A decade ago, the Science Based Targets initiative (SBTi) was launched with the goal of mobilising the private sector for climate action.

Today, it stands as the largest and most influential validator of corporate climate targets, having confirmed the 2030 goals of around 5,000 companies.

Yet new analysis reveals a leniency within the initiative. According to the 2024 Corporate Climate Responsibility Monitor (CCRM), the emissions reduction commitments of 51 major global corporates are falling short of what’s needed at the global level.

Surprisingly, most of these companies received SBTi validation for their targets to be aligned with the 1.5ºC warming limit backed by governments in the Paris climate agreement. 

What explains this discrepancy?  

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Currently, the SBTi’s 2030 target validations often overlook substantial shares of companies’ full value chain emissions by excluding upstream and downstream value chain emissions, known as “scope 3”. Scope 3 emissions account for the majority of corporate greenhouse gas footprints, sometimes exceeding 95%.  

The SBTi requires companies to set a near-term target for scope 3 emissions, but only when those emissions account for more than 40% of their greenhouse gas footprint. However, these targets do not have to cover all scope 3 emissions and only need to be aligned with global warming of 2ºC or well below 2ºC, not 1.5ºC.  

While the SBTi checks whether companies have set a scope 3 target, the initiative does not provide a temperature classification for these scope 3 targets – only for companies’ scope 1 and 2 targets, which apply to direct operations and their energy use.

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This important nuance is often missed by the public, as many companies nonetheless prominently advertise their scope 3 climate targets as science-based.  

Take Fast Retailing, owner of clothing chain Uniqlo, for example. The company pledges to reduce its operational emissions (scope 1 and 2) by 90% by 2030, which represent just 5% of its total emissions.

It also commits to reduce its emissions from procured goods and materials (scope 3) by 20% by the end of this decade. However, upstream emissions in the fashion sector need to be reduced by around 40% to be aligned with global warming of 1.5ºC.

Whereas the SBTi validated the target for operational emissions as “1.5ºC temperature aligned”, the initiative did not provide a temperature classification for the scope 3 target.

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Yet Fast Retailing also describes this target as “science-based”. This pattern is not unique to Fast Retailing but common across companies validated by the SBTi. 

As a voluntary organisation primarily funded by third parties, the SBTi relies on the voluntary participation of companies. Its methodologies need to accommodate the perspectives of various stakeholders.

This may explain why the SBTi’s methodologies for 2030 targets are not necessarily always aligned with the scientific consensus on limiting global warming to 1.5ºC.

However, addressing the lack of stringency in scope 3 targets is key to ensuring that the SBTi can effectively drive corporate climate ambition. 

Offsetting controversy 

Despite the large degree of leniency that already exists in scope 3 standards today, there is a significant risk that the rules will be loosened even further.

Just this week, the SBTi Board of Trustees issued a unilateral and possibly illegitimate decision to revise scope 3 standards to allow for carbon offsetting.

This decision is not based on scientific insights but comes after a lot of pressure on the SBTi from supporters of carbon markets. SBTi staff have already reacted strongly to voice their discontent with the decision and the process. 

Introducing offsetting in the SBTi scope 3 standards could effectively nullify already insufficient targets, reversing years of incremental progress that SBTi and its member companies have fought so hard to achieve. 

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Allowing companies to offset their emissions could also deprive their suppliers – who are often located in the Global South – of much needed financial and technical support for their own emissions reduction efforts. 

Climate target-setting has become standard practice in the corporate world – progress the SBTi helped foster over the past decade. But the recent decision by the SBTi Board of Trustees on offsetting could bring any further advances to a halt.

Reversing this decision and tightening the rules for scope 3 targets would be the next step to propel corporate climate ambition forward. 

This article argues that the SBTI’s rules are too lax. We have also published a comment piece arguing they are too stringent.

The post SBTi needs tighter rules on companies’ indirect emissions appeared first on Climate Home News.

London’s Square Mile (Flickr/ Michael Garnett)

By Alex Pashley

Almost half of the world’s 100 largest industrial companies are obstructing climate change legislation, non-profit Influence Map revealed on Wednesday.

Forty-five counter environmental laws, chiefly through trade associations, according to a unique methodology developed with the US Union of Concerned Scientists.

In the rankings of Fortune 2000 largest 100 firms, which excluded state-owned enterprises and financial companies, energy-guzzling firms perform poorly.

Oil major Royal Dutch Shell, pharmaceutical firm Pfizer and Japanese carmaker Toyota scored Ds.

Koch Industries and utility firm Duke Energy came bottom, with F grades. Microsoft scraped a pass with a C-, with Unilever and Google topping the class on less-than-exceptional Bs.

Some companies volunteer data on their carbon footprint to the Carbon Disclosure Project.

But that alone doesn’t define their environmental impact. Firms are increasingly using trade groups to lobby against regulations, said Gretchen Goldman of the Union of Concerned Scientists.

“Companies get the delay in policy they want, while preventing nations from acting to fight climate change,” she said.

Report: Investors urge businesses to quit climate-unfriendly EU lobby groups

For example, consumer product company Procter & Gamble is a member of Business Europe, despite its stated support for action on climate change.

Business Europe and other lobby groups like the International Association of Oil and Gas Producers have sought to water down EU legislation on carbon emissions, according to the Policy Studies Institute.

Unilever left last year, while BP and Shell are parting ways with the Washington-based American Legislative Exchange Council.

95 out of 100 corporations were members of trade associations, InfluenceMap said.

