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Part 2 - The "Next Ozone Hole" 1985
             2.1 Climate Science
             2.2 Non-Government Organization (NGO) Action

2.1 Climate Science
According to the Intergovernmental Panel on Climate Change's (IPCC) Third Evaluation Report (2001), the global mean annual temperature may increase by as much as 5.8 degrees centigrade by 2100. Globally the 1990s was the warmest year in the instrumental record since 1861 and analysis of proxy data for the Northern Hemisphere indicates that the increase in the 20th century is likely to have been the largest of any century during the last 1000 years. Global average sea levels have risen and ocean temperatures have increased. Snow cover and ice extent are receding. While there are natural variations in climate, the IPCC believes that "emissions of Greenhouse gases and aerosols due to human activities continue to alter the atmosphere in ways that are expected to affect climate". (1)

The IPCC's assessment is the most rigorous of any assessment of climate change. The report cited above involved the participation of 99 IPCC member countries, 122 Lead Authors, 516 Contributing Authors, 337 Reviewers and 21 Review Editors. (2)

Value at Stake
The impact of climate on society and the economy and on individual businesses is fundamental although not always acknowledged. Almost every business is impacted by the weather directly or indirectly through their value chain. The impacts of extreme weather are obvious however more subtle changes can also have a huge impact.

For example from October 1994 to November 1995 England and Wales experienced an average temperature increase of just 1.5C. Farmers lost £180 million, electricity generators £355 million, clothing retailers £380 million and insurance lost £350 million due to drought-induced subsidence. In August 1995 England's human mortality rate increased by 5% due to warmer temperatures. (3)

The value at stake from an unstable, unpredictable climate where deviations from the "norm" become normal and extreme weather events become more frequent and intense has a variety of impacts on business. These can include demand, sales, revenue, cash flow, turnover, productivity/efficiency, outages, damage, accidents, staff well-being, product quality and durability amongst others.

Developments and Trends
In July 2003 the World Meteorological Organization acknowledged that human induced climate change was a reality, citing IPCC's research and a wide variety of extreme and record weather events from the 185 national weather services it represents. (4)

Recent research from the University of Virginia at Charlottesville cited in the New Scientist, covers 2000 years of temperature proxy records from 13 regions of the world. It extends the period in which the 1990s rank as the warmest decade in the northern hemisphere from 1000 to 2000 years and strongly suggests that the same applies to the southern hemisphere. (5)

Scientific opinion regarding global warming and climate change is hardening. While skeptics remain, they are becoming increasingly marginalized as the weight of scientific opinion swings in behind the IPCC and additional non-IPCC research that firms up the IPCC's predictions. Many national governments are also now undertaking their own research. In countries as geographically dispersed as the UK (6), Australia (7) and New Zealand (8) for example, credible national climate research institutions have confirmed the IPCC science. The US National Academy of Sciences confirms the Earth's surface temperature has risen by about 1 degree Fahrenheit in the past century, with accelerated warming during the past two decades. The Academy also concludes that there is new and stronger evidence that most of temperature increases over the last 50 years can be attributed to human activities. (9)

Implications
As scientific evidence continues to mount, it will become increasingly difficult for policy makers to deny or post-pone action that addresses climate change. Just as was the case with the global response to ozone depletion in the 1980s, there is a point where public opinion demands action and action can be swift. Those economies and businesses that recognise and respond to climate change sooner will be in far better shape to cope with the economic implications of policy, that could eventuate, such as taxation and regulatory measures as well as pressures from civil society including increased litigation, consumer and shareholder activism and campaigns from non-government organizations.

References

     1. The Report from Working Group 1 of the IPCC
     2. Climate Change and Climate Variability, NRMA Insurance, July 2002
     3. Opportunities and Risks From Climate Change, Swiss Re, 2002
     4. The Independent, 3 July 2003
     5. New Scientist, July 12, 2003

     6. Peter Stott, UK Met Office, The Observer, July 27, 3003
     7. CSIRO website www.dar.csiro.au/publications/projections.pdf
     8. Gavin Fisher, National Institute of Water And Atmosphere, presentation to NZBCSD
         seminar, Auckland, September 11, 2003
     9. US EPA website - Global Warming - Climate

2.2 Non-Government Organization (NGO) Action
Description
The last 30 years has seen a significant increase in the number of non-government organizations operating both nationally and internationally. This has coincided with far greater public awareness of social and environmental issues and a change in public expectations about corporate behaviour. NGO's are increasingly sophisticated in the strategies and tactics they employ to achieve their goals. A large percentage of NGO campaigns are focused on environmental issues and a very significant number see climate change as a priority issue. A number have a truly global brands including WWF, Friends of the Earth, Oxfam and Greenpeace. Thousands of other NGOs have extraordinary influence within their national boundaries. Combined they have supporters numbering in the tens of millions and budgets well in excess of a billion US dollars. While they operate autonomously, on issues such as climate change there is a high degree of cooperation, including sharing of research and campaign strategies within and across national boundaries.

Value at Stake
NGOs have a proven track record of threatening corporate value. Witness recent campaigns against DuPont, Monsanto, Shell and Exxon. The business value at stake is very broad. NGO campaign strategies can include:

• "Direct action" protests designed to disrupt day to day operations;
  
• Lobbying for increased regulation at the state/provincial level, nationally and internationally through the global conventions. This can both drive up compliance costs and restrict business activity generally;
• Shareholder activism, in the form of purchasing shares in companies in order to attend and raise issues of concern at annual general meetings;
• Boycotts and product/technology specific campaigns that can reduce sales; and,
• High profile sustained media campaigns that can damage corporate reputation and brand.

Developments and Trends
In recent times we have seen a shift toward "market-based" campaigns where NGOs have aligned themselves with brand name companies that take leadership positions on issues such as climate change. Examples include NGO cooperation with BP and Shell and the continued demonizing of Exxon and others in the oil sector. Or the pragmatic relationship with DuPont based on its commitments to reduce greenhouse gas emissions. In this way NGOs leverage corporate leadership to set new benchmarks in corporate behaviour and to punish laggards that resist change by portraying them in the public eye as irresponsible operators.

On the positive side, NGOs have in recent times campaigned for the adoption of new technologies and products. In the context of climate change, most NGOs are campaigning in support of renewable energy technologies and the removal of market barriers to their adoption.

NGO's have also discovered the potential power of investors and the financial sector more broadly as potential drivers of corporate change. In the near future banks and insurance companies may become the NGOs greatest strategic partners on climate change.

Expect increased advocacy for renewable energy and alternatives fuels and hardened opposition to high carbon fuels, particularly coal. Overall, expect campaigners to link climate change to other problems such as drought, wildfire, spread of diseases like malaria, and other issues.

Implications
NGOs capability to mount market campaigns is a significant trend because it signals their recognition that the market, and not just regulation can be used to drive change in the corporate sector. While corporations can resist regulatory change through significant lobbying efforts and political leverage, controlling market forces is much more difficult.

The growing focus on the market as a mechanism to drive change presents new risks particularly in the case of climate change where NGOs are employing their full suite of strategies and tactics to drive change including an increasing focus on the market, investment and finance. While this creates additional risks in many cases, the NGO shift toward market campaigning can create new opportunities to market new products and services that reduce the threat posed by climate change.

Go to Part 3 - Emerging Corporate Leadership - 1995

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