Sustainablog

This blog will cover some news items related to Sustainability: Corporate Social Responsibility, Stewardship, Environmental management, etc.

6.11.04

There ?s management and then there?s leadership: The demand for a ?business case? [for CSR] has long troubled me for at least five reasons.

There?s management and then there?s leadership
Mark Goyder
24 Oct 04
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Management is about getting the best out of existing resources, under
given constraints, whereas leadership is about moving beyond constraints
and redefining what success means, writes Mark Goyder.

Once a month, we get a telephone call from a researcher.

?Hi. I?m doing some research into the links between equal
opportunities/social responsibility/family-friendly employment
policies/sponsorship of the arts and business performance.

?My boss has asked me for a business case. Do you know where I might find
the evidence??

In my usual answer, I emphasise the individuality of each business and the
importance of leadership. You have to look at the whole meal, not just one
ingredient.

?Think about B&Q and disability,? I say. They can show that in the stores
where they have done the most work to support disabled employees and
customers, sales are higher. But that does not mean that if you applied
B&Q?s policies to your company you would get the same result.

The business case needs to be closely linked to one company, its purpose,
values and culture. What does it stand for? What are leaders in the
company trying to do and change?

The demand for a ?business case? has long troubled me for at least five
reasons.

One, it can be a substitute for action. It can be a reluctant manager?s
equivalent of the UK government setting up a royal commission, a body
that, in the words of the late Harold Wilson, ?takes minutes and lasts for
years?.

Two, it can be a substitute for thought ? a predictable recycling of
second-hand research from somewhere else when what you need is fresh
thought about the here and now.

Three, it can be a substitute for belief. ?I?ll tolerate your suggested
policy on disability only as long as the bottom-line results justify it,
but have a bad six months and out goes the policy.?

Four, it can be an obstacle to innovation. In William Miller?s book on
creativity, ?Flash of Brilliance?, he describes an innovation workshop
that was going nowhere until he invited people to start thinking about
issues in the world that they cared about. Then the floodgates of ideas
were opened and the result was the creation of profitable new products.

And five, it can be an obstacle to fact-finding. If you insist too hard,
too early on a business case, people may not experiment enough to discover
what is possible. The rational path to the evidence is rarely the most
creative. Neither penicillin nor the crepe suzette were created because
their inventors were looking for a business case.

This does not stop me trying to help those forced to work within its
straitjacket. Of course any initiative needs to be aligned with the thrust
of the business. Once you have your bright ideas you have to commercialise
them. Businesses are not charities, and they have to justify a return on
investment.

The real trouble with the business case as it is too often understood is
that it is the tool of managers and not of leaders. It is based on the
assumption that success in the future will depend on the same concepts as
success in the past. And when that mindset gets too entrenched, we become
unable to hear new arguments.

A few weeks ago at Schumacher College, the centre for ecological studies
in the UK, I found myself working alongside the brilliant technologist
Amory Lovins, founder of the Rocky Mountain Institute and co-author of
?Natural Capitalism?.

Lovins has written persuasively about the huge business benefits that will
come from properly valuing natural capital, treating waste as a resource,
imitating nature?s skill in resource productivity, and insisting that we
think in terms of solutions and services rather than products.

Last month, he published a new study called ?Winning the Oil Endgame?,
which shows how the USA could wean itself off oil imports in a generation.
It is worth reading his study.

Lovins makes a business case all right: he says the USA can invest US$180
billion and get a return of US$70 billion net by 2025. It is just that he
redefines success so comprehensively that the average reader would find it
hard to shift the mind to the world Lovins is describing as possible.

So here?s a suggestion to everyone required to produce a business case.
Produce it in two parts. Part one is for the managers. It takes everything
the business is doing today as a given. Part two is visionary.

It describes the changing parameters of success in the future, the
changing contribution of leaders, the desired, not the current culture,
and then it offers the proposal for action justified as part of bringing
about that new end state.