“There is a lack of detailed analysis available in this area and sadly great companies sometimes do bad things by lobbying against government action to avoid dangerous climate change,” said Paul Dickinson, executive chairman of the Carbon Disclosure Project.

Dylan Tanner, executive director of Influence Map, said it gave a fuller picture of companies’ green credentials and was helpful for investors and consumers.

The UK-based NGO simply aggregates the data and advocates no position, he told RTCC. Among its rating, it gives a level of “engagement intensity”, which highlights if companies have backed governments acting on climate.

Grading companies would increase scrutiny and could spur them to compete to improve their score, boosting climate action.

“Below the top 100 or 200, most companies tend to ride on the coattails of bigger companies or trade associations to do their influencing,” he added.

The rankings are also a proxy for a company’s readiness for a transition to a low carbon energy system.

Emissions will have to fall to net zero in the second half of the century, according to scientists, signalling the transition of a fossil fuel-dependent energy system to one based on clean energy.

“We have started a process, not just a report that will sit on a shelf and age,” Tanner said.

The post Meet the climate hypocrites of big business appeared first on Climate Home News.

Apple discovered it was under-reporting emissions from manufacturing aluminium used in its products
(Pic: Flickr/Yutaka Tsutano)

By Megan Darby

Apple reduced its carbon footprint by 3% between 2012 and 2013 to 33.8 million tonnes, according to its latest environmental responsibility report.

The consumer electronics giant has won plaudits for its investments in renewable energy at corporate offices, retail stores and data centres.

CEO Tim Cook told investors in April climate change is a “real problem” as he outlined the company’s commitment to environmental improvements.

The modest decrease in Apple’s overall carbon footprint shows those efforts are dwarfed by the impact of its manufacturing, which accounts for nearly three quarters of emissions.

The report says: “We’re striving to reduce that footprint, and we’re making great progress. But there’s still a lot of work to be done.”

Reporting errors

Apple also admitted emissions from manufacturing aluminium to use in its products were nearly four times higher than previously thought. It claimed the earlier assessments were made using “industry-standard methods” but an “extensive survey” of Apple’s suppliers revealed the figures to be inaccurate.

As a result, the reported emissions for 2013 were 9% higher than in 2012. When the 2012 figures were recalculated to correct for under-reporting of aluminium manufacturing emissions, it showed a 3% drop.

Using renewable energy sources, driving energy efficiency, using greener materials and conserving precious resources are identified as Apple’s environmental priorities.

The report cites carbon savings from reduced power consumption of its products, lighter packaging for transport, and greener corporate offices, retail stores and data centres.

It does not provide evidence of any such carbon cutting activity on the energy-intensive manufacturing side, however, much of which takes place in China.

The post Apple cuts carbon footprint by 3% appeared first on Climate Home News.

Source: Flickr/Cherryl Mari Nadela

By Yvo de Boer

Our world is increasingly crowded, depleted, resource-hungry yet resource-constrained, and starting to experience the consequences of climate change.

Businesses are at the sharp end of these challenges and face considerable commercial risks as a result. At the same time, we rely on businesses to come up with the solutions to our social and environmental problems, even when they may not see the potential to profit greatly from doing so.

Many people, including myself, believe that the current way we measure the value of companies is not fit for purpose in this changing world. We place too much emphasis on short-term financial performance. We pay too little attention to whether or not a company is able to manage risks in the long-term and unlock the opportunities. We ignore the value a company creates or destroys for society as well as its shareholders.

Thankfully company value is not a static concept but a dynamic one. Definitions of value have changed throughout history according to the political, business and societal conditions of the times. For example, the value of the Medici banking empire in fourteenth century Italy was quite different to the value of a modern day bank, and hinged more on its influence in Rome and its ability to navigate politics than it did on the financial returns on investment.

Today, companies are valued in a narrow monetary terms. Short term financial performance, and an obsession with quarterly profits – little else matters.  This blinkered view, popularly known as “quarterly capitalism” arguably fails to incentivise business leaders to build long-term value or to consider the impact of their companies on people and the planet.

However, companies must grasp the substantial opportunities of the green economy and manage risk in what is a rapidly changing world, in order to survive in the long term. Winning businesses will be those who innovate, invest wisely and create long-term value.

Megaforces

The need for a new vision of value is being driven by 10 megaforces that many predict will hit the global economy, society and the bottom line of business much harder than the recent economic crisis.

These 10 megaforces are identified by KPMG International, in its report Expect the Unexpected:

• Climate change, with dire physical impacts and economic losses predicted
• Soaring global population – 8.4 billion in 2030
• Water shortfall of 40% by 2030
• Not enough food
• Increasing energy insecurity and price volatility
• Strain on material resources
• Collapsing ecosystems
• Disappearing forests
• Ever-expanding cities
• Exploding global middle class

These are not future risks; they are impacting now. Some companies are becoming focused on the potential this offers rather than the risks. There are real opportunities to cut costs and increase efficiency; for new partnerships with governments, NGOs, other businesses and to innovate new products and services.

New business model – True Value

The opportunities for business in the green economy are substantial. As always, it will be the companies who move early and strategically who are likely to be the winners in this race.

KPMG member firms have been helping companies place the green economy at the heart of their corporate strategy, not only by strengthening management structures, but by developing the concept of True Value.

True Value takes environmental and social performance into account, as well as financial performance. What happens when the financial cost of the damage companies inflict on the environment is calculated and therefore the impact on the wider economy? What happens when that is subtracted that from their profits?

