World is Green

Economics Times interviews Martin Stuchtey, a global expert on climate change, and partner with McKinsey.

Excerpts:

We have done 160 studies over the last 12 months on climate change. Very few are for CSR and sustainability guys. Most of them are being funded straight out of the boards, and typically we talk to the head of strategy when we discuss them. It is not about making the CSR story headlines today; it’s about making your business viable in the long-term, to make your business fit for the low-carbon economy.
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Almost all of them agreed that there is a huge upside to managing this transition.We were surprised to see that almost 30% of the carbon reduction in our own cost curve actually has a negative cost — you actually profit from it! For many companies 60-70% of their emissions can be reduced at net zero cost.
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We estimate the market (carbon trading) to be about $1.0-1.6 trillion by 2030, which is about the size of today’s oil market!

It’s a new commodity market that has to be developed from scratch, and that means infrastructure — you need a world carbon bank, lots and lots of certification bodies, many controls. Without that, it is going to be very difficult, and you can’t only rely on local governments coming back with their fuel economy standard or taxes on this or that.
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Then there is green urbanisation. New cities are coming up, new SEZs are coming up. Can we really start focusing on these? Renewable energy and generation have already seen a big leap. In both solar and wind, I think we can be the front runners, as is the case in bio-fuels. We feel that 10-20% of the top companies will profit from it, and position themselves completely on the cost curve. Overall, Indian companies see it more as an opportunity rather than a threat. In the next 12-18 months, you will see a big change.

Some 300 construction companies have been awarded the Chartered Environmentalist (CENv) qualification from Chartered Institute of Building (CIOB).

Michael Brown CIOB deputy chief executive said,

“Construction is an environmental industry and its importance to such issues like sustainability, energy efficiency and climate change cannot be underestimated. We know that the buildings we live and work in are the largest source of carbon emissions and our members and other professionals can be part of the solution to that problem.
“When we talk about the environment and those topics that challenge us like climate change we should also remember that these are international issues and not just local ones. So it is with some pride that we have CIOB members in the UK and abroad who are qualified Chartered Environmentalists.

“We see the role of the Chartered Environmentalist as an important part in the promotion of those values and beliefs that the construction industry needs to positively embrace.”

Changing people’s behaviour is tough. Or you can be cynical like Dr. House and believe that “People don’t change. They may want to. They may need to.” but they never change. If you do want to however, sell something or manage a change program; you do need to believe that people will and can change and it is important to persuade them.

Seth Godin writes about the many ways of doing it:

Here’s the thing: unlike every other species, human beings make decisions differently from one another. And the thing that persuades you is unlikely to be the thing that persuades the next guy. Our personal outlook is a lousy indicator of what works for anyone else.

Roger James in the Business Spectator:

There was a time when green beer was something strange they did with the brews in Irish pubs on St Patrick’s day. Not any more. Green beer is now a deadly serious marketing strategy, with Foster’s and Lion Nathan releasing products which they say reach the consumer being fully carbon offset in their production, packaging and distribution. Foster’s even goes to the trouble of printing its labels using inks made from vegetable oils.

Will consumers change their beers, perhaps even their brand, in response to this? There is no doubt that being carbon neutral, having carbon offsets or reducing your carbon footprint are all issues that have recently sprung to the fore in business, in marketing and in the community.

A new target market for a new beer.This initiative raises a lot of questions about green marketing strategies.

Will consumers select beers based on their green credentials? A question for Seth Godin I guess. Here’s my take. Consumers may change products like dish washing liquids or even clothes based on their green credentials. Cars come into this category too. However, beers are different. They are personal, taste based and connect to past preferences and habits. Lion Nathan and Fosters may be better off spending their green dollars on other initiatives.

Here’s a thought: what if your most popular beer is made “green”; would that make a difference? Will it get more customers to choose that beer, bring in a new customer?

What if the company developed a greener supply chain and manufacturing systems and built their overall green image. Will that create a blanket of goodwill on all their products? Is that better?

What is a better strategy? New green products, green old products or green the company?

 Andrew Leonard on the first carbon taxes in the world in a discussion on carbon sequestration.

 So imagine our surprise upon learning that Norway’s state-owned oil company, StatoilHydro, has already sequestered some ten million tons of carbon dioxide offshore, in a sandstone formation 1000 meters under the seabed, near the Sleipner offshore gas platform. StatoilHydro started burying CO2 beneath the ocean all the way back in 1996.

How prescient! But perhaps not so surprising. Norway first imposed a stiff carbon tax of $50 a ton on its oil and gas industry in 1991, providing a significant impetus for the industry to minimize its emissions.

1991! In the United States, a “carbon tax” is seen as a death knell for any politician so foolhardy as to endorse such an economy-killing idea. The people would never stand for it, and the energy industry would fight to the death to stop any such madness.

Funny thing, though. Finland instituted a carbon tax on fossil fuels in 1990 — the first country to do so. Norway and Sweden followed in 1991, and Denmark and the Netherlands in 1992.

And somehow, all those nations have managed to survive.