In the covering letter, you remind the chief executive that management is
about getting the best out of existing resources, under given constraints,
whereas leadership is about moving beyond constraints and redefining what
success means.

Have your feet on the ground, by all means, but still keep your eyes on
the ozone layer!

www.tomorrowscompany.com

Online Retailers Have Less Time to Persuade: A new report by DoubleClick reveals a mixed picture of the state of B2C e-commerce in Q3 2004.

Online Retailers Have Less Time to Persuade
November 04, 2004

A new report by DoubleClick reveals a mixed picture of the state of B2C
e-commerce in Q3 2004.
One definite bright spot was the increased use of on-site search by
consumers in the purchasing process. DoubleClick found that 9.3% of all
sales came through an on-site search function, compared to 6.3% in Q3
2003. The average order amount purchased through an on-site search of an
e-commerce Web site rose to reach $126 last quarter, up from $111 the
previous quarter and $100 one year before. Through there have been some
quarter-to-quarter declines, the overall trend since Q2 2003 has been a
significant increase in the average order amount. Year-to-year, the value
of an average on-site search-related order increased 26%. However, the
overall average order value still sits a bit higher at $146 and the
average search-related conversion rate, 2.1%, is lower than the overall
rate of 4.6%.

One area of concern for online retailers is that online consumers are
devoting less time to looking at e-commerce Web pages compared to one year
ago (4.4 minutes in Q3 2004 compared to 4.9 minutes in Q3 2003), but the
number of pages they look at during each session has increased
year-to-year (from 7.7 page views per session to 10.3). This means that
consumers are spending less time on each page. The marketer's task is
therefore more difficult, as there is a smaller window in which to capture
the consumer's attention and induce a sale.

Shopping cart statistics also offer mixed signals. The percentage of
shoppers adding an item to their shopping cart ("carting") rose to 8.9% in
Q3 2004, an increase of 63% over the 5.5% carting rate of Q3 2003. The
percentage of consumers who started the order process on a carted item was
also up, though very slightly, from 52% to 54%. Shopping cart abandonment
rates still hover between 50% and 60% (meaning more than one-half of carts
are abandoned), and the third quarter of 2004 saw an abandonment rate of
57%, four percentage points higher than Q3 2003's 52.9%. However, last
quarter's rate was lower than the 60.3% posted in Q1 2004 (see "Abandoned
Shopping Carts Still Litter the Net" for more information).
eMarketer presents a broad overview of the online retail market in the US
in its "B2C E-Commerce in the US" report.




New Report Documents Profitable Corporate Actions To Slow Global Warming

New Report Documents Profitable Corporate Actions To Slow Global Warming
Source: GreenBiz.com
NEW YORK, Oct. 27, 2004 - A new report from the World Resources Institute
highlights corporate actions to slow global warming at today's
Consolidated Edison's Environmental Excellence Forum.

In 2003, nine diverse northeast-based U.S. corporations -- Bristol-Myers
Squibb Company, Citigroup, Consolidated Edison of New York, Eastman Kodak
Company, General Electric, Johnson & Johnson, Northeast Utilities Service
Company, Pfizer, and Staples -- teamed up with WRI to form the Climate
Northeast initiative. Climate Northeast focuses on climate change
management strategies for energy use, emissions tracking, and innovations
such as green power purchasing.

Today's event marked the release of WRI's findings -- featuring case
studies from each of the companies -- in a report entitled A Climate of
Innovation: Northeast Business Action to Reduce Greenhouse Gases (click
here to download).

"Companies can position themselves to be successful in a
carbon-constrained world and capture new markets for products and
services," noted WRI and all nine corporate partners in the foreword to
the report. They added that business has a role to play in bringing about
technological solutions to climate change because its resources and focus
on innovation can drive a clean energy future and deploy new technologies
on a global scale.

"Forward-thinking companies can be proactive on climate change in a manner
consistent with growing their bottom lines," said Jonathan Lash, WRI
president. "These business leaders recognize that taking action on
environmental issues is more than being a good corporate citizen; it is
also good business."