On a global level, profits would be 87% lower in the electricity sector, 64% lower in mining, and food producers would see profits wiped out more than twice over.  When we factor in social impacts as well, profits fall lower still. But that is only half the story.

Business also creates environmental and social benefits. Benefits such as economic gains from green innovation. Smarter, more efficient, green cities. Healthier, more productive workers. Not to mention the benefits of safeguarding a license to operate by engaging with local communities, respecting the environment and building the trust of governments. What if that value was factored into the valuation of businesses? Then True Value is achieved.

The result is a game changer. Clear incentives for companies to minimize their negative impacts on people and the planet, and maximize their positive impacts. And importantly – True Value can help business adapt and become fit for purpose in the modern business race, where growth opportunities are maximised, and new risks are managed intelligently.

Is this a fantasy? I don’t think so. Business is already moving in this direction as they are being forced to use resources more wisely. There are more commercial opportunities in products and services that address environmental and social challenges. Green regulation is also growing in the form of carbon trading, mandatory sustainability reporting/integrated reporting, human rights principles and green taxes.

Added to this is the increasing scrutiny by stakeholders. People hold companies to account for environmental and social transgressions, and corporate reputations are becoming ever more vulnerable. There is a growing acceptance that current ideas of purely financial value are becoming outdated.

Momentum is building, there is a beginning of an understanding of what True Value should be and why it is important in the 21st century.  We all know that “necessity is the mother of invention”. It is a necessity – not an option – to address the enormous environmental and social challenges the world faces. As such it is also a necessity to assess the True Value of businesses in this context.

Yvo de Boer is the global chairman of Climate Change & Sustainability Services at KPMG, and former executive secretary of the UNFCCC.

The post Yvo de Boer: It’s time to measure the ‘true value’ of business appeared first on Climate Home News.

Chief executives at the Caring for Climate Inaugural Business Forum (UNclimatechange)

Jonathan Grant, director, PwC sustainability and climate change
“By taking us to the brink of collapse, looking over the edge and then pulling back, we come away feeling delighted that any progress has been made at all. A victory was always expected, but like the England football team, the COP made this a lot more dramatic than it needed to be.  The ‘talks about talks’ phase is now over, as countries agreed the agenda for the negotiations and the timeline for coming up with some numbers. With the increasing complexity of these summits now, there are a host of decisions, on finance, loss and damage, and the carbon markets that will take time to digest.”

Yvo de Boer special global advisor, climate change and sustainability, KPMG Advisory

Sad to see so many proud nations trying to hide behind the poor and re-write what they agreed at the climate summit in Durban.

— Yvo de Boer (@yvodeboer_KPMG) November 23, 2013

@juliettelucie the corporates stuck around to make sure their voice is heard. Politicians need to know they have backing for bravery.
— Yvo de Boer (@yvodeboer_KPMG) November 23, 2013

Legal Sector Alliance, which represents 270 law firms and organisations in the UK

“The nature of the threat posed by climate change means that there is an urgent need for mitigation and adaptation programmes to be incorporated as a matter of course into national law. The Legal Sector Alliance calls upon governments to adopt regulations on a global scale to achieve this and to implement any commitments they make at the Warsaw conference (COP19/CMP9) expeditiously and in accordance with these principles. By being creative and adopting a proactive approach governments can support businesses and individuals in reducing greenhouse gas emissions, creating the opportunity for new jobs, economic growth and improved global living standards.

Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change, which represents over 85 of Europe’s largest investors

“The agreement on a timetable leading to Paris in 2015 is an important step but the actions needed to back this up must start now. Mobilising climate finance will be central to a global deal in two years’ time and the only way this can be achieved is if public bodies and private investors work together. This means putting policy frameworks in place which are truly long-term, enshrined in legislation and provide meaningful support for investors who want to back low-carbon energy.”

Steve Howard, Chief Sustainability Officer, IKEA Group via Damandeep Singh

Totally agree MT @_stephenhoward IKEA: Silent majority of companies want to see real change in climate response, need to speak up #C4Cbiz

— Damandeep Singh (@damandeep) November 25, 2013

Anthony Hobley, global head, sustainability & climate change at the Norton Rose Fulbright law firm

“These climate negotiations seems to drain optimism out of you. I’m more so surprised by the lack of engagement between the negotiation process and business. I think that’s [COP 19] better than Copenhagen, so that I think is our glimmer of hope. The other glimmer of hope is the other negotiations between China and the US. The other thing is we’ve got Angela Merkel in place, we’ve obviously got Obama in place and we’ve still got a [UK] coalition government that’s supported action on climate change. All of those things could change after Paris so we may not have the political leaders in place who have the appetite for these kinds of climate deals. I really do think that it’s all or nothing for Paris for a decade.”

Siemens via Stefan Henningsson, senior adviser climate innovation at WWF International

Siemens @ #c4cbiz:If we cant deploy cleantech innovation at home, we cant sell it to other countries.We need ambitious policy for ref cases

— Stefan Henningsson (@shenningsson) November 19, 2013

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The Government and the Treasury are jeopardising Britain’s economy by failing to back green growth, WWF-UK has told RTCC.

Dax Lovegrove, the group’s head of business, sustainability and innovation said businesses would have to up the pressure in order to get the government to catch up.

“Business would benefit from more engagement with governments. What’s difficult, certainly in the UK, is that the government and the Treasury are not particularly behind green growth,” he said.

“They are pretty much stuck on a brown economy, in the long run that’s not good for British business.

“We’ve got to try and turn that thinking around and get our politicians to catch up,” he added.

