our priorities and that of our customers will change.
Doing more for less is the watchword and this goes hand in hand with good sustainability practices. The language may change but the objectives remain the same.
Consumer confidence has been shaken by economic events in 2008. But there are encouraging global political changes ahead, including Obama’s new priorities for the USA.
John Constable, director of policy and research, Renewable Energy Foundation
Historical analogies are tempting, giving a sense of security and chiming nicely with that deeply held intuition that there is nothing new under the sun. But it is precisely because they are so attractive that we generally regard them as suspect. This may be a
mistake. The human record is short, and our activities largely unchanged, in spite of vast acquisitions of knowledge, technological power, huge populations, and enhanced communication. It would not be entirely surprising if the complicated eddies observable in the historical past were sometimes to recur after an absence.
The last year has often suggested a sickening tendency to resemble certain parts of what one of the period’s principal cultural architects called the “low dishonest decade”, the 1930s. Every month, I walk from my office to Waterstones to look at books published in the environmental sector; some hundred titles spread over three substantial shelves. A sprinkling of worthy academics (Sir John Houghton’s Climate Change: The Complete Briefing) aside, most of this is curiously tabloid in character. I find elegantly presented announcements that green is the new black (“how to change the world with style”), which comes with a preface by Lily Cole recommending thrift, and ends by wishing its readers “happy shopping”. The book itself passes on “big ideas for your smalls” (reuse old undies as dusters). Another volume, Gorgeously Green: 8 Simple Steps to an Earth-Friendly Life, comes with an introduction by Julia Roberts, from which we discover she loves the planet to distraction and has learned nearly all she knows from this book and its author. The text gives recipes for houmous, advice about yoga, and suggests, almost insists, we discard carcinogenic talcum and use cornflour instead.
While this seems comic, it is sadly indicative of the deeper character of the current environmental movement, which is superficial, self-advertising, and fragile. A chilling historical analogy presents itself. In October 1934, Canon Dick Sheppard, late Vicar of St. Martins in the Fields, wrote to the Manchester Guardian renouncing war. Within a few weeks, he had some 30,000 supportive replies. And in 1936 Sheppard formed the Peace Pledge Union, a movement which grew to astonishing proportions.
Similar movements existed around the world. None of this prevented war, and may even have made it more likely since it prevented actions that might have stifled German aggression.
Isn’t this where we are in climate politics? Faced with global instability, resource competition, and a creaking energy system, particularly in the UK where the electricity system is entering a period of crisis, we seem trapped in a generalised abnegatory benevolence. We have a faith in international agreement led by panels, NGOs, committees, campaigns, conferences, leagues, unions, a trust that salvation lies in renunciation, then more purely of arms, now more generally of the tools and power delivered by industrial wealth, a faith in the virtue inherent in idealistically pure cheek-turning passivity rather than inevitably compromised practical self-defence, and running through all a lack of self-confidence evident in rather than concealed by strident popular demands: Stop Climate Chaos, No More War. Will any of this work? Are the utterly infeasible EU renewable-energy targets really expected to have an effect on energy security and climate change, or will they actually make things worse? Does the Prime Minister’s recent creation of a Department of Energy and Climate Change show an imaginative determination to tackle the issues, or is it a meaningless gesture, as if Chamberlain in 1938 had created a Department of War and Peace?
Time will tell, perhaps in 2009.
Chris Smith, principal, sustainability and risk practice, Arthur D Little
Faced with a growing sense of uncertainty, the second half of 2008 witnessed a tide of survival-based quick-fix decisions from businesses consumed with keeping in the black through the turbulence in the global markets.
While a sense of relative calm has now fallen, at least for the time being, 2009 is set to be anything but calm for those concerned about climate change.
There is a fundamental dilemma emerging: can business afford to delay making the necessary investment in long-term sustainability while knowing that a positive outcome to Copenhagen is by no means certain? Or do we act now, in the knowledge that responding to climate change, resource shortage and the host of other challenges standing in the way of long-term prosperity will not go away.
The world has always taken a short-term view when defining business success and the early signs are that 2009 looks like it will be no different.
One just has to look to the climate change and energy bills passed at the end of 2008. Both were met with widespread criticism in the economic climate. But the recent downturn in the market provides an opportunity to drive home the message that sustainable solutions, while incurring the costs that any innovation occurs, also provide the opportunity to generate both short and long-term advantage and the return on investment that any business leader seeks.