According to the authors of the report -- Andrew Aulisi, Jennifer Layke
and Samantha Putt del Pino -- examples of the efficiency and financial
returns seen by these nine companies include:
Citigroup invested $2.5 million to upgrade centralize its lighting,
heating, ventilation, and air conditioning at 270 retail branches in the
New York City-Connecticut-New Jersey metropolitan area. With a
half-million dollars in efficiency rebates, it was able to pay back this
investment in a single year. Electricity and natural gas use were cut by
15% and the number of service calls to these branches was reduced by 30%.

Staples decreased its energy use by 12.3% since 2001. In 2003, Staples
took the money it saved from this $6.5 million energy-efficiency gain and
used it to buy renewable energy -- and at no additional cost Staples was
able to green 10% of its energy use.

General Electric continues to diversify into clean power technologies. In
addition to its higher-efficiency appliances and turbines, the company has
made major investments in solar power and wind power -- and is bringing
world-class design and manufacturing skill to these smaller-scale
technologies.
"We are undertaking these projects because they make business sense" said
Randolph Price, vice president for environment, health and safety,
Consolidated Edison Company of New York. "We hope our experiences will be
useful for other businesses interested in getting started with
greenhouse-gas management programs."

The new report says that global warming is a long-term global challenge
that can be addressed by starting today with practical, cost-effective
actions. Carbon dioxide and other greenhouse gases are emitted into the
air from every sector of economic activity, and each year these emissions
continue to rise. Energy use in the Northeast and Mid-Atlantic regions
represents 25% of the United States' greenhouse gas emissions.

These emissions contribute to a pattern of global warming that could
change weather patterns, raise sea levels and cause salt contamination of
water supplies in coastal areas, among other impacts. Policymakers are
moving forward under the leadership of New York Governor George Pataki to
develop a greenhouse gas registry and emissions-trading program in the
northeast region.

Spitzer launches music industry probe

Spitzer launches music industry probe
Poulomi Mrinal Saha
26 Oct 04
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Eliot Spitzer has struck again. This time the New York attorney-general is
probing how the giants of the music industry get their songs on radio play
lists.
The New York attorney general has served subpoenas on EMI, Universal Music
Group, Sony BMG Music and Warner Music, the New York Times reported on
Friday.

Spitzer aims to investigate if unlawful activity has any role in getting
music on to radio stations? play lists. The four music companies have been
asked to produce all contracts, invoices and other documents.

British record company EMI said it was co-operating with the probe and was
sure it would not suffer any ?material financial impact? because of it.

The company said it had a ?long-standing, strict, written policy? that
banned unlawful radio promotion.

Spitzer?s investigation will explore any payments that pass between record
labels, independent promoters and radio stations. US law prohibits music
companies from making undisclosed payments in exchange for airplay.

Companies employ independent consultants to act as middlemen, who
allegedly pay radio stations annual fees for airing their clients? songs
under the guise of payment for advance copies of play lists.

Spitzer alleges that this practice is detrimental to those who cannot
afford these consultants? services.

A music industry source told Reuters that such an investigation could be
advantageous for the music industry that has been plagued by the
?pay-for-play? practice in recent years.

?If the process is changed, where we no longer played that game, it would
probably be a benefit to us,? the source said.

Eliot Spitzer secured $50 million in unpaid royalties to many artists
including David Bowie and Dolly Parton in May this year. His recent
investigations into bid rigging in the insurance industry have also
attracted much media attention.

5.11.04

Starbucks brews up more socially responsible coffee

Starbucks brews up more socially responsible coffee
Lisa Roner
2 Nov 04
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Starbucks chief executive Orin Smith says the company is launching an
aggressive plan to ensure its coffee comes from environmentally friendly
farms whose workers earn a fair wage.
Smith says that currently 10% of Starbucks? coffee is ?socially
responsible?. By 2007, the company says 60% of its coffee will come from
farms following strict guidelines on environmental and labour practices.

