The Business of Climate Change: Corporate Responses to Kyoto

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Frans van der Woerd, David L. Levy
Greenleaf Pub., Jan 1, 2005 - Business & Economics - 284 pages
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In recent years climate change has become a leading issue on both the business and political agenda. With the Kyoto Protocol to the UN Framework Convention on Climate Change now ratified, business is bracing itself for the reality of serious regulation on the reduction of greenhouse gas emissions.

The Business of Climate Change presents a state-of-the-art analysis of corporate responses to the climate change issue. The book describes and assesses a number of recent business approaches that will help to identify effective strategies and promote the dissemination of proactive corporate practices on climate change worldwide. By identifying the factors that cause companies to pursue low-carbon strategies and support the Kyoto process, the book will also be helpful to governments in formulating policy.

Business and industry have a crucial role to play in the implementation of the Kyoto Protocol. They are major emitters of greenhouse gases, and pressure is mounting for them to engage in a range of mitigation strategies, from emission inventorying and trading schemes to investments in low-carbon technologies. Behind the scenes a number of companies have started to develop strategies to curtail greenhouse gas emissions.

These strategies can be very diverse in nature. At a political level, companies try to influence policy implementation and, more specifically, to test ideas in anticipation of possible regulation on the climate change issue. At a more practical level, there are a burgeoning number of initiatives to conserve energy use in production, transportation and buildings, to develop renewable sources of energy, to measure carbon emissions and sequestration at a detailed level, and to develop various markets for trading carbon credits among companies and countries. Some technologies, such as hybrid cars and compact fluorescent lighting, are now market realities.

Common to all of these initiatives is that they operate in an environment of high complexity and uncertainty. The political implementation of the Kyoto Protocol remains uncertain and many details remain unspecified. Economic instruments such as emission trading are favored, but their mechanisms are still hotly debated and the future price of credits is unknown. New markets for low-emission products and technologies are beginning to appear, but there are currently few regulatory drivers to assist their development. The impact of potential regulation on business will vary tremendously between companies and sectors. The fossil fuel and energy sectors fear the economics of action, while sectors such as insurance and agriculture fear the economics of inaction. Combined with the remaining uncertainties about what form climate change may take, corporate responses to reduce risks have to differentiate between sectors and have to be flexible. For individual companies, these big uncertainties demand new thinking and contingency planning.

The Business of Climate Change is split into four sections: 'Introduction and overview' presents a broad perspective on business and climate policies. 'Policy instruments' outlines early experiences with different types of policy instruments to curb greenhouse gas emissions, ranging from emission trading to voluntary agreements. 'Sector analysis' assesses developments within sectors of industry that are likely to play an important role in future climate policies: oil, cement, chemical, automotive and insurance. Finally, 'Case studies' discusses bottom-up initiatives to combat climate change in five different organizations.

This book will be essential reading for policy-makers searching for instruments that have proven business support; academics and researchers analyzing the complexity of how business is responding to the challenge of climate change; and businesses wishing to learn about best practice in the sectors most likely to be seriously affected.

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an overview of corporate strategies
industry NGOs in the climate debates

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About the author (2005)

Katie Begg joined the Institute for Energy and Sustainable Development (IESD) at De Montfort University, UK, in May 2003 as a principal lecturer from the Centre for Environmental Strategy at University of Surrey. Her recent research programmes include 'Encouraging CDM Projects for Poverty Alleviation' for DFID, advice to the UK Department of Trade and Industry on 'Project Entry for the UKETS' and procedures for accounting for energy projects (PROBASE) under the EU. She is on the UNFCCC list of experts for JI and the CDM.

From 198084 Frans van der Woerd was Policy Advisor at the Dutch Ministry of Transport, and from 1985 onward Senior Researcher at the Institute for Environmental Studies, Vrije Universiteit Amsterdam. He has published widely on matters of environmental policy and was the editor of the Environmental Management Manual (Handboek integrale milieuzorg; Kluwer).

David Levy is currently Professor of Management at the University of Massachusetts, Boston. His research examines the intersection of business strategy, technology and politics in the international arena. In the last few years, he has studied the engagement of US and European multinationals with the international regime to control greenhouse gases. Dr Levy is currently researching the potential of the renewable energy business cluster in Massachusetts.

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