Is 10 trillion US Dollars enough to get your CEO's attention?
[Origo Fourth Sector Network]: Global companies are increasingly convinced that climate change can impact shareholder value and that the market needs business reporting to assess the issue.
A survey published on 19 May by a group of institutional investors representing assets exceeding 10 trillion US Dollars shows increasing corporate interest in climate change issues.
From the [1.4mb PDF] Report's Executive Summary:
- Weather-related natural disasters caused about $70 billion damage during 2003 ($18.5 billion was insured). For the first time, climate change was explicitly identified as being a factor. More extreme weather events should be expected in the future, according to leading reinsurers.
- The effects of this will be felt in key sectors and commodity markets[^] notably, the power, energy, insurance, transportation, heavy manufacturing and building/infrastructure industries, and the crude oil, gasoline, grain, soy and wheat markets.
- Mainstream pension trustees, analysts, bankers, insurers and fund managers have begun to appreciate the implications of climate change and greenhouse gas (GHG) policies in financial terms. Taking climate risks into account is now becoming part of smart financial management.
- Carbon finance is now a reality. Legislation favouring a shift to a low carbon intensity economy is now a fact of life for FT500 companies across the EU as well as in many parts of the US, Japan, Australia and Canada. In January 2005, over 14,000 entities will begin trading carbon in what promises to be the largest, most liquid carbon market in the world: the EU Emissions Trading Scheme (ETS).
- The future [OE]cost of carbon[base '] is a major headache for energy-intensive FT500 companies.
- Pressure is growing on financial market authorities, fiduciaries, company directors and officers, and accounting bodies to incorporate climate risk factors into financial statements and offerings.
- The global carbon market has doubled in size in each of the past two years and is projected to reach $480 million in 2004.
- FT500 firms are major participants in the global clean technology sector. Europe aims to generate 50% of its energy needs from renewables by 2050.
Hopefully the point is getting through: This is not a passing phase. It is a serious business, financial and political issue that demands penetrating strategy and focused action from leaders who don't want to be left behind by competitors -- or charged with violation of fiduciary responsibility by their shareholders.
The report is a bit optimistic in stating In the US, clean technology forms the cornerstone of both leading presidential candidates[base '] environmental agendas. I don't see that either major candidate has risen sufficiently to the challenge, though Kerry's energy plan does call for a 20% renewable energy goal by 2020, behind the Europeans but well ahead of Bush.
More to the point, I can't think of a single US company that has set a comparably aggressive -- and fiduciarily prudent -- goal. (Perhaps someone can provide me wrong.) Even the Green Power Market Development Group's admirable goal of 'developing corporate markets for 1,000 MW of new, cost-competitive green power by 2010' will not come close to giving the Europeans a run for their money.
How many more industries do we have to give away before we figure out how to stay competitive, not just innovate?
12:32:13 PM 
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