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Corporate Responses to Global Climate Change: Threats and Opportunities

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Corporate Responses to Global Climate Change: Threats and Opportunities Jason Kibbey Steve Aronowitz Elizabeth Singleton Pedro Vieira Alec Perkins – PowerPoint PPT presentation

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Title: Corporate Responses to Global Climate Change: Threats and Opportunities


1
Corporate Responses to Global Climate Change
Threats and Opportunities
Jason Kibbey Steve Aronowitz Elizabeth
Singleton Pedro Vieira Alec Perkins
2
Overview
  • Climate Change Impacts
  • CERES Analysis of Carbon Disclosure
  • Information to Action Industry Analysis
  • Technology
  • Energy
  • Ski Areas
  • Real Estate
  • Climate Change as Strategic Advantage
  • Sources

3
Changing Climate
  • Global Temperatures increasing
  • Levels of CO2 increasing
  • Anthropogenic drivers

4
Climate change threats to society and profits
Threats to profits and corporations
Threats to planet and society
  • Threat of comprehensive regulations at
    transnational, national, state, and even local
    levels
  • Threat of negative consumer response
  • Direct liability from physical changes due to
    climate change (weather, sea level rise,
    agricultural growing zones, snow patterns, water
    availability, etc.)
  • Legal liability
  • Global sea level rise is likely to be at least
    0.28 meters (1 foot) in this century
  • Forecasts predict that climate change could
    increase forest fires by 143 percent.
  • The risk and severity of flooding is exacerbated
    by climate-induced melting in early spring.
  • Evidence that indicates that ocean warming
    increases the intensity of hurricanes
  • Increased incidence of human morbidity and
    mortality

5
Overview
  • Climate Change Impacts
  • CERES Analysis of Carbon Disclosure
  • Information to Action Industry Analysis
  • Technology
  • Energy
  • Ski Areas
  • Real Estate
  • Climate Change as Strategic Advantage
  • Sources

6
Corporate Awareness Action Still Low
The Carbon Disclosure Project (CDP4)
7
High Impact Industries Understand the Importance
of Climate Change to their Business
Percentage of Information Provided by Key
Industry in CERES CDP4
8
Overview
  • Climate Change Impacts
  • CERES Analysis of Carbon Disclosure
  • Information to Action Industry Analysis
  • Technology
  • Energy
  • Ski Areas
  • Real Estate
  • Climate Change as Strategic Advantage
  • Sources

9
Industries Analyzed
Technology Energy Ski Industry Real Estate
HP Intel BP PGE National Ski Area Association Aspen Snowmass ProLogis Westfield Malls Liberty Property Trust
10
Framework for Analysis
  • Threats Business practice contribution to GHG
    emissions and corresponding potential impact from
    climate change action/regulation
  • Opportunities Profitable response to climate
    change threat
  • Action Steps/ meausures taken by company to date
    or currently in process
  • Alignment Level to which Action is appropriate
    to threat and opportunities

11
Technology
12
Threats
  • Highly visible brand likely to be targeted by
    activists and regulators
  • Products contribute to GHG emissions through
    energy consumption
  • Normal business practices contribute GHG
    emissions
  • Sophisticated workforce will require company
    commitment to global problem

13
HP
Opportunities
Action
Alignment
  • HPs invent tagline and reputation for
    innovation could be strengthened through
    application to climate change problem
  • Sophisticated workforce could volunteer IT and
    computing skills to climate research and data
    analysis tasks
  • Large GHG footprint indicates potential
    efficiency improvements
  • Partnership and emissions reduction in strong
    alignment
  • Could do more to improve GHG contribution of
    products
  • Energy audits and reduction of GHG emissions
  • Entered into partnership with WWF to provide
    support to climate change research programs

14
Threats
  • Most visible microprocessor brand--main product
    consumes a significant share of worlds energy
  • Intel microprocessors will play a measurable role
    in future world energy consumption
  • Products contribute to GHG emissions through
    energy consumption
  • Normal business practices contribute GHG
    emissions
  • Sophisticated workforce will require company
    commitment to global problem

15
Intel
Opportunities
Action
Alignment
  • Improving product design and efficiencies could
    lead to significant GHG emissions reductions
  • Large GHG footprint indicates potential
    efficiency improvements
  • Products could potentially be used for dramatic
    improvements in climate modeling
  • Strong alignment with product design focus on
    energy efficiency
  • Impressive annual energy efficiency improvements
  • Recognizes human causes of climate change and
    supports government policies to curb GHG
    emissions
  • Focusing significant RD dollars to more energy
    efficient chip designs to reduce power
    consumption
  • Reducing energy consumption by 4 annually

16
Ski Resort Industry
17
National Ski Area AssociationThreats
  • Direct economic threat. Shorter ski seasons,
    less snowfall, more precipitation as rain all
    equal less lift tickets purchased.
  • Many resorts also make revenue from real estate
    sales, prices could be impacted.

