Time for business to get ready for carbon change

CLIMATE change has dominated the political debate in Australia and globally in the lead-up to the 15th Conference of the Parties to the United Nations Framework Convention on Climate Change, that is referred to by the acronym COP15.

The UN Convention has been in place since 1994, when the governments of 192 countries ratified the convention and agreed to gather and share information on greenhouse gas emissions, national policies and best practices; launch national strategies for addressing greenhouse gas emissions and adapting to expected impacts; and co-operate in preparing for adaptation to the impacts of climate change.

The most significant previous meeting of the parties to the UN Convention was the COP3 that was held in Kyoto in 1997 and resulted in the Kyoto Protocol. Since Kyoto there have been 11 annual meetings of the signatory countries to the Convention. Each of these meetings was primarily directed towards finding solutions to technical matters regarding how to implement the Kyoto Protocol.

In Bali during the 2007 COP13, the decision was taken to develop a new agreement to replace the Kyoto Protocol. The outcome from COP13 was the document known as the Bali Action Plan that set the negotiation framework leading up to the new global agreement that was negotiated in Copenhagen this time in COP15.

Will the outcome of the Copenhagen COP15 make a difference? Over the next few years a global price for greenhouse gas emissions will be established as more countries set targets and adopt emission reduction strategies.

A price for carbon will be either observed directly in carbon markets, or it will be implied as a result of taxes or other regulatory charges. Companies and business organisations will be able to use this price data to modify their operations so as to remain competitive in the global economy. This may involve sourcing materials and supplies from low carbon emitting businesses, adopting new low carbon emitting business processes and designing and supplying consumers with low-carbon emission products and services.

The post-Copenhagen world economy will offer businesses a great array of opportunities. These will include developing new technologies, redesigning industrial and manufacturing processes, reducing supply chains and transport links associated with high carbon emissions, as well as measuring and communicating information about carbon emissions and climate change to investors, consumers and the general public.

Managers and directors of companies will have only a short time to get ahead of the technology curve and seize competitive advantage in the new carbon-constrained economy. Building business capability in an economic era where there is going be a restriction on the extent of greenhouse gas emissions is the number one challenge facing companies today. The time to get ready for new management, business and investment practices is now.

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