28 Oct 2013 04:29pm

The IPCC, climate change and business

The latest IPCC report revealed widespread certainty that man is largely to blame for climate change, but why does this matter to businesses? Jonathan Shopley, MD of The CarbonNeutral Company, discusses.

Every five to seven years, the Intergovernmental Panel on Climate Change (IPCC) releases a comprehensive scientific assessment of the Earth’s climate. The first section of the IPCC’s fifth report was released at the end of September this year, and covered the scientific basis of how and why the climate is changing, as well as predicting what we can expect in the future.

But what do the most recent findings mean for businesses? In addition to spurring policy and regulation debate, the report’s findings beg the question of whether businesses are doing enough, given our understanding of the risks that climate change poses over the short- and long-term

The results are in…

Drawing on the work of 831 scientists from 85 countries across the globe, hundreds of contributing authors and thousands of expert reviewers, the latest IPCC report revealed a confidence level of 95% certainty that human activities, such as burning fossil fuels, have been the main cause of climate change since the 1950s. 95% certainty should not surprise anyone, and the only question now is how to respond and ensure we don’t emit another half a trillion tonnes of greenhouse gases in the next few decades.

Soaring energy prices, and new operational, financial and regulatory risks are driving businesses to understand the true costs of their environmental impact and demonstrate real action to reduce it


Industry and businesses clearly have to take responsibility, and the corporate world should be standing up and taking notice.

Implications for businesses

In short, the report has upgraded the probability and severity of the risks to society and the global economy from climate change. While policymakers are weighing up the response, businesses need to continue acting to mitigate their environmental impact. Assessing and managing risk and opportunity are at the centre of business success, and the report should therefore be taken by businesses as proof that climate change is of ever greater strategic importance.

Impacts on customer behaviour, supply chain efficiency, and operational performance will also accelerate investment in activities that reduce climate risks, capture low-carbon business opportunities, build business resilience and translate early action into real business benefits. In short, effective carbon management will bolster your business’ bottom line while also doing good for the climate.

Some argue that any uncertainty merits pausing before making decisive business changes. In my opinion, this approaches the problem in completely the wrong way, suggesting that action to reduce environmental impact should only be taken when it is required as a matter of regulatory compliance. This ignores the fact that reducing environmental impact and carbon emissions plays an important role in reducing costs and unlocking new revenue streams, improving employee and stakeholder engagement. As the marketplace becomes more competitive, a comprehensive carbon management programme provides companies with a real and immediate opportunity to differentiate, manage risks and meet stakeholder demand.

Soaring energy prices, and new operational, financial and regulatory risks are driving businesses to understand the true costs of their environmental impact and demonstrate real action to reduce it, and this is compounded by the stark scientific reality presented with the IPCC’s report. Businesses which are seen to take action now will be better prepared as stakeholders increasingly view environmental sustainability as a ‘license to operate’.

The report does acknowledge that there is no single consensus model for predicting the precise extent of climate change. But inaction won’t help to manage risk, and risk is something businesses cannot afford to ignore. Organisations must be proactive and take precautions rather than regarding the limitations of science as a green-light to ignore the issues. There has never been a more important time to take emissions reductions seriously and many businesses, from Microsoft to Marks & Spencer, are leading the way already setting best practice.

Britain has been setting the pace in this arena for years, but hopefully this is just the tip of the iceberg. 


Jonathan Shopley is MD of The CarbonNeutral Company


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