18
National Ski Area Association
Opportunities
Action
Alignment
  • Many customers are concerned with the issue, can
    build a relationship on shared values and action.
  • Easy to communicate with customers about actions
    taken and recommend actions for them.
  • Legitimacy in debate over global warming based on
    self-interest.
  • Resorts, customers and society interests are all
    aligned.
  • Dont have expertise in reduction so partnered
    with NRDC.
  • Ability to talk to customers in appropriate and
    convincing language.
  • BUT not all resorts are participating, still
    fractured industry despite leadership from top.
  • Partnered with NRDC to start Keep Winter Cool
    Campaign.
  • Web site, targeted TV and print ads, info at
    some resorts.
  • Members are buying wind/solar energy and/or
    offsets.
  • Educating customers how to reduce footprint.
  • Backing legislation.

19
Aspen Snowmass
  • Same threats as general industry.
  • Face a specific geographic location with high
    environmental values.

20
Aspen Snowmass
Opportunities
Action
Alignment
  • Chance to lead the industry on this issue, go
    beyond what other resorts are willing to do.
  • Brand association with environmental action.
  • Significant control due to near monopoly in the
    Aspen area.
  • Started own campaign, Save Snow.
    www.savesnow.com
  • Amicus brief in the EPA carbon lawsuit.
  • Print ads in lifestyle magazines.
  • 100 carbon offsets with wind power.
  • Distinguishing with first and only in
    industry on website.
  • Same as industry.
  • Could be more closely aligned with local
    residents and specific customers than industry in
    general.

21
ENERGY
22
BP Beyond PetroleumThreats
  • Top 3 energy company-- likely to be targeted by
    activists and regulators
  • Its products are major contributors to climate
    change
  • Its operations contribute strongly to GHGs
    emissions

23
British Petroleum
Alignment
Opportunities
Action
  • Strong alignment with technology
  • Strong alignment with product design
  • Playing a distinguished role in the industry
  • Exploring new market opportunities
  • Better product design can lead to dramatic
    reduction on emissions
  • New markets
  • Ability to influence legislation
  • Better brand recognition
  • Cost savings
  • First multinational corporation to join the
    consensus on climate change.
  • Committed to reduce GHG emissions from its own
    business operations.
  • Joined international efforts to reduce GHGs
  • Renewables were officially moved up on par with
    BPs other business lines

24
Threats
  • Green-push from customers
  • Products contribute to GHG emissions
  • Operations contribute to GHG emissions

25
Pacific Gas Electric Company
Opportunities
Action
Alignment
  • New markets
  • Ability to influence legislation
  • Better brand recognition
  • Cost savings
  • Alignment with portfolio design
  • Alignment with market expectations
  • Playing a distinguished role in the industry
  • Exploring new market opportunities
  • Reporting (e.g. Carbon Disclosure Project)
  • Reduce rates of GHG emissions from operations
    (one of the lowest rates of GHG emissions in the
    nation)
  • Sharing best practices (SF6 reduction
    partnership CH4 from NG distribution)
  • Advancing responsible businesses (USCAP, Clean
    Energy Group)
  • ClimateSmart (carbon neutral program)

26
REAL ESTATE
27
Real Estate Companies
  • Threats
  • Office, Mall, Industrial Storage, and Apartments
    generate a significant amount of emissions and
    location of development impacts the necessity for
    increased or decreased automobile emissions from
    commuter and transportation vehicle.
  • Natural disasters present a real risk to real
    estate assets
  • Climate changes could create population shifts
    away from office and malls strongest growth
    regions. CA, AZ, costal regions
  • Opportunities
  • First movers will have an advantage in securing
    green tenants
  • Reduced emissions will reduce expense to property
    managers and tenants
  • strategic development locations will help attract
    tenants unwilling to commute.
  • Most experienced green / LEED certified
    developers will win valuable state / university
    and green conscious clients

