Can businesses influence global development and help alleviate world poverty? Bjorn Stigson, President of the World Business Council for Sustainable Development (WBCSD) is intentionally blunt in his assessment of the situation: "Businesses can make a difference but it requires support from governments who play a critical part in creating the framework conditions in which business serves society."
The media coverage of sustainable development issues in general and energy and climate issues in particular has been unprecedented through much of 2007. Not only have there been record amounts of it, but the stories suggest huge changes in the ways in which governments, companies and individuals approach energy issues.
"Climate issues are of real concern in all parts of the world, and there is still much to be done," says Bjorn Stigson. As president of the WBCSD for the past 12 years, he is well-qualified to comment on the role of businesses in global development. "Business is now seen as a necessary part of the sustainable development equation. However, business cannot succeed without a basic framework of law and trade regulation, infrastructure, services and education and healthcare. Governments play a critical part in creating such framework conditions but there is often a lack of political will."
Makes good business sense
The WBCSD, a unique, CEO-led, global association of some 200 companies dealing exclusively with business and sustainable development, argues that they must address major social and environmental issues as part of their business strategies because ultimately it makes good business sense. "A business's long term competitiveness - its license to operate, innovate, and grow - will increasingly depend on how it embraces societal challenges," says Mr. Stigson.
Mr. Stigson recently returned from Asia, a region abuzz with talk of energy and climate as Indonesia gears up to host the 13th Conference of the Parties (COP) to the United Nations Convention on Climate Change in December.
Call for long-term framework conditions
"The year 2007 has been something of a watershed for issues of sustainability, especially climate and ecosystems and the wider impacts for human activity," says Mr. Stigson.
"Today, no one should be in any doubt that climate change is upon us. The science is clear. The effects are becoming increasingly apparent as evidenced by extreme weather patterns and a growing number of natural disasters. Climate change has made its way on the agendas of global conferences; the media publish climate-related stories daily, and the progressive business is becoming a leading advocate for action," he adds.
"The big question now," says Mr. Stigson "is how are we going to respond. If globalisation has taught us anything over the past decades, it should be that we are all inextricably linked and that our actions all impact upon one another. Nowhere is this truer than with climate change. Rising to the challenge therefore will require coordinated policies by global society as a whole. This will be a huge task. Long-term framework conditions are needed now."
A sense of urgency and opportunity
"Without thoughtful policy shifts we may be heading towards both energy insecurity and climate change," says Mr. Stigson. "The macroeconomic picture is becoming increasingly focused: investment in prevention now will, in all likelihood cost less than trying to adapt later.” Stigson also points out: “Some companies see opportunities in developing products and services to both mitigate and adapt to climate change.”
At its recent council meeting in Brussels, Mr Stigson warned delegates that "the stakes are going up on sustainable development issues. In fact, sustainable development is becoming a competitive issue and creating growing tensions inside of the business community".
Sustainable development has reached a "tipping point" noted Mr Stigson. "There has been an emergence of new economies. Media interest in sustainable development has never been so high. The financial markets are beginning to act and reflect this. All in all, there is a growing sense of urgency. However general consensus seems to indicate that we are not moving fast enough. So the question is: where is the power of change going to come from and who is in charge of creating a sustainable world?"
Noting the difference between the "hard power" (such as military force) and "soft power" (such as the influence of business), Mr. Stigson called upon the corporate leaders to work together to "use the WBCSD as a soft power tool to contribute to a sustainable world that is good place for doing business." Stigson elaborated, “you cannot solve climate change with hard military power”.
Mr Stigson believes that "we are all in this together: no one part of society can create a sustainable future on its own. For its part, the WBCSD has to become sharper at advocacy. There is a very real need to educate different sectors of society about the role of business. We need to define and explain the role of business in sustainable development. We need to educate both society and governments about how business works," he adds
A trilogy of reports on energy and climate
As part of its efforts to reach this goal, the WBCSD recently published three reports which highlight the scale and complexity of the challenges ahead. This work is based largely on the experience that WBCSD member companies have had in addressing global challenges.
Mr. Stigson comments, "We are publishing the Trilogy at a time of intense debate. Directions set in the next few years will have profound consequences for future generations - we believe business should be clear about its purpose and candid about its dilemmas”.
The next industrial revolution
So is this a good time for companies to think about greening their businesses? "It's definitely a good time to look at all the issues around sustainability, it is about the future," believes Mr. Stigson. "The expression people are using is that it's the new, or the next, industrial revolution. People used to see sustainability only as a constraint, an additional cost, but they're able to increasingly see that there are real opportunities associated with sustainability”.
At the same time Mr. Stigson acknowledges that evidence is mounting that the climate is already warming, and even if greenhouse gas (GHG) emissions were halted, global temperatures would still rise as UN and other reports indicate. So what can businesses do?
"Our members accept that they must work with governments and NGOs to limit climate change and its impacts. Further, we believe climate change effects will alter existing business models and change current risk structures. In the business arena, we accept there will be both winners and losers” says Mr. Stigson.
Mr. Stigson thinks the current discussions on adaptation should focus on raising awareness and highlighting the challenges. "Adaptation describes a set of responses (to the actual or potential impacts of climate change) to reduce the harm that climate change may bring," he explains and adds "business also must show leadership on the issue by examining the short-term and medium-term risk factors worldwide."
UN panel report
Several recent reports detail the impacts of climate change. For instance, the recent report by the UN's Intergovernmental Panel on Climate Change (IPCC) warns that if temperatures rise by more than 2C (now expected before 2050) 20 per cent of the world's population will face a great risk of drought.
The 'Synthesis Report,' the fourth from the IPCC this year, predicts that with that level of temperature rise, other parts of the world will face increased flood risk from rainfall and there will be a decrease in cereal harvest in some regions. There will also be a rise of flooding, particularly around deltas in China and Bangladesh and low Pacific Islands.
Mr. Stigson comments, "Climate change can sound almost gentle when spoken of in fractions of a degree of temperature rise or parts of millimetres of sea level rise. But GHG emissions are essentially putting more energy into the atmosphere, and it is difficult to predict the knock-on effects and feedback loops this new energy may cause."
Turning to the subject of how businesses are currently combating GHG emissions, Mr. Stigson says that "an increasing number of companies are responding to this challenge by completing GHG inventories, quantifying their emissions, reporting GHG emissions and setting GHG emissions reductions goals."
He continues, "We also believe a changing climate is likely to have significant ramifications on operations, strategic decisions, market development, investor relations and also on communications and policy. Indeed, experience from multinational companies indicates that management commitment is important to steering businesses through the new environmental landscape."
Need for independent verification services
Commenting on DNV's role in climate change issues, Mr. Stigson believes companies stand to benefit from working with independent organisations when verifying and reporting their emissions. "I believe such services will become even more important in the future because there is a growing understanding among companies that they have to be recognised as being environmentally friendly if they want to operate. There is indeed evidence that some businesses and, in particular government departments, are demanding that suppliers and partners adhere to responsible environmental practices.”
Mr. Stigson and colleagues within the WBCSD membership are presently in Bali, Indonesia to attend COP13. "It’s going to be an extremely critical meeting, where governments will formally begin efforts to negotiate a successor agreement to the Kyoto Protocol,” says Mr. Stigson.
The WBCSD is hosting the Bali Global Business Day on 10 December 2007. This event will bring together business leaders with representatives from governments in a series of high-level panel discussions to explore some of the business-led solutions to the challenge presented by climate change.
"Many of the challenges we face can only be overcome by cooperation. No one player can solve the major global issues such as climate change alone,” concludes Mr. Stigson.
