Beside all the challenges surrounding UN negotiations, there are grounds for optimism especially in light of initiatives that have already been taken outside of the UN. Overall, we stress the urgency to get an agreement as the first commitment period of Kyoto expires in 2012.
Tackling Climate Change at Dexia AM
Dexia AM joined the global fight against Climate Change by analysing corporate exposure to this global challenge. Adaptation to climate change and mitigation of Greenhouse Gases (GHG)emissions is embedded into Dexia AM’s analysis of companies’ business models, environmental strategy and performance, and their compliance to international norms.
Dexia AM’s first looks at risks and opportunities of company’s business models to assess to which extent they can contribute positively or been negatively exposed to Climate Change.
Then, companies are evaluated according to their processes and products related environmental impacts (manufacturing, distribution aspects, use and disposal). Dexia AM’s sustainability analysis takes into account GHG emission associated with the entire conversion process from raw material to final products.
Dexia AM’s also fully supports UN Global Compact principles and looks at companies alleged breaches of environmental principles in order to screen out those confronting too many controversies.
Exposure to climate change is most negatively affecting Energy, Transport, Utilities and Building materials’ sectors analysis.
Dexia AM is actively fostering companies to turn their climate change strategy into concrete actions and improve transparency related to ESG issues.
Durban Agenda
Durban Climate Change Conference is the next step after talks in Cancun where 190 nations worked on agreements to tackle climate change. The Durban UN conference has to deliver a roadmap to set up a global legal framework with targets for cutting CO2 emissions by 2050 in order to take over the Kyoto Protocol as the first commitment period expires in 2012.
Participants will also attempt to finalize the Green Climate Fund project promised by developed countries to help developing countries to finance climate change related programs. No fundraising agreements have been concluded yet as the fund has to reach $100bn by 2020.
Durban negotiations: opportunities and challenges
The conference is taking place at a time where scientific knowledge confirms the reality and irreversibility of global warming. In order to limit global warming to 2 degrees in 2050, scientists within the IPPC recommended limiting CO2 concentration to 450 parts per million towards 2050. However, in light of the 2009 Copenhagen Accord, the United Nations Environment Program, concluded on “a ‘likely’ temperature increases of 2.5° C to 5°C up to the end of the century.” Other sources have come to similar conclusions.
In 2010, worldwide GHG emissions have been growing by 5.8% against real economic growth of 5.1%, as economic growth slowed in industrialized countries.
The Fukushima accident in March 2011 has casted doubts over nuclear technology and safety, previously viewed as a core part of the low carbon energy mix. The second round of the debt crisis has seen “green stimulus” reduced and often replaced by austerity packages in the EU and USA. In the mean time, world population growth continues to feed massive world energy needs, a source of greenhouse gases emissions growth.
Overall, Durban is taking place in a mix of challenging macro economic, political and technological conditions.
But still, there is definitely ground for optimism…
…Autonomous initiatives outside of the United Nations’ framework
Outside of United Nations’ negotiations, actions taken by Australia (Energy Future package), China (12th Five Year), India (draft on low carbon strategy) and Brazil (10-year energy plan) reflect strong commitment to tackling climate change. Together, these countries account for 32% of 2008 worldwide emissions and more than 50% of future emission growth. On common feature of Brazil, India and China is sustained economic growth driven by population and a strong resource base. Both India and China have also reiterated their commitment to nuclear generation. We think that these countries will consolidate their position as leaders in the on going negotiations. Meanwhile, the private sector is playing an increasing role in implementing climate change initiatives within cost cutting initiatives, business strategy (product launches) and corporate governance (ESG factors embedded into business plans and remuneration).
More than ever, Dexia AM is supporting the elaboration of a green house gases reduction framework, and encourages companies to accelerate the implementation of active climate change strategy.