The Coffee and Farmer Equity (Cafe) Practices programme, developed with
the assistance of Conservation International and other non-governmental
organisations, will not raise costs, Smith says, since the company is
already paying above-market prices for its coffee.

Scientific Certification Systems, an independent auditing firm, will
monitor growers? participation in the programme.

Starbucks, which recently lost business in the UK during a campaign by
Oxfam highlighting the global coffee crisis, says it hopes the move will
protect its retail coffee shops from boycotts and bad publicity.

The coffee-house giant has since partnered with Oxfam on a rural
development programme in a coffee-growing region of Ethiopia.

Starbucks sells several varieties of shade-grown, Fair Trade and organic
coffees in one-pound bags.

The company hopes to keep increasing the amount of coffee it buys through
Cafe Practices. Smith said the eventual aim is to break the 60% figure,
although he acknowledges it probably will not reach 100% because of
difficulties in countries where the government controls coffee supplies,
such as Kenya.

DHL ?s head of Corporate Citizenship said yesterday that one policy was not enough for complete corporate enforcement

One human rights policy is not enough, says senior DHL executive
Poulomi Mrinal Saha
28 Oct 04
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DHL?s head of Corporate Citizenship said yesterday that one policy was not
enough for complete corporate enforcement of human rights.
DHL vice president Richard Corriette said that it is difficult to make do
with just one single corporate human rights policy when there are so many
relevant issues for companies to deal with when it comes to this complex
and evolving subject.

He referred to issues such as equal opportunities, community investment,
HIV and diversity among others as very much human rights related.

These, he said, all need to be considered as part of a family of policies
companies should evolve on the subject.

The variety of these issues means that once one begins to look at human
rights policies "you find out that much more needs to be done once you
investigate", he said.

In an honest and frank presentation Mr Corriette suggested to the
conference that various departments, from the auditing teams to the human
resources department within a corporation, should all join in to put
together a framework that the corporate citizenship or CSR units can adopt
and use to drive compliance.

He told the delegates present that the communication chain for the
enforcement and implementation of these policies should begin at board
level, where the concept of human rights is still looked upon as
"non-business" issue by many senior executives.

But if the terminology is broken down and communicate in ways that senior
executives are comfortable with, they become much more aware of the
business implications of human rights issues, said Mr Corriette this week.


Sune Skadegard Thorsen, a human rights lawyer from Lawhouse.dk reiterated
Corriette's argument, saying, "the biggest challenge of working (on human
rights) in business is awareness."

He said that 80% awareness and 20% actual change was the balance that
should be achieved by businesses.

Employees and consumers are important stakeholders and could not be left
out of the discussions either, he noted.

4.11.04

Australian organisations want more government action on corporate responsibility

Australian organisations want more government action on corporate
responsibility
James Rose
25 Oct 04
A survey of leading Australian companies, government officials and
non-profit groups has shown that most want more government action on
corporate social responsibility.
The study, carried out by the Sydney-based Total Environment Centre, via
its Green Capital corporate responsibility programme, asked 350 leaders in
business, government and civil society whether they would support
increased government involvement in enacting corporate responsibility
principles in Australia.

Of those questioned:

67% support mandatory sustainability reporting for the top 500 Australian
companies

72% support ratification of the Kyoto Protocol

76% support minimum sustainability performance standards in government
purchasing

78% support putting a price on externalities through market based
instruments, such as emissions or water trading schemes

77% support developing a long-term plan or policy framework for corporate
responsibility

Tony Mohr, associate director of Green Capital, said the figures reflect a
shift in perceptions on corporate responsibility in Australia. He said the
majority of respondents to the survey ? about 61% ? were from the business
sector.

?Corporations are seeing opportunities in CSR but are seeing limited areas
in which to move without government involvement,? Mohr told Ethical
Corporation.

He cited the clear support for the Kyoto Protocol on greenhouse gas
emissions. Potentially even more telling, he said, was the support
expressed for putting a price on externalities, such as biodiversity, or
carbon emissions. Mohr said that this question got the highest number of
responses. For instance, he said, ?support for an emissions trading scheme
was even higher than for Kyoto?.

