Friday, May 30, 2014

Climate Change not an important issue for the Institute of Directors

Graham Leach, the previous Chief Economist at the Institute of Directors, wrote in the Director magazine of February 2014: ”10 years from now man-made global warming will have been exposed as a myth.” When James Sproule, his successor, visited Leeds last month I asked whether he endorsed that view. His response and my comments are below. I spoke to him again  this morning and he told me that climate change was not an important issue for the IoD.

In response to my question James Sproule said that there was disagreement within the IPCC (Intergovernmental Panel on Climate Change) between scientists and economists. The economist view is that it is reckless to plan for what might happen in 100 years’ time when so much has radically changed in the last 100 years and so much more will change in the next.

Here's what I think.
First of all, Graham Leach was not commenting on the planning cycle, when he said “man-made global warming will have been exposed as a myth.” He was rubbishing the science, which he is surely not qualified to do. His remark is reckless in that it could lead the uninformed to believe that there is nothing to worry about and nothing need be done. The report from the IPCC last month shows that it is 95% scientifically certain that we are on the threshold of a problem which will have serious consequences far sooner than 100 years hence. 

Secondly, not all economists suggest that we should sit on our hands and wait and see what happens. Lord Stern published his report in 2006 where he stated that a relatively small investment of global GDP could mitigate the worst effects of climate change if action were taken promptly. Since then he has written that things are worse than he then thought, and since not much action has been taken the cost of mitigation is now very much greater.

Third, CDP, the Carbon Disclosure Project, is an organisation backed by more than 750 global institutional investors who have assets worth $US92trn under management. Each year they request information on greenhouse gas emissions, energy use and the risks and opportunities from climate change from thousands of the world’s largest companies. If they take the trouble to do this they surely believe there is an issue and that the information will enable them to take action - else why collect it?

In my view the future is sustainability. Sustainable business is essentially efficient business, and there is nothing new in examining each stage of the production process to see what improvements or cost savings can be made. Carrying out this analysis from a sustainable viewpoint could mean assessing the availability of key materials and redesigning products to make less use or no use of them. It could mean embracing new technologies such as 3D printing, where there is minimal waste and large parts of the supply chain can become redundant, so transforming some industries. The circular economy will become increasingly important as producers redesign not just to make less use of materials but to produce items that can be disassembled, remanufactured and re-used, thus saving the costs of new materials and the cost of waste disposal. Sustainable business is good business. Developing renewable energy is sustainable from the energy security point of view. Nobody controls our wind and no one can cut off our sunshine. We don’t get much gas from Russia, but we do get 20% of it from Qatar by sea. As the North Sea declines we’re a net importer of oil. A generation ago we were self-sufficient in energy. We can be again. (Without fracking.)

We have challenges. Climate Change is just one of them, but we need a clear understanding, a clear direction and a positive lead on the whole sustainable future. The “greenest government ever” has failed to develop coherent policies. I would like to think the IoD could inject some informed realism into the debate. 

If you can spare 9.33 minutes, have a look at this video