This is not a task the world can just leave to business

As climate change climbs ever higher on the political and social agenda and politicians promote green policies and as more consumers search out low-carbon products, business too is expected to play its part in tackling the problem of high carbon emissions and global warming.

There is no doubt that UK business is leading the way on climate change and low-carbon solutions. British companies like Cadbury Schweppes and HBOS have undertaken ambitious greenhouse gas reduction targets and increasing numbers of British business leaders are understanding that climate change, emissions reductions and energy efficiencies have to be factored into business strategy.

The Carbon Disclosure Project, a global collaboration of over 385 institutional investors with $57trn in assets under management is seeing more and more businesses across the globe understand that climate change has to play a central role in business planning and strategy. Like the internet, you cannot ignore it ­— you have to incorporate it into day-to-day business.

Every year, CDP sends out an annual request for climate change related disclosure to over 3,000 listed companies globally, on behalf of 385 investors. This information request asks them to disclose their greenhouse gas emissions and their assessment of risk and opportunity associated with climate change. It also requests that they report on their strategy regarding climate change.

Companies report through the CDP online system at www.cdproject.net, which now holds the largest database of corporate climate change data and every year in September the responses are made public and analyst reports are launched on findings.

This system has now been extended under the Supply Chain Leadership Collaboration to write to suppliers on behalf of purchasing organisations.

For many companies this is the first time they consider what their emissions actually are. Collecting this information can be extremely informative and acts as the first step on the path to carbon management. The process of measurement often highlights areas within a business where there is scope for energy savings and efficiencies which may have not been previously identified. Not only does this provide opportunities to cut emissions, but in turn, will often lead to significant cost savings.

The highest response rate and levels of engagement with the CDP information request comes from the UK FTSE 100 ­with 92 per cent of UK companies responding to CDP. Seventy per cent of these companies not only respond to shareholder questions on strategy relating to climate change along with assessments of risks and opportunities, they also report their emissions data. This is a key step to emissions reductions. It is only when you’ve measured your emissions that you are in a position to adapt your processes within your business to make emissions cuts.

But of course, climate change is a global issue: a tonne of carbon is a tonne of carbon, whether it is emitted in Beijing or Birmingham, so for the sceptics, there is always the question of whether there is any point in UK business acting to cut their emissions if at the same time emissions are rocketing in countries like China and India.

It is certainly true that we need to stabilise global emissions. Total emissions of greenhouse gases amount to approximately 6.9 gigatonnes annually. Estimates suggest that continuing with business as usual could lead to a doubling of that level in the next 50 years. We need to see cuts in the region of 50 percent if we are to avoid catastrophic temperature rises.

For much of the developed world that means cuts in emissions in the region of 60 per cent per capita. But it also means emissions reductions in developing countries. Despite huge economic growth in some BRIC countries and the growth in emissions that seems inevitably to go with that, there is evidence of some businesses in these countries leading the way on climate change related issues.

The UN has set up the Clean Development Mechanism, designed to export technologies which will reduce greenhouse gas emissions and increase energy efficiency and this is a system that is witnessing some success.

In India, even though there is no government regulation to incentivise energy efficiency or low carbon solutions, there is nonetheless a growing awareness among some Indian businesses that reducing emissions is a key strategy. Just like in the USA, Indian business is in some cases way ahead of government on this issue.

CDP was launched in India in 2007 and sent the CDP information request to 110 of India’s largest listed companies. Although the response rate was fairly low ­— 35 per cent as compared to 45 per cent for the Global 500 in CDP’s first year — over 35 million tonnes of GHG emissions were reported through CDP in India and some heavy emitters such as Tata Steel and Essar Oil gave very comprehensive responses, which showed a highly developed understanding of climate change related issues.

Some Indian companies are not only measuring emissions, but also taking steps to manage them. Infosys Technology, an IT and consulting business states: ‘We are working towards becoming carbon neutral. There are targets in place to reduce power consumption year on year. Recent efforts have been made to reduce air travel for business purposes as well.’

Others are spotting the opportunities for low carbon products. LG Electronics told CDP, ‘With increasing environment consciousness among consumers, we are developing energy efficient products and aggressively marketing it as one of the key facets of our design.’

Few countries have seen such high levels of engagement from business as Brazil. CDP started operating there in 2006, working in partnership with the Brazilian Association of Pension Funds, ABRAPP. In 2007, the response rate from Brazilian companies was 82 per cent, second only to UK FTSE 100 companies.

This success is due in part to good corporate governance — pension fund trustees will frequently sit on the board of large listed companies and will encourage companies to incorporate long-term issues such as climate change into their strategy. CDP also launched in China this year, where the information request was sent out to the 100 largest companies. The China Investment Corporation is a signatory investor to CDP, putting their name and weight behind the CDP information request.

The support of such a high profile investment institution, with very close links to the Chinese government, shows how climate change and emissions management is becoming more and more important in China. CDP is also working with companies like Wal-Mart, Tesco and Carrefour to collect greenhouse gas emissions data from Chinese suppliers, which is proving to be a valuable way of engaging Chinese companies.

So the global issue of climate change really is becoming a global issue for business. It is not just British or European business, subject to regulatory systems such as the EU ETS who are taking climate change seriously. Business in India, China and Brazil are all spotting the opportunities and the risks associated.

But business does not operate in a vacuum and strong political leadership is needed. In order to create a climate whereby business can continue to flourish but at the same time reduce emissions, government leadership is invaluable in creating the right regulatory framework. Of course, as we see in India and the USA, business can go it alone, but the outcomes are far more effective when government is leading the way.

Paul Dickinson co-founded the Carbon Disclosure Project in 2000 with the ambitious aim of engaging the investment and corporate communities to work together to tackle the issues of climate change.