Climate Change - Time For Rhetoric Is Over

Climate change poses the largest single threat to humanity and its ecosystems. Yet, despite mounting evidence of our planet approaching the “tipping point” little progress has been made in tackling its causes.
There is a near 100 percent consensus amongst scientists that man-made effects are real. Dissenters are losing credibility in the face of overwhelming evidence. Even a detractor like the President George Bush has admitted the hazards of US “addiction to oil”. This addiction is creating a global warming disaster of gigantic proportion. Scientists from the Scripps Institution of Oceanography, in California, have been working several years with the Lawrence Livermore National Laboratory to analyse the effects of global warming on the oceans, using computer modeling; and millions of temperature and salinity measurements were taken at different depths over five decades. Previous studies into human activities and global warming had looked for evidence in the atmosphere- but according to project leader Tim Barnett that is the worse place to look. Ninety Percent of the energy from global warming goes into the oceans. The evidence is startling.
More than 20,000 cubic kilometers of freshwater have been added to the Northern Ocean over the past 40 years because the Arctic Greenland Ice sheets are melting. The annual melt season has gone up. The resulting change threatens to disturb ocean currents such as the Gulf Stream, which transfer heat from the tropics towards the Polar Regions. If that happened winter temperatures in Europe would fall by several degrees.
Using several models that project habitat changes, migration capabilities of various species, and related extinctions in 25 “hotspots,” scientists predict that a quarter of the world’s plant and vertebrate animal species would face extinction by 2050. According to a recent FAO report “In some 40 poor, developing countries, with a combined population of two billion, including 450 million undernourished people, production losses due to climate change may drastically increase the number of undernourished people, severely hindering progress in combating poverty and food insecurity.”
Driven by the Kyoto Protocol on global warming and Wall Street’s pursuit of profit, carbon trading has exploded. This controversial corner of the derivatives market – and the dangers it may pose to the environment and human health – are growing as never before. The market in European CO2 Rights, which didn’t exist four years ago, is forecast to reach $5 billion in 2005, according to the Amsterdam-based European Climate Exchange. Trading in the 10-year-lod U.S. markets for sulphur dioxide (SO2), a primary cause of acid rain, totals $7 billion annually.To put those figures in perspective, the entire US wheat crop of 2002 - 2003 was valued at $5.7 billion.
This has hard financial implications. We may externalize those costs but, as the symptoms of climate change come home to roost, we envisage grave threat to the security and sustainability of business. Not only insurance premia would rise but some properties may no longer be insurable against flooding. Add to this the performance of pension schemes, which affects virtually all of us where it hurts most. Pension funds are invested in baskets of corporations, none of which are invulnerable to sustainability pressures.
Carbon trading is only an end of pipe solution. It does not lead to reduction of greenhouse gases. We have to make life style changes. We have to develop our accounting system to price natural capital and factor ecological costs. We have to drive our growth agenda on conservation and not consumerism . Gordon Brown, the UK Chancellor of Exchequer, has commissioned a review of the economics of climate change, headed by Sir Nicholas Stern, a former World Bank Chief Economist and Senior Treasury Official. Outlining some of the complexities of establishing economic solutions to climate change Sir Nicholas said: “It is an international collective action problem. The simple standard theory of externality”. The first step, he said, was to convince all the governments involved of the need to take urgent action on climate change.
Knowing difficulties of achieving international consensus as epitomized by the controversy on Kyoto Protocol, this is a non-starter. It is the business whose neck is on the chopping block. So the business has to rise up to the occasion, and use eco-innovation or Ecomagination as GE has done to build a competitive advantage. We have to go back to Carnoule’s Declaration of 1994 and make Factor Ten improvements to the productivity of natural capital. It is for this reason that the World Council for Corporate Governance is joining hands with the World Environment Foundation to form a Global Human Chain commencing at Palampur on 9 June 2006, and extending from Australia to Alaska as a wake up call to the business to take proactive action to combat climate change. The alternative is a catastrophe stalking our children.