Wednesday’s UK Budget, announced by Chancellor George Osborne, did little to counter Lovegrove’s accusations against the British Government with fuel duty cuts, shale gas subsidies and no measures to reinforce the green economy.

VIDEO: Lovegrove on the UK government’s ‘brown economy’

The post WWF: UK government stuck on a ‘brown economy’ appeared first on Climate Home News.

Five years ago last week, BNP-Paribas kick started the mother of all recessions.

Unprecedented fraud, mindless greed and reckless gambling in the financial sector (and lets be honest, among certain sections of the public too) fed an incredible turn of events with banks failing, currencies sliding and in Europe, entire nations going tightening their collective belts.

The financial crisis is just one of many drivers that Giles Hutchins, author of The Nature of Business, sees ushering in a new era for business.

His message for leaders is clear. It’s time to learn from the natural world. You evolve or you die.

Hutchins is a management consultant, formerly of KPMG, who specialises in applying lessons from nature to help businesses boost their sustainability through practices like biomimicry and cradle-cradle production patterns.

“The downturn has been very positive in the long run. We need these shocks,” says Hutchins. “Quite a lot of corporate social responsibility (CSR) was shutdown because it wasn’t core to the business, those activities needed to change. These transformational times are forcing people to change.”

“The economy as it was is not coming back. The changes are needed.”

The result is that big business is now in a position where it wants to change. Companies like Unilever and Nike are held up as good examples by Hutchins.

Their stated aim is to not just reduce their environmental impacts but also to explore ways to improve the planet.

Hutchins' book explains what "new firms" can learn from nature. (Source: Flickr/wwarby)

Biomimicry – inspiration from nature

One of the inspirations for ‘change’ was first observed by Charles Darwin. The natural world adapts to its surroundings.

Hutchins sees diverse and interlinked ecosystem-style operations replacing rigid, unresponsive management structures that seek only to grow.

“The previous paradigm was a relic of the industrial era where we tended to see businesses as machines,” he says. “And of course, the bigger the better. The focus is on short term gains for the shareholders.”

A combination of climate change, resource scarcity, the transparency created by the internet, and of course the recession are driving these changes.

“Businesses inspired by nature, a firm of the future is one that is constructive as well competitive we’re not saying there’s anything wrong with being competitive its about addressing the balance. It has to be dynamic and stable at the same time.”

In the book, Hutchins outlines six principles for business to take from nature, build resilience, optimise don’t maximise, adapt, integrate systems, navigate by values and support life.

One of the most interesting ideas is to support life. Instead of limiting the damage you do, companies should look at how they can make net improvements to nature.

This list of principles ultimately work as a process. If you know how you can support life, the means of doing that create your values. The systems within your business for achieving these are informed by those values. The fact that you have these systems rather than distinct, inflexible units means you can adapt.

This gives you the ability to make the best out of whatever situation the volatile world creates, ultimately delivering your resilience.

Back to the firms of the future

Inspiration from nature can be more direct.

The book is full of examples of products mimicking the natural world. He cites the  Adnams Brewery in the East Anglia region of the UK as a company organised in an ecosystem-inspired style. Its values are prominent and its processes borrow from nature when they can (grass roofs, underground storage and converting waste to energy). The result was that it outperformed its competitors by 4%.

Unilever provides a more powerful example for Hutchins when he is talking to businesses about how they can change. The size of the company prevents the ideas being written off as “just for hippies” to paraphrase Hutchins.

But while Unilever’s efforts are well documented, he is quick to point out that they are not perfect.

“It’s a bit like the Olympics to be honest. The Olympics by its very nature is not sustainable and yet it is trying and has set out some accomplishments that will help drive the market towards better sustainability standards.

“That’s what Unilever is doing. The amount of palm oil it uses in its product by its very nature is not sustainable, but it’s trying to drive action towards sustainable processes for palm oil,” claims Hutchins.

“They are still in the early phases and yes they will still grow and yes they will increase their profits, but they are also looking to decouple that from environmental degradation.”

Unilever aren’t alone. Dow Chemical, hardly a favourite with environmentalists, saved $7bn from energy efficiency measures. Mining giant Rio Tinto has cut its CO2 intensity and has begun monthly emissions reporting.

Richard Branson was one of several high profile business leaders at the Rio+20 summit. (Source: UN/Rossana Fraga)

If the firms of the future are indeed already with us, then the Rio+20 summit was their coming out party. The conference delivered perhaps the clearest signal yet of what the private sector can achieve with its new found motivation.

While politicians and diplomats struggled under the weight of self interest and external pressures in the negotiating rooms, business figures like Sir Richard Branson and Ted Turner were flexing their muscles on the sidelines.

“Rio+20 showed the old and the new sitting side by side. There was lots of talk and no ambition to change while on the fringes there was lots of positive moves and signs of the phoenix economy,”  says Hutchins.

“People like Unilever’s Polman and Branson are stepping up and saying they’re fed up with governments not doing anything we’ll do it ourselves.” With more than a little inspiration from nature.

Giles Hutchins has over 15 years of business transformation experience and is now embarking on a BBC/Open University documentary of the same title and subject as the book. He regularly lectures at conferences and business schools, and blogs at www.thenatureofbusiness.org

The ‘The Nature of Business’ can be purchased on Amazon and also through Green Books.

The post Why a new business era inspired by nature not greed can benefit us all appeared first on Climate Home News.

The Circular Economy uses biological materials that once exhausted can be returned safely to the natural world. It exploits technological materials that can be kept within the system at high quality and used again. And again. And again.