Mohr said Australia is witnessing an ongoing evaluation of the role of
government regulation of the market. ?Government standards are always
required,? he argues, adding that putting a financial value on qualitative
factors, such as the environment or health and safety, allowed market
leaders on corporate responsibility to move forward with security.

Corporate respondents to the survey were from a range of industry groups
that had attended Green Capital?s forums around the country. While
unwilling to discuss their answering patterns, he named BHP, BP, BAT,
Caltex, Delta Energy, Westpac and IAG as among the regular attendees of
Green Capital events who might have contributed to the findings.

3.11.04

With Kyoto In, India May Gain Big Time By Going Green

With Kyoto In, India May Gain Big Time By Going Green
The Economic Times, 23 October 2004 - With the Russian Lower House (Duma)
ratifying the Kyoto Protocol on Friday, developing countries including
India are a step away from a goldmine of opportunities if they go the
green way.
While the Upper House nod and President Putin's signature is a foregone
conclusion, India's Gujarat Fluorochemicals has already got the approval
of the Executive Board of the UN Framework Convention on Climate Change
for a clean development mechanism project.
India also boasts of a mentor-trader company, SenergyGlobal which actually
trades in carbon credits - buying it from Indian companies to sell it to
developed countries which wish to meet carbon emission reduction
requirements.
The international treaty makes room for clean development projects which
produces a marketable commodity, namely emissions reduction (ER) credits.
The sale of ER credits to developed countries and companies with ER
targets can help generate additional revenue for a CDM project in the
developing country.
In fact, carbon has already become a tradable commodity with an associated
value a couple of years ago, in anticipation of the Kyoto Protocol coming
into force. One tonne of CO2 (carbon dioxide) reduced through a CDM
project, when certified by a designated operational entity, is known as a
CER (certified emission reduction), which can be traded.
Revenue from CERs can form part of a project's annual cash inflow, equity,
or debt. Last year 2m tonnes of carbon was traded. The going rate now is $
5.5 per tonner of CER.
The green signal which came very recently for the GFL project, provides
for disposal of a byproduct - HFC 23, in the production of HCFC 22.
Instead of venting it into the atmosphere, GFL will carry out thermal
oxidation to avoid HFC 23 emissions which is a greenhouse gas. "India has
taken the lead also on the CDM national apparatus front.
Twenty six projects have been granted approval by the Ministry of
Environment and Forests which is the first step before the EB decides,"
said Ajay Mathur, president of SenergyGlobal -India's first CER trading
company.
In fact SenergyGlobal has already signed three contracts in India to "buy"
CERs from green companies as and when the projects get approval and
contribute CERs.
"We have volunteered to do some hand-holding for these companies and are
also open to similar work in other countries," says Mr Mathur, admitting
that his company is one-of-a-kind mentor-trader. With most companies
contributing small quantities of CERs, and the requirement being
30,000-10,000 tonne, he hopes to buy carbon credits from several companies
and then sell them to a developed country.
"I help the former hedge their Kyoto risk and the latter cut down on
transaction costs," he told ET.
Otherwise, the UNFCC's CDM structure has accredited five "verifiers" who
act as the eyes and nose of the EB including DNV, TUV, Veritas and BVQI.
These are the designated entities which track the CERS claimed by the
project. Others like Natsource of Canada and the World Bank's Prototype
Carbon Fund Act as intermediaries between the CDM project company and
buyers of CERs.
There are varying estimates of the potential opportunities under the CDM.
Earlier studies expected annual flows of as much as $ 1bn into India.
According to TERI sources, "If India can capture a 10% share of the global
CDM market, annual CER revenues to the country could range from $ 10-300m
(assuming that CDM is used to meet 10%-50% of the global demand for GHG
emission reduction of roughly 1bn tonnes of CO2, and prices range from $
1-6 per tonne of CO2)."
With the deadline for meeting emission reduction targets being '12 for
developed countries, Companies in developing countries are already running
short of time as their projects should have started by '02 at least. So
expect a mad rush for CDM approvals soon.


