The pendulum has swung: meaningful change is coming for business
I was watching in Le Bourget last week as 150 or so world leaders stood up in turn and committed to act on climate change by reducing the greenhouse gas emissions of their respective countries. The countries they represent collectively account for almost the totality of man-made gas emissions.
If all these leaders mean what they said, or even if most of them mean most of what they said, then there is truly no longer any room for doubt. The pendulum has swung at the highest levels of government. Meaningful change is coming and businesses had better be prepared for it.
Let us not underestimate the challenges that governments are committing to. It is not an easy task to deliver significant carbon cuts within a 10 – 15 year timeframe in economies that are likely to be, for the most part, growing.
These governments will need to price carbon. They will also need to catalyze significant shifts in the energy mix.
Businesses need to respond by planning long-term with timeframes similar to those adopted by governments. Few companies are doing that yet, according to KPMG’s latest review of corporate reporting.
I believe it’s inevitable that national carbon pricing systems will merge into regional and global systems eventually, but I think that is still 10-15 years off. In the meantime, there will be a plethora of national, rules, regulations, prices, systems and standards.
For multinational businesses that will mean dealing with different pricing mechanisms in different places. It will be complex and it will be challenging to manage. But from what I heard today, it’s not a question of whether it’s going to happen but how quickly it’s going to happen. My advice to businesses is: get ready now.
Adrian King is KPMG’s Global Head of Sustainability Services. He leads key KPMG stakeholder relationships at a senior level including the World Business Council for Sustainable Development (WBCSD); Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and the UN Global Compact (UNGC).