Yesterday we brought you the basic principles behind the Circular Economy. Today we are going to look at how we go about designing and building this new way.

We now know the Circular Economy (CE) is one which is designed to be restorative and to feed materials back into the system.

We understand that we can learn from the way nature functions in order to build this.

But doing this we will mean completely transforming the way we design, make, use, own and dispose of things – as well as how we fund them.

Today we take a look at how we begin to change our systems to fit the new CE.

We must design for disassembly, allowing materials from products to go back into the system (Source: thebestfriend.org/Creative Commons)

The basic premise of the circular economy it to keep our vital resources in the loop. For this a revolution in design will be needed, ensuring that these valuable materials can be re-collected from goods (still with the same quality) and used again.

In the same way in natural waste becomes a resource, in the CE the waste goods of today become the resources of tomorrow.

For this to happen, however, the key will be to be able to break our good and products down, back into their components and materials, so that these materials can be sorted and re-used in a new product. This is called designing for disassembly.

While big steps have been taken by many artists and designers to design with waste – recycled and up-cycled products – this is only a temporary fix, and the CE idea focuses on designing out waste altogether.

One of the best examples of this is the work being done by those designers looking at Cradle-to-Cradle principles. Here products are made to be dismantled at their end of life – when biological materials go back into nature and technological materials back into the system.

While this seems like a simple idea, it is not something that is widely practiced in a design market that places aesthetics and functionality above all else.

Just 1mm can make the difference between products being reused or sent to landfill (Source: Yutaka Tsutano/Creative Commons)

Dustin Benton from Green Alliance uses the example of the iPad.

To make it as thin as possible, the computer is sealed. While giving it a sleek finish, this means that it is more difficult to repair or replace the battery – impossible without sending it off to the store.

Meanwhile (Benton explains) the latest rival to the iPad from Google uses ‘easy open’ clips allowing users to access the components – as demonstrated in a video by technology repair website, iFixit.

It is not only attractive but it is repairable. And still only 1mm wider than the iPad.

Douwe Jan Joustra from One Planet Architecture Institute – an Amsterdam based firm working closely with the Ellen MacArthur Foundation says: “The most important thing is designing for disassembly; that is designing products in a way that you can recapture the materials that are used and quality that they have when we started using them so that we can have our resources used in a circular way. We reuse and reuse and reuse them again.

“Basically we need a kind of design that enables us to regain the resources in a high quality way and what we do when we put stuff into the waste system we bring it all together and make it into a waste soup and then we have to find the right part of the resources in the big soup.”

Buying performance – not the product

What is we were able to buy the performance of our appliance without having to buy the product? (Source: jim212jim/Creative Commons)

Material goods are not the only aspects of the circular economy that needs an overhaul. Entire new business models will also need to be designed.

The circular economy relies on the sharp distinction between consumption and use of materials – placing the emphasis on the use of a product.

This means a major design of business models away from selling widgets themselves to selling their use or life-cycle, what Joustra calls ‘buying performance.’

Rather than the one-way consumption habits of today, this new system will place the responsibility firmly into the hands of the manufacturers and retailers who will retain ownership and sell the performance of a product.

This will involve the development of efficient and effective take-back systems and will push companies towards making more durable products that can be refurbished.

For example in the One Planet Architecture Institute, lighting is rented from Phillips at a monthly upfront fee – a contract which says the company will get so much lighting per-day. Phillips then pay for the electricity bills of this lighting.

Meanwhile in Northern Europe, washing machine manufacturer Electrolux offered customers per-wash options of leasing devices based on smart metering, where the company could track both the number of uses and the type of cycles used by the household.

While this model has been discontinued many companies including Appliance Warehouse of America and Bosch Siemens Hausgeräte provide leasing options to both commercial and household customers.

With companies responsible for ensuring the quality of products, for fixing it when it goes wrong and eventually disposing of the system – they would loose money for an inefficient or poor quality product.

It will be in their best interest to make a durable and efficient systems.

But how can we interest people in loaning products (or buying a service) over ownership?

Often ownership is about status. Having an expensive car or the newest iPhone is a sign that people are doing well in their lives – a trophy to show off about. Would this still be possible in a circular world?

91% of Ferrari cars in Europe are not brought outright by consumers (Source: casggo/Creative Commons)

The simple answer is yes.

91% of Ferraris – one of the ultimate status symbols – across Europe are brought on a performance basis and are not owned by those who use them, according to Joustra.

Car and bike-hire schemes in the UK, France, Brazil and Mexico are similar success stories.

The Ellen MacArthur Foundation report ‘Towards the Circular Economy’ also notes this trend, estimating that the car-sharing market will grow around 30% per year between 2009 and 2016.

With less responsibility for the upkeep and disposal of your products – and better quality as businesses start to feel the financial impact of faulty goods, it could be a win-win for consumers.

Douwe Jan Joustra says: “Ownership is a concept nature doesn’t know.

“It is a big transition because right now we have an economic system but also a cultural system which is quite based on the idea of ownership. We will have to have a major shift in the cultural identity of ownership.”

“The cultural idea that you need to own products to really show your position that is just not true. It is not about ownership it is about what you can afford to use. Because when I have a low income I will buy a cheap television set and it would be the same way in a service oriented society – my income would still be the key to the types of services I could buy.”

Tomorrow: Why is collaboration so important to the Circular Economy?

The post Circular Economy #2: How can we redesign our production cycle to remove waste and create new resources? appeared first on Climate Home News.

Unpredictability and uncertainty in weather patterns has been observed by farmers across the globe.