If nothing else, the events of 2008 showed us with great clarity how short-term our thinking has been. But can we, or are we willing to learn from our mistakes to refrain from making short-term claims but focus on long-term action? Failing to do so may see us charging headlong into a different crisis. A crisis that creeps up on us just as slowly but as monumentally as the events of 2008 did, but that will take far longer to claw our way out of.
Neil Bentley, CBI director of business environment
The last 12 months have led us to the point of maximum opportunity and of maximum risk. Climate change has officially become legislative, and the UK now leads the world with the highest carbon emissions reduction target. But we are in danger of losing momentum.
The UK government’s leadership through 2008 was commendable and the creation of the new DECC and the Planning Act were good news. But we need to speed up the pace of action, and the global economic crisis is not a reason to hold back in 2009.
We must forge ahead, and our ambition must now be matched with the delivery of a framework for investment.
We must begin developing the technologies and intellectual property, here in the UK, to be a low-carbon market leader. The government must support this drive in low-carbon technologies, through sustained investment and procurement, while raising the numbers of university students studying science, technology, engineering and maths.
On the European stage, the politics looked shaky in 2008. Our most urgent objective must be to secure a global climate change deal. We need an effective replacement to the Kyoto Protocol when it expires in 2012 and leadership must come from the EU, otherwise we are unlikely to persuade countries such as the US, China and India we are serious about a new agreement.
Nicky Chambers, strategy director, Best Foot Forward
Last year was undoubtedly the year of carbon. Some heartening progress was made with the recognition of two vital aspects of sustainability. Firstly, that there is an absolute limit to resources (including our carbon sinks) beyond which we cannot go without very serious consequences.
And secondly that, to understand how we fit into a resource-constrained world, we have to draw the boundaries wide and take a holistic view.
Apart from the obvious need for a switch to renewable power, knowing exactly where carbon hot spots are is the ongoing challenge. How to identify them has caused great debate. Company measuring and reporting on emissions has gained traction promoted by the excellent Carbon Disclosure Project and is soon to be a requirement of the Carbon Reduction Commitment. How to deal with emissions associated with products is somewhat more controversial, especially on the technical details of product labelling. But at least the publication of PAS 2050 enshrines the concepts of indirect emissions and embodied carbon. This supports Best Foot Forward’s experience that, in most cases, the majority of the carbon in a product is embodied in components and raw materials up the supply chain rather than in the direct emissions of the final manufacturer. Often many of those emissions are actually taking place outside our national borders, (adding another 15% or so to our per capita footprint) and if we take that into account, UK emissions have actually been increasing.
Which bring us on to the crux of the matter. Several initiatives in 2008 have added to the carbon literacy of policy makers and the public, but literacy alone is not enough. Now we urgently have to work out what we are going to do about achieving carbon reductions. If we are to achieve a 42% reduction within 12 years, we need to get serious. We need to get serious about funding renewables infrastructure: a shocking back-of-the-envelope calculation indicates that spending an amount equivalent to that proffered as part of the banking bailout on renewables could have delivered in the region of 40 terawatt hours of clean, green electricity a year – equivalent to about 10% of the UK’s total demand.
In the absence of that level of investment, and in an economic climate where money seems to be rather tight, we have to get more serious about reducing consumption. Every business, organisation, local authority, and individual will need to really understand their carbon footprint – not just to work out how much to pay the carbon offset company, but to identify where the big hitters are and where the most savings can be made. And we have to get serious about the scale of those reductions. If we are to achieve the reductions that are necessary to avoid the worst of climate change, we are going to have to do more than choose a low-carbon packet of crisps.
Jeff Chapman, chief executive, Carbon Capture and Storage Association
In years to come, I believe we will look back on 2008 as the year when carbon capture and storage (CCS) went from being science fiction to science fact. I hope 2009 will be the year when this technical progress is matched with similar commitment from the regulatory and financial framework, to ensure CCS fulfils its potential as a significant contributor to mitigating climate change alongside renewables, nuclear and energy efficiency.
With operational CCS trials under way, the technical pieces of the jigsaw are falling into place and this technology’s potential to contribute to climate change mitigation is becoming increasingly recognised. So too, efforts in both Whitehall and indeed Brussels mean the regulatory framework necessary to enable CCS is also taking shape.
