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In only 51 days world leaders will convene in Copenhagen to agree a global framework to reduce carbon emissions to a level where our climate can be stabilized. This is a successor to the Kyoto protocol which expires in 2012 – not that many countries met their targets for that agreement. This time it has to be different. According to the Intergovernmental Panel on Climate Change (IPCC) our global emissions must peak by no later than 2015 and reduce by 80 – 85% by 2050 if we are to have any hope to avoid the worst effects of climate change.

Personally, I think the worst result from Copenhagen is a null return, a fudge. It would obviously be the worst result for the environment in the long run but it would also hurt business in the short run. Most business leaders already understand that CO2 emissions are a significant risk to the sustainability of their business but they lack the regulatory certainty & incentives necessary to begin to deal with the problem. So a null return means more uncertainty, and continued uncertainty about the future cost of carbon is bad for business.

If governments would agree a global target that shares the burden fairly and we take a market approach to abatement (and by that I mean cap & trade systems) we would surely see our entire economic base transform. A wave of innovation for cleaner technology, information technology, alternative energy and dematerialization would emerge quickly to transform current business models. Even older business models would become more efficient as new incentives are offered to encourage energy efficiency in existing business processes.  

Nicholas Stern once said that climate change was the world’s largest market failure which maybe in fact only half the truth. Its also a huge political failure. But both politics and markets can fix the problem more quickly than you might imagine. However first we have to have a sound political deal in Copenhagen in 51 days from now.

You can do your part. Please sign the petition at Hopenhagen.org calling on global leaders to ‘seal the deal’ in Copenhagen. Please watch the embedded video in this of IPCC Chairman R Pachurai’s address to Hopenhagen (click on ‘Download Media’ in the top right of your screen). To paraphrase him – at the end of the day in a democracy leaders can only lead with the support of the people. Its time to show your leader the support they need in order to make the right decision in Hopenhagen.

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12 Comments

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  1. Marilyn Pratt
    Ensuring this isn’t the outcome of Copenhagen would be our collective responsibility then.  I’d like to see each of us “doing out part” to drive the message to governments worldwide.  If, as you quote above James,  “climate change was the world’s largest market failure” (or as you say half of one), let’s indeed see how marketing political pressure drives a “sound political deal”.  If signing a petition is an individual act of countermanding the null return, then let’s commit to at least doing that small act of voicing our collective will.
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      1. Marilyn Pratt
        If SAP considers its own sustainability reporting as an instance of “exemplar” activity, which it does, then no, this isn’t just a political soapbox but rather an instance of an activity by an ecosystem player committed to demonstrating  thought leadership in an area (climate change) designated as an SAP priority: see Sustainability Report priorities .  Regulation appears in this list as a top priority.
        SAP is “fostering an exchange with stakeholders to challenge and guide our approach”.  You are welcome to join the conversation.
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          1. James Farrar Post author
            Armin

            Thanks for your comments. I understand your sentiment  – many of us share the instinct that business should operate outside the realms of politics.

            Climate change challenges all our thinking for a few reasons. Firstly its a global problem that requires a global response. No single nation alone can address the problem without sacrificing economic competitiveness. And yet we dont have the global governance machinery adequate to the task.

            Second, because emissions are so closely linked to business and economic development its nigh on impossible for business to ignore or eschew the public policy debate. That would be even more dangerous to business interests.

            Thirdly, how climate change is addressed in the policy arena is crucially important. Shall we go for a straight cap and tax or shall we harness market forces? I think capturing market forces with mechanisms such as cap and trade are a better solution for business and the environment. Businesses are offered real incentives for reduction and this is more likely to unleash innovation than a straight tax.

            Fourthly, its fundamentally a strategic question every business has to face. A cursory glance at Porter’s Five Forces bears this out. The opportunity here is for business to move early and seize the competitive advantage. On the more short term tactical front – the question of COP15 is one of how regulation will be shaped to boost energy & resource efficiency. In other words, how to reduce operating costs.

            Armin, we need look no further than the US Chamber to see how politics of the environment is turning over boardroom tables. Leading companies have left in open dispute with the US Chamber because it felt its position on climate was bad for business. Similarly, more than 500 companies have signed the Copenhagen Communiqué.

            Armin. In the final analysis I share your discomfort with the mix of business and politics. But avoiding the debate and lingering uncertainty is even more damaging to business. A deal will be done. It should be the best deal for business, citizens and the environment. 