Throw in the increased incidence of extreme storm events, water scarcity and ever growing demand, and the scale of the challenge facing the agriculture industry is clear.

Many businesses, rely on their suppliers for cultivated commodities like soya, sesame oil, rubber, cotton, wool and many others.

With climate change creating new problems and inflating old ones, many suppliers, particularly smaller farmers, are facing big challenges that eventually hit businesses where it hurts.

Climate change has hit Lavender production in France © Mark Percy/Creative Commons

Oxfam has compiled an excellent paper looking at what the challenges facing coffee shop giant Starbucks, food and clothing chain Marks and Spencer and cosmetics retailer The Body Shop.

And their timing could not be better.

Increased heavy rainfall has encouraged fungi to ravage coffee plantations in Colombia. Devastating floods in Pakistan have contributed to fourfold increases in cotton prices, while shifting weather patterns have put the squeeze on sesame growers.

Here are their five tips for businesses to protect supply chains, give growers a better deal and protect the long-term viability of both their own business and all those who contribute to the product you pick up in your local shop or supermarket.

1. Adaptation is not a dirty word

In the west, relatively untouched by climate change effects so far, adaptation is considered by some to be a dirty word. A sign that you’ve given up trying to reduce your impact and are instead bracing yourself for the effects.

The effects are being keenly felt nearer the tropics where stormier conditions are interfering with traditional farming practices. Adaptation is not a dirty word however and businesses should be examining weak spots throughout their operations and at every level of management to meet the challenge on their own terms and not after the fact.

2. Talking shop

If you want to know how badly your producers are being hit, ask them. Obvious really.

Asking to what extent they are seeing changes, how it is impacting their output and what they need to overcome this is the first step in addressing any issues that are raised.

3. Less is more

A coffee shop might be able to buy its coffee from another region if its regular growers hit hard times, but the supplier cannot find new buyers quite so easily. This uncertainty can make farmers unwilling to invest in water saving technologies, new agricultural practices, or in the case of coffee growers in Colombia, to plant new fungus-resistant varieties of tree.

A stronger relationship between buyer and seller secures and steadies supply in the long term.

Part of this might be encouraging growers to diversify into other crops, even if this means you are now buying less of your chosen commodity from that particular seller. At least you can be assured that they will still be in business come next season’s harvest.

4. Support

Behind the supplier is a community. A weak community can bring down the grower. Supporting a supplier to provide staples as well as cash crops can secure local food supply. Educating and enabling sustainable farming practices directly impacts the strength of your supply as can local initiatives such as farming cooperatives.

Access to finance, be it through micro-insurance or opening up access to carbon finance, can also put growers on a more stable economic footing.

5. Use local knowledge

Existing groups such as cooperatives, local governments, research institutes can save time and improve the quality of decision making.

It also ensures that growers are not being dictated to by each and every buyer and can instead follow regional specific advice.

Oxfam also points to the lesson from climate mitigation efforts in the UK, where buyers asked suppliers to provide different reporting data creating layers of bureaucracy, much of which overlapped.

Oxfam’s Climate Change Risks and Supply Chain Responsibility report was written by Jodie Thorpe, an Oxfam policy advisor Shelly Fennell, an independent consultant.

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1. The world still believes in Common But Differentiated Responsibility

Small islands and oceans both got a boost at Rio+20 (Source: Rafael Avila Coya)

This week RTCC dissected the text to find out exactly what the consequences of it would be for climate change.

Small island states and the oceans received a boost while the increased use  and cost effectiveness of renewable energy was promoted.

Perhaps most importantly, the text brings back into play the principles of Common But Differentiated Responsibility. This short phrase means some countries have a greater duty to pay for the damage to the earth than others – usually the ‘developed’ world.

It’s an intensely controversial topic – that has dominated the last three major climate conferences – so the fact CBDR made it into the final Rio+20 text is significant.

But not everything or everyone made the cut. We analysed what was omitted from the text.

The green economy, finance or state commitments countries are all missing – key components of any future climate deal.

2. Rio+40 could look very different

With the Earth Summit seen by many as a colossal failure, NGOs and Trade Unions called for civil society to ‘mobilise’ for change.

Could we soon see a new era for civil society with a place at the negotiating table?

Youth and Civil Society groups staged a walk out at the conference to protest against governments lack of action (Source: Youth Policy)

Monique Barbut from the Global Environment Facility (a key UN Financial mechanism) called for more synergy to be created between the three Rio Conventions on climate change, biodiversity and desertification. All fighting the same problem – so let’s fight as one!

Meanwhile Carbon War Room chief and former President of Costa Rica Jose Maria Figueres has said that negotiators should not be involved in the process for more than four or five years to ensure we have a group of negotiators who are ‘connected to reality’.

3. Business leads on sustainable development

Greenpeace chief Kumi Naidoo slated politicians in Rio for being in the pockets of the corporations, but the conference did demonstrate the work that businesses large and small are doing to drive sustainability.

Take wind energy giants Suzlon, or Airbus – who told us about their plans to run a ‘perfect flight’ on 50% biofuels.

But what is the motivation of business to get involved in these talks? For Norine Kennedy from the US Council for International Business the answer is simple: “Business cannot succeed in societies that fail.”

4. The UK sees boost in renewables, but also in emissions 

The UK has a long way to go on its climate and energy policies (© UN)

Meanwhile, outside of the world of negotiations, new figures from the National Office of Statistics looking at the UK’s energy and environment performance were a mixed bag.

While some progress have been made on renewables, forestry and fossil fuel use, the country is still not meeting its emission targets.

