E3G

The changing business approach to climate: where is Japan?

By Jennifer Morgan and Rebecca Bertram

As part of Jennifer Morgan’s current visit to Japan, she will be discussing how Japan’s business community can engage with efforts to forge a new global deal on climate change.

To provide a starting point for discussion, the following paper, written by Jennifer and our new E3G colleague Rebecca Bertam, sets out the current efforts by US and EU business leaders. The paper is also attached as a pdf download.

Changing Business and Political Climates in the US and Europe:  Where is Japan?

Jennifer L Morgan and Rebecca Bertram, November 2007

Business executives and policymakers from the United States and Europe are actively supporting an absolute mandatory cap and trade system to address the problem of climate change. In Japan, however, business associations and politicians seem to have different views, often questioning or outright blocking a mandatory cap and trade system. This paper outlines the current trends in the U.S. and Europe and finds that Japanese business, and potentially the government, could soon be standing alone in their opposition to cap and trade.

Changing business climate in the US and Europe:

The business approach to climate change in both the United States and Europe has changed considerably in recent years. Major companies now agree that climate change is a serious business issue, and urge their respective governments to set clear and mandatory caps on CO2 emissions.

This development is to the increased awareness that climate change is a serious problem which carries significant risk.  It also is due to the recognition from business that the response does not have to be a burden, but can in fact present a huge opportunity for their future economic performance, if managed properly.

While in Europe, where the Emissions Trading System with absolute mandatory caps is already in place and obliges companies to take measures to cut their CO2 emissions, business leaders in the United States are now increasingly advocating that the government set similar mandatory caps on emissions. American business analysts agree that such mandatory regulations are no longer an uncertainty but rather a matter of time.

Business coalitions urge politicians to set absolute mandatory caps on CO2 emissions:

United States Climate Action Plan (USCAP) assembles a group of large US companies urging the federal government to actively engage in the climate deal. Members of the USCAP include Duke Energy, General Motors and Shell. They share the view that regulatory certainty is needed in order for them to make adequate investments and to plan accordingly. The USCAP declares that it “will provide the basis for the United States to assert world leadership in environmental and energy technology innovation … [Such leadership] will assure U.S. competitiveness in this century and beyond by putting mandatory caps on CO2 emissions.”

Investor Network on Climate Risks (INCR) calls for “mandatory market-based solutions such as a cap-and-trade system, a realignment of national energy and transportation policies to stimulate research and development of clean technologies, and for the Securities and Exchange Commission to clarify what companies should disclose to investors on climate change in their regular financial reporting.” Companies of this coalition include among others American Airlines and the Ford Motor Company.

UK Corporate Leaders Group including Shell, E.ON and Centrica calls for the President of the European Commission “to promote the necessary step-change in investments in low-carbon goods and services, a strong and clear policy framework that creates long-term value for carbon emission reductions.”

The German 2 Degree Initiative is a purely German business coalition pressing for a functioning and mandatory cap and trade system to reduce greenhouse gases. Coalition partners include BP Germany, Vattenfall, and Deutsche Bahn.