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What procurement people should know about December's Copenhagen climate talks01 Sep 2009When world leaders come together in Copenhagen this December to work out a successor to the Kyoto protocol, what will it mean for business? What should procurement professionals be thinking about?
There is little doubt that the Danish capital will soon have significance equal to Kyoto in economic and political climate change parlance. The United Nations Climate Change Conference (COP15) in Copenhagen this December represents the last opportunity for the international community to work out a successor to the Kyoto Protocol in time for it to take effect immediately after the 2012 commitment deadline. Any agreed international approach is likely to be based on countries’ commitments to further reduce carbon emissions, establishing a carbon market and equitably distributing responsibility for tackling climate change. Whatever the details of such an agreement, it will have far-reaching immediate and long-term implications for the way organisations do business all over the world. The Australian government has said it will reduce carbon pollution by an ambitious 25% compared to 2000 levels by 2020 if an acceptable international agreement comes out of Copenhagen. Regardless of such an agreement, Australia will target a 5 to 15% reduction. New Zealand too has declared a 2020 emissions reduction target of 10 to 15% on 1990 levels, conditional on the outcome of Copenhagen. Fulfilling these commitments would require an approximate reduction in carbon emissions of 40 to 50% per capita. What does this mean for the supply chain and procurement community? Many of the climate change challenges facing organisations have been emerging for a few years now. There is an ever-increasing body of literature, case studies and tools addressing these very challenges. The Copenhagen Conference provides a timely reminder for organisations to consider how well they are positioned to take them on and thrive. New markets emerging The establishment of efficient globally compatible carbon markets would represent a new supply chain element as large organisations will be required to purchase emission permits. Smaller organisations could be affected by this cost being passed on. As organisations accommodate economic imperatives of reducing their carbon emissions, markets for ‘green’ products and low-emissions technologies will continue to grow rapidly. Consumers will continue to demand increasingly environmentally friendly goods and services. Measuring and verifying carbon emission performance Accurate metrics could require gathering carbon emissions data along the length of supply chains. The extent to which developing countries should be responsible for emissions resulting from manufacturing for goods sold by organisations based in developed countries is one of many contentious issues on the table. Impact on bottom line There is data to suggest that the earlier countries and organisations tackle the challenges of reducing carbon emissions, the more money they will save in the long term. There are likely to be short-term costs in reducing emissions so long-view strategic thinking is necessary. ‘Cap and trade’ carbon markets will likely see prices increasing over time as countries’ total carbon caps are lowered, representing an increasing cost for organisations that cannot reduce the emissions permits they require.
Read more about COP15 and Australian current approaches to reducing carbon emissions in Australia and New Zealand: http://www.guardian.co.uk/environment/series/road-to-copenhagen http://www.climatechange.gov.au/emissionstrading/index.html http://www.climatechange.govt.nz/
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