This was a warning echoed by the UK’s Committee on Climate Change this week, as they said Britain could face missing climate goals because the economic slump, not proactive policy, has been the main reason behind the greenhouse gas emissions fall seen in recent years.

5. Australia’s outback could bear brunt from climate change

New research this week from the University of Adelaide warned that South Australia’s Arabunna region could be one of the worst hit regions from climate change, as it becomes hotter and drier.

Damage in the area could include bushfires, dust storms and drought and could impact local food sources, warned the report.

It urged urgent work to set up adaptation plans, and said working alongside the indigenous communities in the area would be vital in doing this.

The post A week in climate change: Five things we learnt appeared first on Climate Home News.

The aim is to demonstrate how Sustainable Development is becoming a reality on every continent, country and city.

Here, Braulio Ferreira de Souza Dias, Executive Secretary of the Convention on Biological Diversity explains why managing biodiversity is a way for business to manage risk.

Managing diversity is a way for businesses to manage risk, says UNCBD

Business is one of the key stakeholders in the global mission to preserve biodiversity.

As for all of us, businesses depend upon biodiversity and ecosystem services to survive.  The products and services provided by the natural environment are the basis for stable, predictable and profitable activities.

Unfortunately, current business practices are, for the most part, one of the main contributors to the serious loss of biodiversity.

This needs to change.

However conserving biodiversity is not merely a question of saving the environment.It is also an important business opportunity.

Consumers are becoming much more aware of biodiversity issues, and as a consequence they are increasingly looking for sustainable products and services.

Business, therefore, faces an increasing level of scrutiny for its impact on biodiversity. With this added scrutiny, comes an increased risk of tougher regulations and a more unforgiving marketplace.

Businesses are also increasingly held responsible for the supply chains through which their products and services are produced.

That encompass the actions of farmers, fishers and a host of other producers whose activities can have an enormous impact on biodiversity. Thus businesses must not only look at their own processes, but at all aspects of the lifecycles of their products and services.

As a result of this, it can be seen that managing biodiversity is, for businesses, a way of managing risk.

Research shows that biodiversity loss can lead to higher costs for inputs to business processes, or unpredictable changes in the way in which a business operates.

Consumers are increasingly looking for sustainable products and services

Ignoring biodiversity can therefore result in loss of profit and market share, and cause severe disruption to existing business models.

Businesses, being a prime driver of biodiversity loss and a major economic force in most economies, will play a key role in determining whether countries meet their 2020 targets.

If businesses resist change and continue their destructive practices, they will act as a severe impediment to the political adoption of meaningful targets.

Conversely, if businesses are “on board” they can act as a positive force and partner with regards to biodiversity conservation and can help to move the political agenda forwards in a meaningful and constructive fashion.

I want to call upon business everywhere to work together to preserve live on earth, and in so doing, work to build successful and sustainable business models for the 21^st century and beyond.

Braulio Ferreira de Souza Dias is Executive Secretary of the Convention on Biological Diversity (UNCBD).

This article is part of a series commissioned by the Rio Conventions for their RioPlus Business project.

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The Bahrain World Trade Centre. (Source: Flickr/JustDONQUE.images)

A new study has revealed that the cleantech sector is being driven by real business demands rather than the pursuit of good publicity.

The report, by the Grant Thornton advisory group, also highlights the growing optimism within the industry.

“Companies once approached the cleantech sector – as buyers or sellers – because it was a good thing to do, a socially responsible corporate action,” said Randy Free, member of Grant Thornton’s global Cleantech group and tax partner in the United States. “But today, around the world, cleantech means reducing costs and increasing profits.”

The research looked at a number of areas from utilities and renewable energy to energy efficiency and construction.

When asked what was driving demand for clean technologies among businesses, the most common answer was cost reduction, which was cited by 52% of the companies surveyed. The least popular answer was to enhance their brand.

Optimism

Optimism in the clean tech sector is on the increase in 2011 with 37% saying they were optimistic about the next 12 months compared to 34% the previous year. The all-sector average fell from 24% to 22% during the same period.

We’re really on the cusp of something big,” said James Brice, sustainability service head, Grant Thornton South Africa.

“We’re not quite sure yet how big, because the government keeps on changing its tack, but we’re going through the first wave of our country’s renewable energy tendering process.”

The impact of policy is not limited to South Africa with Grant Thornton’s analysts in Russia, India, Canada and throughout Europe picking out the role of governments in driving the sector.

When asked to list the cleantech market drivers, Vivek Vikram Singh, associate director, Grant Thornton India said: “One to 10 would be government regulations – everything else is 11th.”

While there are plenty of reasons for the sector to celebrate, the report acknowledges that it is not immune to global financial constraints.

While the situation is improving, businesses taking part in the report continue to list the cost and availability of loans as a major constraint to their operations.

The post Profit not image driving cleantech boom as business tackles climate change appeared first on Climate Home News.

Wall Street and other centres of business are key to securing the necessary finances to tackle climate change (Source: MediaCommons/Zoonabar)

The leaked documents from the Heartland Institute reveal that some surprising firms have funded their work, a large part of which involves climate scepticism, but is there any alternative to the private sector for funding climate action?

Finance took a front and centre position at the UN climate talks in Durban last year.

The Green Climate Fund was fairly high on the agenda as country’s looked for ways to raise the $100bn a year proposed by the Cancun Agreement at the previous year’s round of talks.

This is the scale of funding required, and right now, governments don’t have it to spare.

The EU, China, Australia and South Korea have all put their faith in carbon markets.

