As COP21 enters its final few days and world leaders draw closer to a new global agreement to tackle climate change, what does this mean for business? Imperial College Business School’s faculty share their views:
Dr. Mirabelle Muuls
Lecturer at the Grantham Institute and Programme Director of the MSc Climate Change, Management & Finance
Reaching an international deal out of COP21 is key to maintain the momentum on climate change. The greenhouse gas (GHG) reduction commitments and targets made by countries in the run-up to Paris will need to be respected and improved in the future to meaningfully reduce the risk of dangerous climate change.
Businesses are some of the stakeholders that will need to be engaged with these targets, and the success of Paris will add to the visibility they need to innovate and invest in emission reductions. At the national level, they are already pushing for carbon pricing, which our research has shown to be effective in driving abatement of GHG. Tackling climate change can happen in big and small businesses, through many different routes – from increasing the use of efficient systems to creating new innovative technologies or business models. There are many opportunities for companies to benefit from.
Dr. Eng. Paolo Taticchi
Director of the MSc Management, Director of Global Initiatives and Principal Teaching Fellow in Management and Sustainability at Imperial College Business School.
Business is part of the problem and it needs to be part of the solution. I believe that business will play a key role, but we will not be able to solve this problem alone. There is a need from the government to set the right regulation, the right environment and provide the right support to allow companies to change their business models and become more sustainable.
The key stakeholders in business are now more engaged in sustainability. Investors understand the potential and risk of climate change, customers are more educated to recognise and reward corporates that engage with sustainability and decision makers appreciate sustainability can contribute to build a competitive advantage in industry. Moreover, because sustainability is core to business school programmes, a new generation of business people look at business from a different perspective. Rather than seeing sustainability from a cost perspective, businesses are able to recognise the opportunities and look for win-win solutions that are economically profitable but also environmentally and socially sustainable – the triple bottom line. Our research shows companies across many industries changing their business models to reflect this change and my expectation coming out of Paris is to see a group of large corporates taking a strong commitment to reduce carbon emissions even further and to become more sustainable. I am sure the commitment will materialise with some very specific requests to government to support them on this journey.
Dr. Ralf Martin
Assistant Professor in Economics at Imperial College Business School.
We need to look for the win-win scenarios, ones that benefit both climate and business.
Our research shows a much higher degree of knowledge spill overs from clean technologies compared to dirty technologies. Not only is this good for climate change, but this could lead to higher economic growth in countries that adopt policies such as higher subsidies for clean technology research and development, as well as supporting this through climate policies such as carbon taxation.
Another win-win is countries such as China looking to combat local pollution. Until the last COP China were blocking lots of things, but they are now very active and doing something about coal to combat local pollution issues, which in turn will be good for the climate. The other thing is energy security and reliability. If you have a system which is not dependent on only one resource, possibly from an unstable region, then we of course have more resilience and a more reliable system that is also better for the environment.
There will be winners and losers, but the net effect on the economy can be positive, if politicians implement coherent and strong policies in support.
Dr. Charlie Donovan
Principal Teaching Fellow at Imperial College Business School.
Previously Head of Structuring, Global Power, at BP plc and a policy analyst at the U.S Environmental Protection Agency during the Clinton Administration.
The global energy system is in a state of rapid transformation. The wave of technological change playing out across the globe brings with it new risks and opportunities for companies. To me, the most interesting story unfolding at the climate negotiations in Paris is not the negotiations themselves, but the growing recognition of the systemic implications for business of de-carbonizing the global economy. As new energy infrastructure investment accelerates, tremendous wealth will be made. Substantial losers will also abound.
Over the past 6 years, the cost of solar photovoltaic modules and LED appliances declined by 80 percent. Wind energy and battery prices went down 40 percent. Today, it’s cheaper to put solar on your roof than buy electricity from your utility in most countries around the world. No surprise then, that Wal-Mart, IKEA, and Johnson & Johnson are major buyers of solar power in the United States. For the same reason, large European electric utilities have been tearing themselves to pieces as they struggle with losses in their old energy businesses.
Last week, CEOs at companies like Amazon, Alibaba, and Facebook placed multi-billion dollar bets on more big changes coming in the energy system. The big takeaway I am getting from the climate meeting in Paris is that the clean energy revolution is accelerating. Great businesses are seeing this wave of innovation close to shore and getting out their surfboards.
Is your business still on the beach?