Here's the good news: we can be green and still grow

Running a big company is not as complicated as you might think. There are only a few things you have to do, but on the list is certainly the ability to identify significant business risks and to decide how they will be mitigated. No doubt the scientists will continue to argue for years to come about the scale and intensity of climate change, and the part in this process that human activity is playing.

But one thing is certain — climate change presents a significant and immediate risk, not just to business but to the way we conduct our lives, and to the kind of world that we will leave to our children and our grandchildren.

It was recognition of this risk, and a realisation that business must play a major part in its mitigation that brought together the chairmen and chief executives of 18 of Britain’s biggest companies in the CBI Task Force that I was asked to chair.

The report we produced was the first of its kind anywhere in the world. It describes a roadmap of practical steps that can be taken by business, government and consumers — in partnership — to get the UK on course to meet the climate change targets set by the government for 2050.

Backed up by forensic analysis by McKinsey’s, it takes business into territory where it is usually afraid to tread. Calling for additional regulation, including  mandatory emissions reporting, and for higher tax as part of a fiscally neutral set of incentives to encourage the right behaviour.

Nick Stern is right to describe climate change as history’s greatest market failure. There is no invisible hand that is going to solve the problem. As the CBI report concludes we will need to work in partnership to build a sustainable future.

But here’s the good news: we can be green and still grow. So long as we act together and soon, there is no need to abandon economic growth or return to the Middle Ages.

The CBI Task Force was deliberately drawn from all areas of business. From the oil majors, through financial services, retailers and power generators, to motor companies, airlines, IT and communication companies.

When we first met it was hard to believe that we would ever reach a consensus on the way ahead, and yet that’s exactly what has happened. With the Task Force making specific commitments which include taking the lead in cutting household emissions by 50 per cent, and engaging our workforces (collectively a million people) in creating a sustainable future.

Let me talk for a moment about the business I know best to give you some idea of the way in which companies can be part of the solution to the challenges we face. At BT we are on a journey towards reducing our company’s carbon footprint by 80 per cent by 2016 compared to our emissions in 1996. That means halving our current energy consumption in the UK.  However, we are a global company and our global business, though relatively new, is growing. BT’s commitment is to ensure that we manage this part of the business as effectively as we have our UK operations.  

As commercial enterprises we need to make it easier for our customers and employees to make low-carbon choices that means making it affordable and obvious that what they are buying is the most energy efficient in its class.

We must actively promote smarter ways of working and set examples of how people can work differently — moving from a culture of ‘I have to be based in an office’ to ‘my office can be where I am’, for example.  

BT has had great success in implementing this philosophy, with more than 15,000 of our employees now full-time home workers and a further 63,000 who work flexibly.

We have seen a 21 per cent increase in productivity and 63 per cent less time taken in sick leave.  We save carbon emissions by reducing the journeys BT employees would have made by travelling to the office and we can reduce our real estate — again creating real carbon savings. These employees also have a better work/life balance.  It’s not rocket science, and businesses and governments can do this today — we just need to shift the mindset.

Let me take another example. We have a fast growing business in teleconferencing and Net meeting that encourages our employees and customers to not travel but use technology to meet instead.  Last year we saved £141m through reduced travelling and prevented emissions of 97,000 tonnes of CO2.   It’s a good example of how companies can collaborate together to reduce carbon emissions and it’s a real area for potential growth.

The demand for teleconferencing illustrates another important aspect of the world we are moving towards. The business opportunities for those companies who are able to innovate compelling solutions will be truly enormous. The global market for green products/solutions is estimated at $1trn in the first five years in the Task Force report and nearly £3bn in the UK to 2010.

Adopting a new economy will require collaboration. That is why I stress that we want to work closely with the government. In fact, I might even go further and say we have to — we demand to — work collaboratively and transparently with government.

Creating the right taxes and regulations is essential if we are to create a new, low-carbon, economy. Rewarding businesses and consumers for adopting the right behaviours will help to accelerate the changes required as well as gain the support of business and individuals.

We already have many of the technologies and solutions but some are not commercially viable. As we all recognise that the pace and scale of implementation must now be accelerated we must work to ensure these solutions become commercially viable sooner rather than later.

The UK needs to take a lead in the development of low-carbon technologies and services in power, buildings, transport and industry.  Government has a part to play in making this happen, for example through ensuring that planning controls do not hinder renewable energy projects.

The government must follow up with a market price for carbon, revenue-neutral tax reform to reward greener behaviour, bigger and more focused R&D programmes and financial support for new technologies and solutions to make them commercially viable. Business has to do its bit here but it does need government reform and support to really make a difference in the short to medium term.

The report recognises the good work that the UK government has done, especially in setting a framework for change.  And we welcomed the proposals in the Climate Change Bill as important elements of a framework to promote significant cuts in emissions. But now the government really needs to focus on the delivery of that as a matter of urgency.

So business and government both have their parts to play. But there is a third and critical constituency that will ultimately decide the scale and pace of change. The role of the consumer will be absolutely vital in meeting the challenges that lie ahead. It is the consumer who will force companies to produce sustainable products by the purchasing decisions they make and who will determine how high governments place this issue on their long list of priorities by the way they cast their votes.

The one message I want to leave people with is that climate change demands a co-ordinated response from government, business and consumers. As the CBI and other reports show, as long as our society acts together now to adapt and cut emissions, we will not have to face painful choices later on between economic development on one hand and climate change on the other.

I hope that companies of all types and sizes will follow the lead that the CBI Task Force has set. Producing a report is not of course the end of the matter. Now we have to see it through. A CBI Climate Change Board has been assembled to hold Task Force members to their word, to keep the pressure up on government, and to make sure that consumers have the information and the products that can help them play their part.

Being ‘greener’ is in everyone’s interest. The UK has a significant role to play internationally and business has both the responsibility and the ambition to be part of the solution.

It is, therefore, up to us to push government for the right incentives and for consumers to push us for the right products and services — and to make them affordable for every level of society.  

Ben Verwaayen has been CEO of BT since 2002. In November 2006 he agreed to Chair a CBI Climate Change Task Force, a group of 18 CEOs and Chairman of some of Britain’s biggest companies including Barclays, Rolls Royce, Tesco and BA. The Task Force produced the world’s first report from Big Business on the practical steps needed to meet the climate change targets for 2050.