NEWS

Why it pays to be green

World-class names in business joined world-class figures from academia at a conference organised by PricewaterhouseCoopers in Norwich to discuss the challenges poses by climate change. Business editor Paul Hill reports.

. . . . . . . . . . . . . . . .

Be frugal in your use of raw materials. Eliminate waste. Be mindful of your use of the utilities, power and water.

These are all good ideas when economic times are tough and there is every reason to control costs and watch cashflow.

But what makes business sense, also makes environmental sense.

Yesterday two corporate brands with a multi-national reach, Aviva and Marsh, came together at a conference at the John Innes Centre in Norwich organised by one of the world's biggest accountancy and business advisory firms, PricewaterhouseCoopers.

The theme of the conference was the challenge - and the opportunities - that climate change poses for businesses in the East.

They were joined by a world-class brand in the field of climate research, the University of East Anglia, and a man who has long been an advocate for sustainable living - and, for a time, adviser to then prime minister Tony Blair on environmental policy.

Jonathon Porritt served as director of Friends of the Earth from 1984 to 1990, is currently chairman of the government's Sustainable Development Commission and also works as programme director for Forum for the Future, the sustainable development charity.

His message yesterday was simple.

There is much to gain for businesses by taking account of climate change in both their long-term strategy and day-to-day operation - and much to lose if they do nothing.

The evidence for being green also being profitable is “incredibly strong”, Mr Porritt said.

“As the downturn bites deeper and companies have to think very carefully about eliminating any unnecessary costs, the whole resource efficiency argument - energy, water, waste and materials - will become even more pressing than they have been up until now,” he added.

The challenges of climate change take many forms.

“The first is that business won't think strategically enough about what success in a low carbon economy means,” Mr Porritt said.

“When the reality of a low carbon economy emerges - paying a price for every tonne of carbon emitted, and low carbon products and services - the danger is some companies won't be prepared for it.

“Secondly, most of the energy we use today is still hydro-carbon-based - oil, gas and coal. “Within a very few years, the CO2 in those fuels will be priced. The carbon reduction commitment the government is introducing in 2009 is the first indicator of the kind of market in CO2 that's been talked about for a long time.

“As soon as there is a real working market where something is being traded, companies that are not prepared are going to be very exposed to additional market pressure.

“Then there's consumer pressure. Notwithstanding the difficult economic times, consumers want to know that companies are doing their bit to help address the challenge of climate change. “Non-governmental organisations, the media and academics are going to get better at putting the finger on the poor performers and upholding the example of the good performers. For the bad performers, that means damage to reputation, to brand and to market position.”

The days of denial about climate change are all but over, Mr Porritt said.

But if denial has gone, it has been replaced by a sluggishness - a slowness to act .

“You need a board-level director with cross-company commitment,” he said. “But most companies will dump responsibility on an environmental specialist or corporate social responsibility specialist. Instead, the board won't think about it much during the year. It won't feature very large in the overall profile of the company. So there'll be a recognition it's important, but not enough recognition that it's important enough to warrant focused attention in the short term. But that's not to say we don't have real champions. The UK has some of the best companies when it comes to thinking through climate change strategies.”

But leaving a few pioneering companies to lead the way is not enough. One hundred and fifty years ago, a handful of Victorian philanthropists helped changed Britain's attitude to pay and public health, child labour and factory conditions.

“The Rowntrees and the Cadburys believed there was a business case to what they were doing - it wasn't just charity or philanthropy, they believed they would be building a better company,” Mr Porritt said.

“But 150 years ago it wasn't as easy to put a money value on those benefits in the way you can put a money value on responding to climate change.

“The issue today is that we can't leave things in the hands of a small cohort of pioneering companies which have realised the importance of responding to climate change and are dealing with it in their own terms. “Government is going to have to drive the free-riders, lazy, indifferent, irresponsible companies increasingly through regulation and pricing to ensure that all UK business is rising to the same standard.”

Yet climate change does not simply pose a threat, it presents opportunities - and businesses in the East should be well placed to take advantage of them.

“Think of the use of spent reservoirs for capture of CO2,” Mr Porritt said.

“Although a lot of the NGOs don't like it, the reality is that we can't reach at least a 60pc reduction in emissions by 2050 without a massive investment in carbon capture and storage. I haven't seen any trajectory or scenario for radical decarbonisation that works without carbon storage, it's simply not possible.

“So though there are considerable problems with that disposal route, we've got to learn how to do it quickly and do it incredibly well.

“This is going to be a multi-billion dollar industry in the next 15 to 20 years - it's got to happen that quickly if it is going to make a difference.

“The second thing is that we dithered around with offshore wind in the UK for a long time. And although we're now seeing some of the new proposals for large offshore wind off the east and west coast, it's taken a long time to understand what that means in terms of skills and the scale of industry that is needed to support it.

“We recently saw a government-supported research report looking at the idea of a new 'wind grid' in the North Sea - that's a tremendously exciting idea. It would couple all the offshore wind projects to a new grid that would feed into the UK, the Netherlands and Scandanavia. It would be a massive investment. For the East of England, these are potentially huge opportunities which needs to be seized.

“These investments are ramping up every year. Last year we saw about $150bn of investment in clean tech around the world. It's perfectly proper for a region like the East of England to go after its share of that huge new flow of money. That's the way to build prosperity for the future.”

An audio recording of the presentations and slides from the conference will be available from the 'downloads' section of the Carbon Connections website: http://www.carbon-connections.org/