28
Real Estate Companies
Control 26 Bil of real estate assets
Response to Climate Change
  • Joined the Chicago Climate Exchange requiring
    complete offset of their carbon footprint for
    all properties in the US
  • Quantified (but did not disclose) total carbon
    output at all facilities worldwide
  • Installed solar roofing panels on several
    development projects. (didnt say how many, or
    give a percentage of total energy used)
  • Selected development sites to minimize
    transportation/ carbon emission. (part of core
    strategy)
  • Provided recharging stations at Denver HQ for
    electric vehicles. (probably minor total impact,
    but positive for employee satisfaction)
  • Redeveloped properties instead of greenfield
    building.
  • Made Sustainability their 2005 tagline for
    their 10K and integrated it through their
    economic reporting with mention of continued
    carbon reduction as a goal.
  • 422 mil sq ft
  • 2466 properties
  • 80 mkts in Asia, Europe, and US
  • 1st public real estate co to offset carbon
    footprint

Connection to Strategy
  • Carbon offset strategy helps win business w/
    environmentally conscious customers
  • Energy efficiency at properties reduces
    customers expense on triple net leases by
    cutting energy costs.
  • Locating properties near distribution hubs and
    reducing transportation emissions is core to
    industrial distribution strategy.
  • Decreased carbon output from properties increases
    likelihood of future development approval from
    local and state governments.
  • First mover advantage over AMB, others and a
    partial reason for their 1 rank in Real Estate
    for Fortunes most admired companies.

29
Real Estate Companies
Response to Climate Change
Westfield Shopping Centers
  • Reduced carbon dioxide emissions during
    construction by 40 on recent office development
  • Committed to further disclose climate risk
    information to investors at the urging of the
    INCR
  • Used wind generated energy to power common areas
    thus reducing GHG emissions
  • Located development near public transportation
  • Lead office REITs in developing LEED certified
    buildings that stipulate reduced emissions
  • 2005 10K includes an argument that green
    buildings provide financial benefit as well as PR
    benefits
  • 49 Bil mkt cap
  • 65 million sq ft
  • 700 properties
  • 2,100 tenants
  • Located in mkts in US/ UK/ NZ and Australia

Connection to Strategy
  • Focusing on reduced emissions buildings is
    directly connected to their core strategy of real
    estate development
  • Reduced energy consumption saves tenants and
    Liberty on increasing energy costs in the long
    run
  • Several tenants are demanding lower emission
    buildings closer to public transportation
  • Improves likelihood of future development
    approvals from state and local governments
  • Has helped win contracts with universities and
    other public projects

30
Real Estate Companies
Response to Climate Change
  • Took part in a review of each shopping centers
    impact on climate change and energy as well as
    other environmental concerns lead by an
    independent consultant.
  • Retrofitted lighting in 11 shopping centers to
    conserve energy and quantified the results. Total
    cost was 4.6 million but energy savings of
    2.6millon annual will make the project cost
    effective in less than 2 years and will save 30
    million kWh of electricity per year.
  • Located mall developments near public
    transportation and committed to reducing energy
    and transportation at new sites.
  • Website highlights their positive contributions
    to the environment and climate change
    specifically for positive PR and improved
    disclosure.
  • 48 Bil in real estate assets
  • 100 mil sq ft
  • 121 properties
  • 22,750 retail outlets
  • 20 mkts in US/UK
  • 1st Green Builder

Connection to Strategy
  • Focusing on reduced emissions buildings is
    directly connected to their core strategy of real
    estate development
  • Reduced energy consumption saves tenants and
    Westfield on increasing energy costs in the long
    run
  • Green tenants are demanding lower emission
    buildings closer to public transportation
  • Improves likelihood of future development
    approvals from state and local governments

31
Deep Dive Summary Action v. Threat
NSAA
Aspen
Intel
BP
PGE
Strong
HP
Pro logis
Action Taken
Liberty
Westfield
Trend line of expected future action and threats
Weak
Size of circle indicates magnitude of impact on
reducing GHG emissions
Small
Large
Threats
32
Inaction is no longer an option.
  • Growing societal expectations of action
  • Increasingly vocal scientific consensus
  • National and international policies on climate
    change inevitable

33
Overview
  • Climate Change Impacts
  • CERES Analysis of Carbon Disclosure
  • Information to Action Industry Analysis
  • Technology
  • Energy
  • Ski Areas
  • Real Estate
  • Climate Change as Strategic Advantage
  • Sources

