Max Oliva, Associate Director, Social Impact Management
FT just before Davos: “Few would have predicted at the start of 2006 that a slide show lecture on the science of climate change would become a cinema blockbuster.” Al Gore’s film An Inconvenient Truth, is now the third most profitable documentary of all time. FT says it was a measure of how far the issue of global warming had invaded public consciousness.
The cost of reducing emissions is according to experts of 1% of global GDP while the cost of not doing anything about it is of 5-20%. David Miliband, the UK’s environment minister, said: “The scientific argument is settled, and the Stern review has answered the economic argument against action.” He said all that was left was the collective action problem, that no country wanted to be the first to reduce emissions for fear of being put at a competitive disadvantage if other governments did not follow suit.
Climate Change and the WHO.bmp
Yet as the FT clearly states on their article, several businesses have seen a competitive advantage in taking early action on climate change. General Electric’s Ecomagination revenues has risen from $6.2bn in 2004 to $10.1bn in 2005.
Wal-Mart has promised emissions reductions recently at The Clinton initiatve, just as Virgin. Marks & Spencer has also just announced it will become “carbon neutral” by 2012.
So how did Davos’ call to action go? Here’s a brief summary. To follow the whole conversation click here.
In regards to climate change, the “wait and see” is not a valid solution under any circumstances. Just bringing into account risk management which is part of the day to day CEOs’ responsibility.
In regards to biofuels, we have to get more serious: US corn based biofuel is not economic; sugar cane fuel in Brazil is. Let’s not confuse energy security with actually energy replacement of the sources.
We can not afford to effectively kill the growth protection of the pension funds (China, India, etc.) All Europe are aging and the world needs to facilitate the growth of these regions. The tipping point is unclear.. However, there is a social responsibility to act with preemptive measures, which means planning, building laws, that is not put all people into the highest danger.
The world biggest reserves of Coal are in the US, China, India and Russia (In this order). Unless we can develop a technology which takes the carbon dioxide from coal, we have an immense problem. We need to sequester billions of tons of carbon in order to bring change in global warming. We also need to increase our nuclear fission capabilities, having in mind that the US, China and India can’t build them fast enough. Finally, renewables have a chance at the 20% level (although at the end of the conversation this percentage found its way to the 50% level); yet it is important to increase transporting distances of electricity over several thousand miles, not hundreds like it is done now.
As a final conclusion, which by the way makes sense since Kyoto’s revision does not happen until 2008, global agreements are best to get nowhere. Let’s take concrete steps which are implementable. This is far better than trying to come to a world agreement. However, the Industry does need a signal, giving the industry time, a decade. Create incentives in order to have technologies developed. Yet, as Martin Wolf concludes, “We are still in a very messy transitional place in dealing with this challenge.“


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