The recent recommendations of Lord Turner’s Climate Change Committee report again acknowledge the likely role of CCS as playing a major part in UK energy policy, providing another powerful stimulus to the development of this technology. This situation has become even more pressing given the UK government’s recent commitment to an ambitious 80% cut in greenhouse gas emissions by 2050 – a target that will be simply unattainable without CCS in the mix.
So, the political will is growing, the technical advantages are increasingly apparent and the regulatory framework is evolving as expected. These have been the CCS community’s key achievements in 2008. Where we are still lacking – and this is the CCSA’s overwhelming priority for 2009 – is in the development of a full-scale CCS trial in the UK, as well as commitment to a funding mechanism to support a CCS demonstration programme.
It is imperative this situation is addressed soon – for environmental reasons and to capitalise on the UK’s potential leadership position. Britain is blessed with an ideal combination of engineering expertise and geological storage resources, creating a strong position from which to lead development of this industry. UK business is committed to early investment, as evidenced by the increasing number of organisations in the CCSA’s membership. These are all promising signs, but the UK is in danger of squandering this leadership opportunity.
Realistically, given the timelines imposed by the UK government’s CCS competition, commercial-scale carbon capture-equipped power stations will come online by 2020. This will not be too late for CCS to play a significant role in carbon abatement. But, to ensure the optimum conditions for success, it is also essential UK CCS demonstration projects are developed with the support of incentives similar to that which other low-carbon technologies receive. I am confident we will look back and see 2009 as the tipping point when political and corporate commitment made CCS a reality.
Jason Perks, director, Sd3
Throughout 2008, we have seen a shift from sustainability at the beginning of the year to a clear focus on survivability by the end. My overriding hope for 2009 is that global business will see the two as mutually supportive, rather than mutually exclusive.
Issues such as transparency and a new framework for global financial governance, actually show that survivability is dependent on instilling the fundamentals of sustainability. And now, we have a once-in-a-lifetime opportunity to make a significant step change in the financial markets and therefore create key drivers for more sustainable company decision making in future.
The challenge lies in how companies can progress to find real solutions to societies’ major problems like climate change, poverty, greener infrastructure.
Twenty years ago that was almost unimaginable. Fast forward to the US election of Barack Obama – no one dared hope that there would be a black presidential candidate, never mind him actually taking his place in the White House. This has raised hopes internationally and, just as the challenge is on for Obama, so it is for CEOs to deliver on their promises.
The test won’t just be whether sustainability commitments are stuck to over the next 12 months or so, but whether real change is achieved over the next few years. This means being truly realistic about where we are now and where we need to get to, making those changes year on year, and working to ensure that the society and frameworks that govern them promote those changes and don’t undermine them.
The global efforts we have seen to prop up the banks and credit markets show that this can be done. My fear is that it will take an eco-credit crunch for similar action to happen within the sustainability arena. Our job is to make sure that as a society, we heed the clear and unequivocal warnings before we get to the crunch. We have moved from boom to gloom, let’s avoid moving to doom.
Perhaps we may be able to pull some positives out of the worrying situation that we all now find ourselves in. People’s new found scepticism of the economic process will provide an opportunity for us all to rethink and re-evaluate what really matters in the world.
Let’s also hope that even with the threat of recession, that the UK government doesn’t just stick to its climate change targets and ensure their implementation, but meets its commitments on child poverty and raises the bar on other social and environmental issues.
Can sustainability help corporations survive? It doesn’t buy any special treatment, but many companies are now not just recognising and mitigating risks, they are also looking at how they can evolve existing products and services, or create new ones, to address major social and environmental challenges and turn them into business benefits.
Gill Hall, director of sales and marketing, AEA
This was the year that climate change finally moved from the political and government sphere to the business arena. The surge in oil prices half way through the year focused attention on fuel costs and the bottom-line impact of fuel efficiency. At AEA, we saw a dramatic shift in take up of our range of energy efficiency products and services.
Energy efficiency has always been the rather dull relation to green technology, carbon trading and even climate change adaptation. With oil prices over $100 a barrel, every CFO had an interest in how much energy was being used in the business.
Last year, I made a decision to move from IBM into a climate change consultancy and put my business skills to work on the climate change agenda. At AEA, we are seeing a growing trend of business professionals making the move from mainstream business to the climate change sector – from sales and consulting to legal, commercial and HR. The rise of the green sector is allowing companies like AEA to work together with global corporations to solve some of the biggest challenges our society faces.
