From Cancun to Durban: Climate Policy as a Proxy

By Ivetta Gerasimchuk

Corporate social responsibility has to address dozens of immediate issues from layoffs amid the financial crisis to consultations with local communities about investment projects. So why should the topic of climate change, which is ridden by uncertainty about its distant future implications and persevering disagreements within and among national governments, belong to the CSR (corporate social responsibility) agenda?

Climate Change as a Common Environmental Denominator

To answer this question, one has to look at the driving logic behind the current climate change debate, which this year culminated at COP16 in Cancun, Mexico (COP16 is an abbreviation for the Sixteenth Conference of the Parties to the United Nations Framework Convention on Climate Change, or UNFCCC). A dangerous, albeit uncertain challenge per se, climate change has become an overarching issue for a row of environmental and social problems.

On one hand, the mitigation aspects of climate change are not just about abatement of greenhouse gases emissions. To cut their carbon footprint, governments and companies are prompted to address other pressing environmental issues. First, forests and wetlands have to be preserved as carbon sinks. Second, energy efficiency should be improved throughout the value chain and incentives for renewable energy production must be put in place. This addresses the energy security concerns and depletion of nonrenewable resources, as much as it addresses climate change. Furthermore, reductions in emissions of greenhouse gases have a lot of co-benefits for improving the quality of the air we breathe.

On the other hand, the climate change adaptation includes the need for improved water resource management, combating desertification, biodiversity conservation and better healthcare.

All these issues are not just CSR challenges for companies, but also top items on their competitiveness agenda.

Certainly, trying to use climate change as a common denominator for such a wide spectrum of problems can be cumbersome when it requires unanimous agreement of nearly 200 members of the United Nations Organization. Consensus was not achieved in Copenhagen last year, and was possible this year in Cancun only after overriding Bolivia's protests.

From Top-Down to Bottom-Up Approaches

Similarly to the last year's round of talks in Copenhagen, in Cancun little progress has been made on the emissions reduction regime after 2012, the year when the Kyoto Protocol expires. This issue will be discussed again at COP17 at the end of the next year in Durban, South Africa.

The Cancun Agreements have established a "Green Climate Fund" to manage a "significant share" of "climate aid" from richer to poorer nations. The total amount of the low-carbon assistance pledges are $30 billion by 2012 and up to $100 billion annually starting in 2020. Delegates have also agreed on a "green" technology transfer mechanism, a forest plan known as Reducing Emissions from Deforestation and Forest Degradation (REDD), a "Cancun Adaptation Framework" for affected developing countries, and methodologies of monitoring, reporting and verification of emissions reductions. But the main achievement of COP16 was restoring trust to the negotiations process itself.

The fact that COP16 in Cancun has exceeded most expectations owes a lot to the reversal from the top-down UN-driven climate action to the multiple bottom-up climate initiatives. After Copenhagen's debacle last year, climate change actions started relying more and more on initiatives within G20 and regional alliances of countries rather than decisions by the UN. Rather than at a national level (with a remarkable exception of China), practical steps increasingly originate from businesses and sub-national authorities (California's initiatives are a good example against the background of failed attempts to pass the US climate package at the federal level). Even the COP16 program reflected these shifts: outside the official negotiations venue, numerous side-events showcased successful projects of conservation and restoration of forests, improving efficiency of energy and water use, development of renewable energy sources, carbon capture and storage, etc. Siemens, for instance, has almost one third of its project portfolio in the "green" economy.

Cancun signaled that more and more companies should stop waiting for the UN or national government decisions on climate-related measures and take initiative by "decarbonizing" their corporate agendas. In a "greening" marketplace, investors, customers, NGOs and competitors increasingly judge companies on their climate policies as a proxy for sound CSR and, generally, good management.

Originally appeared on CSR wire.