There is no 'silver bullet' - make no mistake, this is a big battle we have to win both at home and abroad

In May 2005 the Prince of Wales’s Corporate Leaders Group on Climate Change (CLGCC) wrote to the prime minister about the need to take urgent action on climate change. In particular we sought to address the ‘Catch 22’ situation in which governments refrain from introducing new policies to reduce emissions because they fear business resistance, while companies find it difficult to take their investments in solutions for tackling climate change to scale because of the lack of long-term climate policies.

Climate change has risen up the agenda of both the political and business world. What has been missing to date has been innovative action. Over the last year the group has continued to press for a tougher stance on climate change.

The Corporate Leaders Group, which includes Standard Chartered and leaders from Shell, Tesco, Vodafone, Unilever, Reckitt Benckiser, F&C, John Lewis, BAA, Anglian Water, B&Q, ABN Amro, Sun Microsystems and Johnson Matthey, needs the UK government to continue to show international leadership by setting clear and long-term national policies as well as working together with international colleagues to develop an international response.

At a dinner hosted by the Prince of Wales in May we shared our passion for taking bold action on climate change and discussed in some detail how we could deliver for the good of the UK economy. Having such a cross section of companies sharing ideas and strategies provided a unique opportunity to really get to grips with the global issue of climate change as it relates to business.

The group has identified a number of issues where we believe a partnership between business and the UK government has the potential to deliver real progress in the shift towards a low-carbon economy. These are wide ranging because we firmly believe in the need to pursue a number of different technology and policy paths.

This diversity is essential if we are to deliver the goal of reducing UK CO2 emissions by 60% by 2050. They range from strengthening the markets for low-carbon technologies to stimulating consumer action on climate change.

There is no one ‘silver bullet’ that can halt climate change in its track — action across all of these fronts is key.

The UK is a small player on the global stage in terms of global greenhouse gas emissions and dwarfed by those of say the United States or China. Despite this, the group believes that the UK can and should play a leading role in the development of a long-term international framework for action on climate change. We support the objective of moving quickly to progress talks about international action beyond the first Kyoto Commitment Period in 2012. The goal of such action should be to stabilise greenhouse gas emissions and global temperature levels. Establishing this goal will be vital for reassuring the global business community that there is international political consensus about the need for ambitious action to tackle climate change.

Maintaining forward momentum at the international level will also require the UK, and its partners in the EU, to show leadership by taking ambitious action now to stimulate investment in low-carbon technology.

Only through leading by example will we be able to convince developing countries, many of Standard Chartered’s core geographies, that the UK and its EU partners are serious about their commitment to tackling climate change. We need to engage the developing world in efforts to create a global low-carbon economy and show that action can be taken on climate change without damaging economies.

Of the four key global players in the politics and economics of climate change — the US, Europe, China and India — it seems likely that the EU will need to play the leadership role for the foreseeable future. There is an important role for the UK in delivering this leadership.

Bold leadership on domestic climate change policy also has the potential to deliver significant economic benefits for us in the UK — through improvements in economic performance, increased energy efficiency, improved growth as a result of technological innovation, greater energy security and access to significant global export markets for low carbon technologies.

There are a range of technologies and services that could give the UK a leading position in these new markets. We need to look to carbon financing, carbon capture and storage, hydrogen storage, tidal and wave electricity generation, and a range of transport technologies.

Experience curves of other technologies suggest that if widely deployed the costs of such technologies are likely to be far lower than is currently projected.

The UK will only access these potential economic benefits if domestic policies provide strong incentives for technological development. The EU Emissions Trading Scheme (ETS) is critically important for providing a central signal to business about the rising cost of carbon; its main impact in the short term is likely to be to incentivise the uptake of the cheaper options for lower carbon intensive energy production.

In addition to driving a long-term carbon pricing regime by strengthening the EU ETS, we also need to introduce policies capable of triggering step-changes in technology development. This approach will both enable the UK to deliver on the government’s ambition to be world-leaders in tackling climate change and give UK plc the chance to take a major share in global markets. Well-designed policies have a role to play here in creating secure forward markets for new technologies which can then be deployed by a buoyant carbon market.

Each of the member companies of the Corporate Leaders Group are trying to do their part in tackling climate change, whether it is by installing renewable energy technology into stores, branches or offices or investing heavily in low carbon technologies. However, much more needs to be done. It is the collective action of businesses in this group, the business community in general, and the UK as a whole, that will allow us to take a global leadership position in tackling climate change.

Standard Chartered has the unique experience of being a UK company with operations that are predominantly based in Asia, the Middle East and Africa. We bring another perspective on climate change to the table. Some of our markets are likely to be the most seriously affected and yet are least able to respond to changing weather patterns.

Two of our biggest growth markets — China and India — are seldom out of conversations about climate change. That is why I have started a full review of environmental initiatives within Standard Chartered with the aim of answering the question of where our effort should be best placed to result in the greatest gain for the environment, customers, staff and our shareholders.

Supporting renewable energy, improving environment outcomes of lending decisions and lowering our own carbon footprint are things that we have been doing for some time but I believe we can do far more. There are real commercial opportunities for us in doing so if we have the right enabling environment.

On June 6 2006 the Corporate Leaders Group met with the Prime Minister and the Secretary of State for the Environment to discuss opportunities for partnership and cooperation. The meeting was extremely positive, and resulted in an outline programme of work for the CLGCC which will focus both on identifying practical policy measures that can strengthen UK action on climate change — with the goal of making the UK a ‘global showcase’ for climate action — and on providing business support for progress at the EU and international levels.

We look forward to working with the government and with the other political parties and to making the UK a real leader in the global fight to tackle climate change.

As the Prince of Wales said in response to our latest letter ‘the real question now is whether all of us can work together to deliver what is required quickly enough’.

Mervyn Davies is Group Chief Executive of Standard Chartered Bank. The Prince of Wales’s Corporate Leaders Group on Climate Change is facilitated by the University of Cambridge Programme for Industry. More information about the work of the group can be found at www.cpi.cam.ac.uk/bep/clgcc