Many countries including Germany and the UK are looking to leverage small amounts of public money to generate private funds for domestic plans.

Even the more populist proposal for raising climate finance, the so-called Robin Hood tax on financial transactions, ultimately depends on the private sector money.

Regardless of your own personal feelings on corporate social responsibility, the money is well spent and the intentions behind it are ultimately irrelevant.

The $60,000 contribution that Microsoft made to the Institute raised eyebrows over its intentions. But if money talks, this is barely a whisper.

In 2007 the company donated $68m in cash and $331m in software to NGOs.

In the same year, Forbes compiled a list of the 78 most generous companies in America. In total they donated $3.8 billion to good causes. That’s almost $50m each.

Climate finance has nothing to do with generosity however. There is money to be made and institutional investors, like the CalPERS pension fund (worth $224bn), are desperate to sink money into green investments.

They say however, that they are held back by uncertainty surrounding government’s commitment to supporting policies.

Just like Climategate in 2009, “deniergate” is damaging, but regardless of which direction the boat is rocking in, it can’t be helpful for those looking for stability, not controversy.

The contents of these documents add flesh to the theory of environmentalists that special interest groups, backed by wealthy individuals and certain businesses, are pushing the climate change agenda.

Business, as a whole, accepted climate change as a reality a long time ago and its role in fighting climate change is only going to grow.

The Heartland Institute has issued a statement saying that it can not verify the accuracy of the leaked documents and asserts that at least one of them has been falsified.

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The opening of this years WFES was attended by Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, UN Secretary General Ban Ki-moon and Wen Jiabao, Premier of People’s Republic of China (Source: WFES)

By Tierney Smith

The door has closed on this year’s World Future Energy Summit (WFES).

The four-day conference saw 26,000 people fill the corridors of the Abu Dhabi National Exhibition Centre.

Attendees included top names from the business, political and academic world aiming advance the energy, energy efficiency and clean technologies of the future.

But what did we learn, and has this summit given the clean-tech world hope for the weeks and months ahead?

Sustainable Energy is Possible and must happen

UN Secretary-General Ban Ki-moon used his keynote address to call on governments and the private sector to make greater commitment towards the UN’s Sustainable Energy for All Initiative.

“Widespread energy poverty still condemns millions to darkness, to ill health, to missed opportunities for education,” he said. “It is not acceptable that three billion people have to rely on wood, waste and charcoal for their energy needs.”

“This is the right time for this initiative…Achieving sustainable energy for all is both feasible and necessary.”

Dr Sultan Ahmed Al Jaber, CEO of Masdar said huge advancements have already been made in the renewables sector in recent years.

“Over the last decade, the renewable energy sector has grown immensely,” he said. “Production and technology advance have led to a sharp decrease in the cost of production, and the market value of the renewable sector has increased from one billion dollars to 211 billion dollars.”

Innovation and Education will be essential

Leading member of the business community met to talk about innovation and education (Source: WFES)

Businesses attending the summit warned that investment in innovation and education will be essential in the future development in renewables in 2012, which they say is set to be a difficult year.

Steve Bolze, Senior VP of General Electric Power and Wind said that those companies who invest significantly in R&D and innovation will thrive.

“Given times, technology investment has to be the long-term differentiator in the sector,” he said.

Tulsi Tanti, Chairman and Managing Director of Suzlon, India said costs of wind power are now on a par with gas and would catch up with coal by 2015. He warned that education was not keeping up with the industry.

“Talent is simply not sufficient to support growth in the industry, so we need to make significant investments to boost that talent pool.”

We are running out of time to act

In his speech Dr Rajendra Pachauri, chair of the Intergovernmental Panel on Climate Change warned that while the world has the capabilities to act against climate change, it’s running out of time to do so.

“We have the capacity, we have the opportunity and we have the technologies,” he told delegates. “We certainly have no limits to the potential that exists for the use of renewable energy.”

He also said the Gulf sits on a gold-mine of untapped solar energy.

Could we still be doomed?

Chief Economist of the International Energy Agency, Fatih Birol was less upbeat about the future. Reiterating the warning of the IEA last year that the world is running out of time to prevent leaving itself on a pathway to a 6°C temperature rise between 2010 and 2035 he said he regretted that the financial crisis had diverted attention from the issue of climate change.

He again slammed fossil fuel subsidies – with global subsidies amounting $409 billion in 2010 – for being an obstacle to the development of renewables.

“To say we want renewables, but then on the other hand give fossil fuels subsidies doesn’t work,” he said. “It’s like you go for a run and then have a big lunch of junk food.”

He also warned that emissions would rise as countries turning their backs on nuclear technologies in the wake of the Fukushima disaster.

Water more important than oil to the Middle East

This year’s summit also saw the launch of International Water Summit which will run alongside next year’s WFES.

Launching the event, Dr Rashid Ahmad Bin Fahd, United Arab Emirates Minister of Environment and Water said the new initiative was a response to the growing importance the UAE government gives to water.

“Sheikh Mohammad [Crown Prince of Abu Dhabi] underlined in a lecture last month that water is much more important than oil for the UAE and its people,” he said.

LEDs and Solar lead the way

The Summit also provides businesses a chance to show off their latest technologies, with many products being launched throughout the four days.

Varous technologies were showcased, including the iMaps application that enables interactive browsing of solar radiation and temperature maps, and the Real Smart Grid which aims at integrating renewable technologies into smart grid systems.

Ssolar panels and LEDs dominated still dominated proceeding, however, as the exhibition’s largest technologies.

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