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Tougher government attitudes on climate change key to business action


G7 Summit in Brussels

Do government attitudes to climate change influence corporate attitudes and practice on climate change? Photograph: Anadolu Agency/Getty Images


Powered by article titled “Tougher government attitudes on climate change key to business action” was written by Rory Sullivan and Andy Gouldson, for on Tuesday 2nd December 2014 18.33 UTC


The UK has been seen by some as a climate change leader, partly because of its early adoption of a legally binding target to reduce its 1990 levels of emissions by 80% by 2050.

In contrast, the US has been seen as a laggard, in both domestic and international arenas. While the recent US-China climate change agreement (in which the US has committed to reducing its greenhouse gas emissions by 26-28% below its 2005 levels by 2025) may signal a change, it remains to be seen how successful the US will be at delivering on these commitments.

But do government attitudes to climate change influence corporate attitudes and practice on climate change?

We have recently completed a review of the climate change practices and processes of major retailers in the US and the UK. While certain of the sector’s activities and operations are regulated (i.e., vehicle efficiency standards) and others are influenced by wider climate change policy (i.e., through electricity prices), the sector’s overall emissions are not directly regulated, in either the US or the UK.

Not surprisingly for a sector where marginal changes in prices can have a large impact on sales or profitability, we found energy prices to be an important influence on actions taken. Improving energy efficiency in buildings and transport dates back to at least the mid-1990s, for retailers on both sides of the Atlantic. However, while broadly the same actions (i.e., improving the efficiency of electrical equipment) have been taken, there is a noticeable difference in the outcomes that have been achieved.

Driven by the higher energy prices that have prevailed in the UK over the past decade, UK retailers have reduced their energy and/or emissions intensity by an average of approximately 4% per annum over periods of 5 or 7 years. In contrast, US retailers reduced their energy and/or emissions intensity by an average of slightly less than 3% per annum over the same time period.

Important though prices are, the political and policy context is also hugely important. In the UK, the 2005 to 2007 period was a critical tipping point. This period saw the publication of the fourth report of the Intergovernmental Panel on Climate Change (IPCC), the publication of the UK government sponsored Stern Review on the Economics of Climate Change, the introduction of the EU Emissions Trading System, the introduction of national policies directed at reducing greenhouse gas emissions, and a significant increase in the level of UK and European business press attention on climate change.

UK companies commented that at this point, they saw high energy prices and strong policy action on climate change as “inevitable”. Most UK retailers have now set long-term overall targets for their own operations. These targets, if achieved, could see UK retailers reducing the total greenhouse gas emissions from their operations and transport by more than 1.5% per year over the period through to 2020.

UK retailers also have a range of initiatives directed at reducing greenhouse gas emissions from their supply chains. The major supermarkets have established programmes to help their suppliers improve their environmental performance, and see these efforts as having the potential to deliver significant reductions in greenhouse gas emissions.

While UK retailers saw an alignment of pressures, US retailers were faced with a less clear cut picture, with strong political opposition to policy action on climate change, and energy prices continuing to be much lower than in Europe. As a result, they saw little need to go beyond a relatively short-term, narrowly defined approach to climate change.

The majority of US retailers expect their absolute emissions to in fact grow over time, with business growth swamping efficiency gains. In addition, US retailers appear to have paid relatively little attention to their supply chains. Where they have engaged with their suppliers, the focus is largely on those aspects that directly affect the retailer (ie reducing product packaging), rather than on issues such as production processes or supplier energy management.

It is clear from our research that government attitudes on climate change directly and indirectly affect the manner in which companies respond to climate change. Higher energy prices and strong political signals make it more likely that companies will take a proactive approach on climate change.

Put another way, if we want to see climate change leadership at the corporate level, we first need to see climate change leadership at the national level.

Dr. Rory Sullivan is a senior research fellow for the ESRC Centre for Climate Change Economicsat the University of Leeds. Andy Gouldson is professor of Environmental Policy at the University of Bristol and deputy director of the ESRC Centre for Climate Change Economics and Policy. © Guardian News & Media Limited 2010

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