Stern: downturn won't slow green efforts

How long will companies continue to worry about the environment if the financial downturn affecting the US bites harder and really impacts the UK? That was one of the questions posed to Lord Nicholas Stern, of Stern Review fame, at a business conference this week held at Wembley Stadium in London. Stern's response was in line with the remit given to him under the terms of the Stern Review, published in 2006, which set out to look at exactly what impact climate change would have on the UK economy.

Rather than agreeing that companies would indeed cast their high-minded environmental ideals to the wind if times get harder, Stern claimed that being green is actually the only economically sound policy in the long run.

"I think that difficult times should not derail this. There will be some ups and downs over the next 50 years but we have to push through that," he said.

Corporate energy efficiency

Stern's 2050 forecast refers to a timeline he presented earlier in his speech to around 1,000 business leaders at the event organised by US software-maker SAS. Stern, Lord and London School of Economics professor, claims that rich countries will need to commit to around an 80 per cent cut in carbon emissions by 2050 to avoid the five degree rise in temperatures that scientists have forecast for the end of the century. If we continue to produce carbon at the present rates of growth, that is.

According to Stern, sensible companies look to do two things when economies being to shrink: look at hard costs and protect their assets. Reputation is a big asset for many firms and abandoning environmental commitments can have a big impact on how a company is perceived -- not something that any firm wants to attract when facing financial pressures.

For its part, business intelligence vendor SAS is hoping that it will be able to sell its analytics tools to companies that want clearer metrics on how energy efficient their businesses actually are. So it's firmly on-side with Stern's message that green doesn't have to mean compromising when it comes to making money.

Stern's speech at the software conference came on the same day that he published a set of proposals for a global deal on climate change at the London School of Economics and Political Science.

The report, Key Elements of a Global Deal, includes input from HSBC, IdeaCarbon, Cambridge University, Lehman Brothers and consultants McKinsey. It suggests a set of proposals to "advance the climate change debate" ahead of the 15th Conference of the Parties of the United Nations Framework Convention on Climate Change in Copenhagen in December 2009.

According to a statement issued by LSE, the report examines the implications of the commitment to cut global greenhouse gas emissions in half by 2050, taken at the G8 summit in Heiligendamm in June 2007.

Tackling climate change is the only sensible course open for businesses, Stern claimed in his conference speech. Doing nothing would have far more impact on the global economy than spending to tackle climate change. "It is not doing anything about climate change that will affect growth. I don't think that this has a negative story; it can be a very positive strategy," he said.

Making polluters pay

And rather than rapacious corporations being at fault, the beast of commerce and financial markets could actually hold the key to tackling climate change, says Stern.

"The right reaction is not to abandon markets but fix the problems," he said. The problem is that markets have not been working properly up until now -- the underlying economics of business have directly contributed to climate change and global warming by not making polluters pay. "People do not pay for the damage that they do," said Stern.

The other contributing factor is that the last ten to 15 years has been a period of unparalleled growth. During this prosperous period, companies got sloppy when it came to managing risk, which can be seen in the recent sub-prime mortgage collapse -- basically built on financial institutions ignoring risk. The same goes for climate change. Similar to the selling of mortgages to people who couldn't afford them, people and businesses have been generating carbon with no thought to how it might impact them in the long term.

"During periods of growth people get careless. What is happening now is that people are taking risk much more seriously," said Stern.

Having discharged his duties to the government and returned to his role as a professor at the London School of Economics, Stern also couldn't help but use the forum to take a swipe at some of the figures that he couldn't really criticise when acting on behalf of the government.

Top of the list was ex-Australian Prime Minister John Howard, who Stern described as "appalling" during a panel debate after his keynote address. "It's really nice to be outside of politics so you can refer to people like John Howard as appalling," he said. Stern's views on Howard no doubt stem from the former Australian PM's poor record on the environment -- Australia joined the US in not signing Kyoto last year.

Related Links

• SmartPlanet