How green do we want us to be, ask business leaders

Tricia Holly Davis

When it comes to funding the transition to a low-carbon world, global leaders have proved big on talk but short on detail.
This has left businesses uneasy in the run-up to the G20 summit in Pittsburgh later this month as they want to know how much they should invest in climate change — as well as to be sure that those investments won’t be undermined.
Britain, in particular, is hoping for a “green new deal” that will create millions of jobs and position it as a big exporter of environmental goods and services.
Yet, according to research by HSBC, it has earmarked only 15% of its economic stimulus package for environmentalrelated development. China, by comparison, has allocated about a third of its recovery budget towards bolstering its green industry.
Ministers have failed to explain how climate-change targets announced this year will be met. The targets include raising the proportion of renewable energy to 15% by 2020 and cutting emissions 34% over this period and 80% by 2050.
“The government needs to get much more specific on how it will grow renewable-energy supplies,” said Andrew Torrance at Allianz, the insurer.
Torrance said Climate Wise, a lobby group for his industry that he chairs, wanted the government to agree to cut emissions by 40% by 2020.
Businesses, and insurers in particular, want the government to start preparing for the physical impact of climate change, which may make parts of Britain prone to natural disasters. The two big floods in 2007 wiped £70m off Allianz’s bottom line, Torrance said.
“The 2050 target is too far away for businesses to think about,” he said. “Chief executives want commitments that can be met sooner rather than later and a firm plan for how to meet those commitments.”
Businesses are wary because Britain has a poor track record on meeting environmental objectives. When Labour came to power in 1997 it pledged to cut carbon emissions by 20% and boost the supply of renewable energy to 8% by 2010. It will miss both targets.
David Kennedy, head of the Committee on Climate Change, which oversees environmental progress, said most of Britain’s reductions were the result of the dash to gas from coal and of lower levels of methane, which declined after laws limited the amount of waste going into landfill.
“Over the past five years our carbon emissions have remained broadly flat, so the government has a lot of work to do if we are to meet longer-term targets,” said Kennedy.
Joan MacNaughton of Alstom, the transport technology firm, said businesses needed a broadly predictable carbon price to encourage investment in low-carbon technologies.
Policies protecting overseas investments from the impact of climate change are crucial, said Andy Wales of SAB Miller, the brewer. Water scarcity in South Africa could hurt his profits, as operations there account for 18% of the group’s earnings.
In June Gordon Brown proposed giving $100 billion (£60 billion) a year by 2020 to help developing countries cope with climate change — a drop in the ocean compared with how much needs to be spent. The International Energy Agency estimated that $2.4 trillion must be invested by 2030 to develop low-carbon or zero-carbon power generation alone.
“Ultimately the private sector will have to foot much of the bill, so businesses need ambitious carbon policies that stimulate investment,” said Richard Gledhill, a partner at Price Waterhouse Coopers, the accountant. “That’s why this is such a key month.”