This is a guest post about the UN Climate Summit in Copenhagen from Peter Lacy, Accenture
As the UN Climate Summit approaches the end of its first week, it was the ‘Business Day’ today. Talking to a client and friend over coffee, we got onto the topic of the real Copenhagen ‘so what’ for business leaders and what questions they should be asking.
Having reflected on this, I think the ‘so what’ comes in two parts - firstly, early insights into what changes might occur in the business context for your industry and company as a result of the commitments that are made here by governments next week; and secondly,although still storming and forming, an early understanding of business imperatives and strategic options available to you to turn carbon into competitive advantage.
While the likelihood of a legally-binding commitment before next year’s meetings in Bonn or Mexico seems, according to the whispers in corridors here in Denmark, unlikely, the direction of travel is clear – a global transition to a low-carbon economy that has already begun and is gathering pace.
As Copenhagen injects further momentum, what does that mean in terms of changing business environment for companies? Well here are a few Copenhagen questions to ponder:
1. Do you know how and where global carbon commitments by governments might impact your company? Governments, whether regional or national, really only have 3 levers they can pull to reduce greenhouse gas emissions and deliver on their carbon commitments – mandating reductions through regulation and standards; establishing carbon pricing – whether through cap and trade or taxation; or directing public investment through subsidies or public procurement. This mix will vary significantly depending on country commitments, energy mix etc.
2. Do you when this will hit and how it might shift over time? In delivering on their Copenhagen commitments, these government levers will cause disruption to the business environment in the short, medium and long-term. So time-horizons matter. For example, while the US is currently looking to deliver a 17% emissions reduction by 2020, that could rise to 30% by 2025 based on current discussions. A steep trajectory. So an understanding of timing is critical.
3. Do you know how your competitors will be impacted relative to you by these shifts? For energy intensive industries this will mean substantial winners and losers as assets become liabilities at potentially frightening speeds and as national policies reshape the competitive playing field. For others sectors, such as ICT and infrastructure, this means new markets for products and services that meet the need for carbon reduction in other sectors or help the world adapt to the changes that even a 2° temperature increase will likely bring. Understanding where you have relative advantage, or disadvantage, will be crucial to acting fast.
If the answer to any or all of the above is no, then you may want to watch Copenhagen carefully for the sign of things to come. And therein lies the first Copenhagen ‘so what’ for me. Copenhagen will likely be remembered as a milestone on a longer journey rather than the ‘big deal’. But what matters most for smart business leaders is that it represents a strategic ‘sign-post’ for probable scenarios and the likely mix of regulation, carbon pricing, and public investment to expect – and, therefore, the chance to consider what those shifts might mean for their industry landscape, markets and competition.
Companies watching events unfold with an eye on the future, planning for likely scenarios and asking tough questions are already positioning themselves ahead of the curve for the second Copenhagen ‘so what’… ‘what can I do to set strategy, drive innovation, shape new business models and execute effectively to achieve high performance in the shift to a low-carbon economy?’. And that’s where it gets really interesting. A topic for future posts.
Peter Lacy is the London-based Managing Director of Accenture Sustainability Services – Europe, Middle East, Africa and Latin America
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