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  2. Miles Escow
    Hi James,

    has SAP signed up to the 10:10 campaign in the UK? As you probably know the campaign’s aim is to reduce carbon emissions 10% by 2010. It is being supported by business, organisations and even individuals.

    http://www.1010uk.org/

    I haven’t seen a notification that SAP has joined this important initiative, however Oracle and Microsoft, for example, have made it clear that they have. Thanks

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    1. James Farrar Post author
      Hello Miles

      I’ve looked into the details of the 10:10 campaign and here are my thoughts. The 1010 campaign is an excellent way of raising awareness and kick starting action especially with those who may still be on the sidelines to begin measuring their emissions and setting real CO2 reduction targets. That is surely to be welcomed.

      In relation to SAP – last year we already set a target of 50% CO2 reductions for 2020 and we have already delivered more than 6% cuts and I expect signficant progress again in 2009.

      The 1010 targets, interestingly are for c. 3% custs per unit of revenue. Last year when we engaged with stakeholders we were given clear direction that transparent, absolute reductions were preferable to intensity reductions.That means even as our business grows we will continue to reduce emissions. 1010 targets do not provide that transparency and accountability in my opinion.

      SAP also included Scope 3 business travel emissions in our footrint and target. Many companies exclude business travel from their footprint and target. SAP will not. In this regard our efforts are paying off with positive recognition relative to peers. In the Dow Jones Sustainability index SAP leads the software sector and attained perfect scores for environmental reporting and eco efficiency.   

      Based on our agressive targets and positive feedback I’m not sure that the 1010 commitment challenges us anymore than we have already done so for ourselves.But it would provide an additional burden in duplicative administration and reporting. Also its not clear if this is just a one year initiative for awareness raising or a longer term programme. Either way, SAPs ongoing performance against long and short term goals will always be made available publicly at http://www.sapsustainabilityreport.com.

      James

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  3. John Harford
    Hi Jim,
    how do you think this burden should be shared fairly

    “James Farrar, Sustainability Principal EMEA, considers it “vital for governments to agree on a global target that shares the burden fairly.”

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    1. James Farrar Post author
      John

      Great question. What is fair? It depends on your perspective.

      We have built up atmospheric CO2 concentrations to levels now at 430 parts per million. It is generally accepted that 550 ppm is the maximum safe level to keep us within a 2°C increase and we are adding about 3ppm pa.

      No doubt the developed world is most responsible for the current build up. Equally true, BRIC and developing economies will be responsible for an increasing share in the future.

      But developing economies also have pressing poverty issues and really do need to balance their development needs with environmental protection. To compare: China still has about 200 million people living on less than $1.25 per day, India has about 400 million in the same category.
      When it comes to carbon emissions per capita: the US emits 19 tonnes per annum, Germany 10 tonnes,China 5 tonnes & India 1 tonne.

      I heard Nicholas Stern speak this week and his view is that, right or wrong, China and India are unlikely to agree absolute caps on emissions in Copenhagen. They are committed to reducing CO2 emissions per unit of GDP. What he felt was fair is that India and China should agree in Copenhagen to a time frame from when caps will be imposed on China and India.

      The US is also looking to impose trade sanctions to protect US heavy industries from the perceived competitive advantage of less rigorous carbon regime in developing markets. The Chinese and Indians will look for more time and space for development and also a share of the global investment funds available to smooth their transition to a lower carbon economy.

      What is a fair then is a balance where newly developing countries are made to pay for historic emissions of the developed world and also be denied badly needed economic development opportunity. This is likely to be a deal that allows China and India a little more time but they must set a time frame. Developing countries will also need access to technologies that help them keep up with economic growth and transformation and to do so on a low carbon basis.

      James

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  4. Steve Unger
    I am delighted to see SAP taking a stance on Copenhagen and promoting real action on climate change.  As a responsible corporation and global citizen it is incumbent on SAP to push world leaders to take action on climate change.  Environmental interests aside (which are priority to me and I’m sure you), SAP will not have much of a market if climate change dramatically and negatively changes the economy as we know it.  

    That said, I also have concerns.  What are SAP’s motives with Hopenhagen?  Is it green washing or promoting a relaxed position on carbon targets in Copenhagen?  Further, I would have preferred that SAP jump on the TckTckTck band wagon, which has significantly more momentum and backed by dozens of NGOs and non-profit groups such as the WWF, Amnesty and Green Peace and people such as Kofi Annan and Desmond Tutu.

    Overall I am happy that SAP is doing something and taking a stand.  I just want to ensure it is not a soft stand.

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  5. Cheryl Smith
    Hi,
    I am so glad SAP is sponsoring this summit! As a founding member of the SAP Cycling Club in Palo Alto, I am very excited by the potential. Copenhagen is a fascinating place from a cyclist’s point of view. 36% of trips taken are by bicycle (in the US, the average is 1%; in the San Francisco Bay area, the average is 2%). Their bike lane systems and bike-share programs are copied the world over.

    I encourage all who are going to check-out the bike lanes and bike-share programs in between the sessions:-)
    Best to all,Cheryl

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