What is the Copenhagen ‘So What’ for Business Leaders?

Posted by: Peter Lacy on December 11, 2009

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

Reader Comments

Kanayalal Raina

December 13, 2009 12:06 PM

Rich countries responsible for the damage have neither promised significant emission cuts nor money to help developing countries fight climate change effects. Instead what they are demanding is that all countries, including developing countries, make political statements to undertake GHG cuts. In other words, the Kyoto Protocol should be discarded, which is not acceptable to developing nations.

Mick Blowfield

December 16, 2009 12:18 PM

Any further thoughts now that we're well into week 2? I've been hearing too often the most ominous words, 'There's nothing here for us.' Is COP15 failiing to build on the momentum that I thought I saw in the business community earlier this year?

Peter Lacy

December 17, 2009 6:17 AM

Mick,

Thanks for the post. I think it's a bit of a mixed bag.

On the one hand, I think it is not clear the real impact of business leaders and business being at the Summit itself other than as a good place to convene key industry players (e.g. good to be here, but not sure the impact on the negotiations). Yvo de Boer seemed to confirm this several times.

On the other hand, more generally in terms of whether 'there's something here for us' I would say that there is but what exactly will only become clear over the weekend as we digest.

It is very clear that where it will matter most is as governments start to deliver on their commitments. So execution is the name of the game. The blend of regulation, carbon price mechanisms (tax, cap and trade), public investment in R&D / incentives etc, public procurement and infrastructure will be profound in reshaping some industries economics and creating new markets.

Because this is now getting so close to trade negotiations, the game changes and so it starts to shift from impacting direct climate negotiations to impacting trillion $ trade flows (which is not necessarily a bad thing by the way). That matters for business as much as for governments. Interesting times..

Thanks
Peter

Kanayalal Raina

January 23, 2010 10:43 AM

Global climate change has received much attention in the last few decades after the discovery in 1985 of a hole in the ozone layer over Antarctica, which protects life from the sun's harmful ultraviolet rays. The expected doubling of heat trapping greenhouse gases over preindustrial levels by the middle of the present century is projected to raise the average temperature of the earth between 1o and 5oC with resultant consequences.
Such radical changes would lead to an ecological catastrophe of unimaginable proportions. According to an earlier report of the United Nations' Intergovernmental Panel on Climate Change (IPCC), since the nineteenth century due to rise in the earth's average temperature, sea levels have risen 10-25 cm. The average temperature in 2100 will be two degrees higher than today and sea levels will rise an average of 50 cm and up to a metre in places. A one metre rise in the sea level would submerge islands, salt water would intrude on rivers and coastal areas affecting freshwater supplies and severally hamper fishing. IPCC predicts that other serious effects of global warming would be droughts, water shortage and wildfires -- some we are already witnessing such instances.

Kanayalal Raina

January 23, 2010 10:43 AM

Global climate change has received much attention in the last few decades after the discovery in 1985 of a hole in the ozone layer over Antarctica, which protects life from the sun's harmful ultraviolet rays. The expected doubling of heat trapping greenhouse gases over preindustrial levels by the middle of the present century is projected to raise the average temperature of the earth between 1o and 5oC with resultant consequences.
Such radical changes would lead to an ecological catastrophe of unimaginable proportions. According to an earlier report of the United Nations' Intergovernmental Panel on Climate Change (IPCC), since the nineteenth century due to rise in the earth's average temperature, sea levels have risen 10-25 cm. The average temperature in 2100 will be two degrees higher than today and sea levels will rise an average of 50 cm and up to a metre in places. A one metre rise in the sea level would submerge islands, salt water would intrude on rivers and coastal areas affecting freshwater supplies and severally hamper fishing. IPCC predicts that other serious effects of global warming would be droughts, water shortage and wildfires -- some we are already witnessing such instances.

OXYGEN

March 28, 2010 7:32 AM

Any further thoughts now that we're well into week 2? I've been hearing too often the most ominous words, 'There's nothing here for us.' Is COP15 failiing to build on the momentum that I thought I saw in the business community earlier this year?

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