New Report Documents Profitable Corporate Actions To Slow Global Warming

New Report Documents Profitable Corporate Actions To Slow Global Warming
GreenBiz.com, 27 October 2004 - A new report from the World Resources
Institute highlights corporate actions to slow global warming at today's
Consolidated Edison's Environmental Excellence Forum.
In 2003, nine diverse northeast-based U.S. corporations -- Bristol-Myers
Squibb Company, Citigroup, Consolidated Edison of New York, Eastman Kodak
Company, General Electric, Johnson & Johnson, Northeast Utilities Service
Company, Pfizer, and Staples -- teamed up with WRI to form the Climate
Northeast initiative. Climate Northeast focuses on climate change
management strategies for energy use, emissions tracking, and innovations
such as green power purchasing.
Today's event marked the release of WRI's findings -- featuring case
studies from each of the companies -- in a report entitled A Climate of
Innovation: Northeast Business Action to Reduce Greenhouse Gases
"Companies can position themselves to be successful in a
carbon-constrained world and capture new markets for products and
services," noted WRI and all nine corporate partners in the foreword to
the report.
They added that business has a role to play in bringing about
technological solutions to climate change because its resources and focus
on innovation can drive a clean energy future and deploy new technologies
on a global scale.
"Forward-thinking companies can be proactive on climate change in a manner
consistent with growing their bottom lines," said Jonathan Lash, WRI
president. "These business leaders recognize that taking action on
environmental issues is more than being a good corporate citizen; it is
also good business."
According to the authors of the report -- Andrew Aulisi, Jennifer Layke
and Samantha Putt del Pino -- examples of the efficiency and financial
returns seen by these nine companies include:
Citigroup invested $2.5 million to upgrade centralize its lighting,
heating, ventilation, and air conditioning at 270 retail branches in the
New York City-Connecticut-New Jersey metropolitan area. With a
half-million dollars in efficiency rebates, it was able to pay back this
investment in a single year. Electricity and natural gas use were cut by
15 percent and the number of service calls to these branches was reduced
by 30 percent.
Staples decreased its energy use by 12.3 percent since 2001. In 2003,
Staples took the money it saved from this $6.5 million energy-efficiency
gain and used it to buy renewable energy -- and at no additional cost
Staples was able to green 10 percent of its energy use.
General Electric continues to diversify into clean power technologies. In
addition to its higher-efficiency appliances and turbines, the company has
made major investments in solar power and wind power -- and is bringing
world-class design and manufacturing skill to these smaller-scale
technologies.
"We are undertaking these projects because they make business sense" said
Randolph Price, vice president for environment, health and safety,
Consolidated Edison Company of New York. "We hope our experiences will be
useful for other businesses interested in getting started with
greenhouse-gas management programs."
The new report says that global warming is a long-term global challenge
that can be addressed by starting today with practical, cost-effective
actions. Carbon dioxide and other greenhouse gases are emitted into the
air from every sector of economic activity, and each year these emissions
continue to rise. Energy use in the Northeast and Mid-Atlantic regions
represents 25 percent of the United States' greenhouse gas emissions.
These emissions contribute to a pattern of global warming that could
change weather patterns, raise sea levels and cause salt contamination of
water supplies in coastal areas, among other impacts. Policymakers are
moving forward under the leadership of New York Governor George Pataki to
develop a greenhouse gas registry and emissions-trading program in the
northeast region.


