The ongoing UN Climate Change Conference is being closely monitored not just by environmental groups, governments and the media, but by those in boardrooms around the world.
Climate change has been focusing the mind of business as never before, as highlighted at the recent Business Forum at the Bank. Now the past week has seen the unusual sight of big name multinationals actively calling for more regulation. The Bali communiqué signed by 150 business heads, including from the US and China, calls for a legally binding UN framework to tackle climate change.
A new survey by law firm Clifford Chance finds that 4 out of 5 firms worldwide want more regulation. As reported in the Washington Post, James Smith, chairman of Shell UK, spoke for the UK and EU Corporate Leaders Group on Climate Change in arguing that enforceable standards will give business the confidence to make long-term investments in lower-carbon technologies. Big business believes it cannot afford to ignore climate change. Michael Porter and Forest Reinhardt, writing in a special report on the topic for Harvard Business Review agree that climate impacts on companies' operations are
now so tangible and certain that the issue is best addressed with the tools of the strategist, not the philanthropist.
They advocate an inside out analysis of the firm's impact on the climate and outside in analysis of global warming impact on the business environment. Firms will have to mitigate risks all the way down the supply chain, but might also spy opportunities to establish competitive advantages through new products (hybrid cars), exploring new inputs such as jatropha, or simply more effective management. No wonder that firms hope delegates in Bali focus on the matter at hand and don’t sneak off to the beach.