I hope 2009 will be the year we become aware of the complexities of the solutions to global warming and understand there are no easy answers. We need to collaborate, invest, and work towards a fair and fast global agreement.
Miles Keeping, director and head of sustainability, GVA Grimley
When people in the property sector discuss sustainability, they typically mean environmental sustainability and particularly refer to energy issues and often mean carbon efficiency. This tightly defined focus, while understandable, can be frustrating and is something I hope will change during 2009.
One of the best bits of 2008 for me on the policy front was the announcement by Ed Miliband that the UK was adopting the 80% greenhouse gas emissions reduction target for 2050: real, internationally impressive leadership from government, at last.
This target is particularly important to the property world because of its contribution to national carbon emissions. The Climate Change Committee has put particular emphasis on the carbon budget period which runs from now to 2022. This is a period during which the property sector has an important role in cost-effective carbon mitigation. Policy development in 2009 – particularly the Budget – must reflect this.
Such developments will present further challenges to those struggling to keep up with the raft of regulations which began to affect them in 2008. Earlier in the year, Energy Performance Certificates and Display Energy Certificates came into being in the UK.
After anxiety about a shortage of energy assessors was overcome, concern turned to the poor quality of some assessments. Why was the owner of an office tower block in the City advised to “lag the loft” as the best way to improve the performance of the building? In November, the new, recast EPBD draft was published and will mean, inter alia, all existing buildings should meet energy efficiency levels when they undergo a major renovation.
It was in November 2008 that real progress was made in terms of regulation. The Climate Change Act, the Energy Act and the Planning Act were all given Royal Assent on 26 November and all three pieces of legislation will affect property sustainability very significantly. The Climate Change Act will quickly have implications because of the Carbon Reduction Commitment. Early in 2009 we shall have consultation on the draft regulations and later see which organisations will have to participate in the scheme (and who, therefore, will be named and shamed or lauded in the public league tables of carbon performance). Meanwhile, the Energy Act at last provides for the introduction of feed-in tariffs for renewable electricity and incentives for renewable heat. Perhaps 2009 will see a real surge in renewables investment?
Both these acts have been welcomed by campaigners, with UNICEF UK calling the Climate Change Act 2008 “the world’s strongest piece of national climate change legislation”. Furthermore, the 2008 Planning Act requires local authorities to provide policies which result in development schemes contributing to climate change mitigation and adaptation. This reinforces the Planning Policy Statement on climate change and both will significantly affect property developers, their advisers and regulators in 2009 and beyond.
So, significant progress, on the policy front in 2008. How well we respond to the agenda in 2009 remains to be seen. Of course, there is a lot of progress being made outside the legislative arena too, such as in the crucial area of refurbishing the existing stock, the UK Green Building Council (UKGBC) making headway on the future of the Code for Sustainable Buildings and many portfolios, including the government estate, becoming greener.
The economic malaise will not help all property people to see the benefits of the raft of sustainability regulation coming their way. But in GVA Grimley’s second Green to Gold survey into sustainable investment attitudes, reported overwhelmingly that 82% of investors are taking sustainability into account when assessing potential purchases.
Let’s hope we see continued buy-in in what promises to be a rollercoaster year in 2009.
Sarah Davidson, technical director, Bureau Veritas
Undoubtedly, 2009 will see pressure on corporate sustainability initiatives and environmental programmes as organisations economise. But, with spiralling energy prices and stiff competition to win work, there is a strong argument for businesses to embrace green policies because of their cost benefits and business opportunities.
The change in US government inspires hope for increased support on global environmental issues, and carbon is a big focus for the UK in 2009.
The global economic downturn brings uncertain times for the UK’s planning, development, housing and construction sectors. But I am optimistic there will be positive effects in 2009 to be seen from the introduction of The Planning Bill in late 2007, the legislation now requiring Site Waste Management Plans on construction projects over £300,000 and various other new requirements for sustainable construction which come into effect in 2009. These include the launch of BREEAM International and the first initiatives borne of the government’s Strategy for Sustainable Construction.
On the air quality front, May 2008 saw the new Ambient Air Directive (2008/50/EC) come into force, which not only introduced legally binding Limit Values for a new metric but also introduced a supplementary method of air quality management across Europe.