34
Business Protection and Profitability define
strategic climate change response.
More aligned Intel Product roadmap focuses on high efficiency chips with lower power consumptionpotential to make significant WW power consumption reduction PGE Energy conservation strategies for consumers have become core element of message and service Ski Industries profitability and existence dependant on an aggressive climate change response. Less aligned HP Climate change response focuses on philanthropic investments and partnerships and reducing carbon footprint BP Media efforts and incremental alternative energy investments not impacting major dependence on fossil fuels REITs Addition of green development capabilities and carbon offsets havent changed core real estate portfolios energy consumption.
35
Turning climate change risk into strategic
business advantage
GHG Contributions Elevators, engines, HVAC,
helicopters
  • Green building advantage
  • Dow sustainability index
  • Emissions-free power generation

GHG Contributions PCs, servers, data centers
  • Low power consumption processors and chipsets
    driving product roadmap
  • Dramatic emissions reductions from company
    business practices

GHG Contributions Light bulbs, engines, power
facilities
  • Ecomagination Green is Green
  • GE investment portfolio approach to green
    technologies
  • CFLs, LEDs, Hybrid Locomotives, Photovolatics,
    Wind Turbines, etc all seen as NPV investments
    for GE

Greenhouse gas contributors have potential to
transition GHG liability into profitable business
advantage
36
Moderate contributors to climate change can find
strategic business advantage in climate change
response
  • Operational efficiency (HP, Intel, Westfield,
    Prologis, Liberty)
  • Improved consumer reception in the marketplace
    (PGE, Aspen, HP)
  • Reduced exposure to risk (Westfield, Prologis,
    Liberty)

Even companies without significant climate change
exposure can benefit from strategic climate
change responses
37
Conclusions
  • Climate change is critical to the future of
    business
  • Threat level vary by industry
  • Best responses to Climate Change are aligned with
    core business objectives
  • Companies with substantial Climate Change risks
    have the potential for significant business
    opportunity
  • Even companies with low to moderate threat levels
    are profiting from their responses to Climate
    Change

38
Overview
  • Climate Change Impacts
  • CERES Analysis of Carbon Disclosure
  • Information to Action Industry Analysis
  • Technology
  • Energy
  • Ski Areas
  • Real Estate
  • Climate Change as Strategic Advantage
  • Sources

39
Sources
  • Intergovernmental Panel on Climate Change,
    Climate Change 2001 Synthesis Report, Summary
    for Policymakers, http//www.ipcc.ch/pub/un/syreng
    /spm.pdf, p. 5. in Climate Risk Disclosure by the
    SP 500. Ceres, January 2007.
  • National Research Council, Committee on Surface
    Temperature Reconstructions for the Last 2,000
    years, Surface Temperature Reconstructions for
    the Last 2,000 years, Prepublication Copy, Pp.,
    3-5 (Washington, DC National Academies Press,
    2006) in Climate Risk Disclosure by the SP 500.
    Ceres, January 2007.
  • Except where noted, this summary is taken from
    Allianz Group and World Wildlife Federation,
    Climate Change and Insurance An Agenda for
    Action in the United States, October 2006 in
    Climate Risk Disclosure by the SP 500. Ceres,
    January 2007.
  • A.L. Westerling, H.G. Hidalgo, D.R. Cayan, and
    T.W. Swetnam, Warming and Earlier Spring
    Increase Western U.S. Forest Wildfire Activity,
    Science, August 18, 2006, Vol. 313, No. 5789, pp.
    940-943 in Climate Risk Disclosure by the SP
    500. Ceres, January 2007.
  • Association of British Insurers, Financial Risks
    of Climate Change, Summary Report, June 2005, p.
    4 in Climate Risk Disclosure by the SP 500.
    Ceres, January 2007.
  • Kerry Emanuel, Anthropogenic Effects on Tropical
    Cyclone Activity, MIT, January
    2006,http//wind.mit.edu/emanuel/anthro2.htm in
    Climate Risk Disclosure by the SP 500. Ceres,
    January 2007.
  • Paul R. Epstein, Climate Change and Human
    Health, New England Journal of Medicine, October
    6, 2005, p. 1434 in Climate Risk Disclosure by
    the SP 500. Ceres, January 2007.
  • www.CERES.org
  • www.BP.com
  • www.PGE.com

40
Sources (continued)
  • www.prologis.com
  • www.westfield.com
  • www.libertyproperty.com
  • ProLogis 2005 Annual Report
  • Westfield 2005 Annual Report
  • Liberty Property 2005 Annual Report
  • www.HP.com
  • www.intel.com
  • www.ecomagination.com
  • www.utc.com
  • www.us-cap.org
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