2.11.04

HP, Dell and IBM release electronics industry code of conduct

HP, Dell and IBM release electronics industry code of conduct
Ethical Corporation, 27 October 2004 - Hewlett-Packard, Dell and IBM have
joined forces to release an electronics industry code of conduct to
promote industry standards for socially responsible practices across their
global supply chains.
The code, developed in co-operation with electronics manufacturers
Celestica, Flextronics, Jabil, Sanmina SCI and Solectron, establishes a
standards-based approach to monitoring supplier performance on labour and
employment practices, health and safety, ethics and environmental
protection.
The new code replaces individual codes of conduct used by the companies
and simplifies supplier compliance, as well as auditing and verification.
The partners are urging other electronics businesses and suppliers to
adopt the code, which encourages participants to go beyond legal
compliance to use internationally recognised standards to advance social
and environmental responsibility.
A spokesman for the As You Sow Foundation, a non-profit representative of
socially concerned investors, says the code of conduct is an important
precedent for the electronics industry and others that rely on global
supply chains and is an effective mechanism for driving social performance
improvements.
HP, which facilitated the collaboration, has assessed more than 150 of its
350 suppliers for compliance with the code and is currently evaluating the
other 200. The company will have completed audits of 50 factories in
China, Mexico, South-east Asia and Eastern Europe by the end of October
and has plans to assess 50 more next year.
The code is available for review on each of the participating companies?
websites.


Political climate warms for Kyoto: High oil prices and nuclear revival should help treaty

Political climate warms for Kyoto: High oil prices and nuclear revival
should help treaty
Financial Times, 25 October 2004 - The Kyoto protocol on climate change
will come into force next spring. This is now certain after the Russian
Duma ratified it on Friday. For reasons specific to the way the treaty was
written, Russian approval has become key to its taking effect, and it will
do so three months after Moscow completes all ratification formalities.
Kyoto remains hugely controversial. The US rejects its attempt to reduce
greenhouse gases; the Bush administration contests the very notion of
global warming, or at least that man-made pollution has helped cause it.
Other sceptics admit the problem exists and man has made it worse, but
argue that countries might do better to devote their money and resources
to adapting to climate change rather than fighting it. Even Kyoto's most
fervent proponents concede that it is only a modest first step.
Initially, it only bites on the richer industrialised countries that have
signed and ratified it - essentially the European Union states, Japan and
Canada - and then only to ensure that by 2008-12 their emissions will be
an average 5 per cent below what they were in 1990 when the world first
addressed the climate change problem.
But at least Kyoto provides a start to an inevitable shift away from
polluting fossil fuels towards carbon-free energy such as renewables and
nuclear power. For there is not a reputable oil expert on the planet who
believes the peaking of world oil production can be delayed much beyond
2030.
Three factors could be auspicious for Kyoto. One is the possibility that
the US position will evolve. Even if John Kerry were to win the election,
there is little chance of Kyoto as presently written passing the US
Senate, where Democrats are as solidly against it as Republicans.
On the other hand, Americans cannot fail to be somewhat impressed by the
fact that the rest of the world plugged on with Kyoto without them. It
might, too, be possible to entice a President Kerry or even a re-elected
Mr Bush into discussions about a successor treaty to Kyoto, if the EU were
to play down its high moral tone and play up the role of US energy
technology in combating climate change.
The second factor is high oil prices. Over the medium term, these will
fall from current levels, but probably not to below Dollars 25-Dollars 30
a barrel. This provides a spur to oil output, but since such production
has eventual limits, it is also a prop to development of renewable
energies such as wind power.
The third factor is a revival of interest in nuclear power. Last week
France announced the building of another reactor. That is no surprise in
atom-addicted France, but it comes on top of reactors being built in
Finland and several Asian countries where nuclear power never went out of
fashion.
None of the problems posed by nuclear power has been solved - and
certainly not possible bomb-making by Iran or North Korea. But some have
eased. Higher gas costs have raised electricity prices and, at least
temporarily, pulled nuclear companies, such as British Energy, out of the
doldrums into which energy liberalisation plunged them.
Reactor safety has improved. And while most countries still let
radioactive spent fuel pile up near reactors because they cannot decide on
a final resting place, Finland has made such a decision, and Sweden and
the US are approaching one.
Nuclear power is the one carbon-free energy environmentalists love to
hate. Yet it is the only significant complement to renewable energy that
can make Kyoto work.
Copyright 2004 The Financial Times Limited