Malaysia: PM Believes Private Sector Can Make A Difference
March 9, 2010 by admin
Filed under News Bites
Malaysian Prime Minister, Datuk Seri Najib Razak, has called on corporate Malaysia to assist the government in transforming the nation into a high income economy through its corporate social responsibility (CSR) programmes, according to the Malaysian Insider.
The Greening of Putrajaya
March 4, 2010 by admin
Filed under News Bites
Selangor’s No Plastic Bag Day is just one of the many new efforts at going green in Malaysia. There are now plans underway to turn Putrajaya, Malaysia’s administrative capital, into an eco-friendly city. According to a news report, the first initiative will be turning the Prime Minister’s Office Complex into a green building this year, while Putrajaya’s first commercial energy-efficient building is expected to be completed by 2012.
Putrajaya Holdings Sdn Bhd (PjH) project management division general manager, Hassan Ramadi, was quoted as having said:
We will have to do some retrofitting to change or modify its mechanical and electrical system, that is, the air-conditioning and lighting, to make it more energy efficient.
Hassan wad reported to have said that retrofitting would take about six months as it will not involve heavy renovation works or extra-sun-shading devices because the complex was already designed to meet this need.
Together this move is the building of another energy efficient structure, both in design and material, in Putrajaya – the Energy Commission’s (EC) Diamond Building, which is now under construction.
PjH planned to lease the commercial green building, when completed, to both government agencies as well as local and multinational companies (MNC).
The 2010 Budget targeted Putrajaya and Cyberjaya to be developed as pioneer townships in green technology. Building owners or developers who obtain Green Building Index (GBI) certification between 24 Oct 2009 and 31 Dec 2014 will be given tax exemption equivalent to the additional capital expenditure in obtaining the certificate.
Another green rating tool for the tropics is Singapore’s BCA Green Mark scheme, which was made mandatory in 2005 for all new buildings in the republic as part of submission to get certification.
Voluntary CSR Guidelines For India
February 12, 2010 by admin
Filed under News Bites
India’s Ministry of Corporate Affairs has launched voluntary guidelines for responsible business which aim to add value to the operations and contribute towards the long term sustainability of the business. These guidelines also aim to enable business to focus as well as contribute towards the interests of the stakeholders and the society. Read more
Coping with Copenhagen
by Paul R. Kleindorfer, courtesy of INSEAD Knowledge
| Represented by a group of faculty, students and alumni, INSEAD attended the Copenhagen Summit as an accredited Observer. Kleindorfer, who headed up the INSEAD delegation, reflects on what was and was not accomplished at the Summit. |
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Paul R. Kleindorfe
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The Copenhagen Climate Summit (COP 15) began on December 7, 2009, on the heels of the pirating of the East Anglia University Climatic Research Unit’s email exchanges, and calls of climate sceptics to re-examine the scientific basis for undertaking actions to limit greenhouse gas (GHG) emissions originating from human activity. The debate on this issue lasted only a few hours at COP15, as delegates from the 193 countries represented, noted the all too apparent signs of climate change already affecting many countries, especially developing countries, and the fact that the science underlying climate change – while uncertain – was sufficiently foreboding to warrant immediate and urgent action. With peak oil behind us and the implied necessity to move in any case to new sources of energy, the general reaction of the delegates to COP15 was that not moving ahead with strong actions to avert potentially disastrous consequences to the planet from global warming would not only be imprudent but irresponsible. The conference moved on quickly to the expected agenda of what targets could be set, how adaptation strategies could be financed in the developing world and how markets could be used to foster innovation and implement low-carbon targets efficiently.
What was achieved? The heads of state of Brazil, China, India, South Africa and the United States managed, in direct negotiations, to agree on a few principles, as recorded in the so-called ‘Copenhagen Accord’, which was finalised in the waning final hours of COP15. The Accord itself was not formally adopted by the Conference of Parties, but was merely “noted” by the COP (with all but five countries agreeing to the final wording of the Accord). While disappointing to many of the 193 country delegations for its failure to set specific targets for GHG reductions, the Copenhagen Accord nonetheless represented some important elements of progress.
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Let me note a few of these. First, China and the US did come to an agreement of sorts, and the last-minute breaking of the logjam at COP15 by US President Barack Obama and Chinese Prime Minister Wen Jiabao underlined the critical role of China and the US in these negotiations and the basic notion that the 30 or so countries responsible for 90 per cent of global anthropogenic emissions must be the primary countries to agree on practical steps going forward. The idea of “common but differentiated responsibilities” was further refined as part of climate change adaptation, and specifically in respect to discussions of aid to developing countries for adaptation and reforestation, with collective commitments approaching $30 billion for the period 2010-2012 and an agreed target of $100 billion by 2020 to provide funding for “meaningful mitigation actions” in developing countries. Finally, and most importantly, the Copenhagen Accord states that deep cuts in global emissions are required, based on available science, with a view to reducing global GHG emissions to levels consistent with maintaining global temperature increases at less than two degrees Celsius.
As important as these steps are for moving ahead to lower global GHG emissions, there were some real disappointments for business at COP15. The largest disappointment is the continuing uncertainty about what various national and regional governments will eventually do or will be required to do.
The general tone of the discussion at Copenhagen continued to be a portfolio of national approaches to GHG emissions, rather than international agreement on targets, on carbon pricing or other key ingredients that would allow businesses with global reach to plan for the future. While this portfolio approach may ultimately be the only feasible approach, it will understandably continue to cast a cloud over new investments, especially in energy-intensive industries.
Moreover, the nature of this uncertainty is lop-sided for European and North American investors in several important respects. The Copenhagen Accord is silent, for example, on border adjustments for carbon content of internationally traded goods (for example, metals and cement) that could be a significant advantage for companies in countries without input-carbon pricing regimes (such as China and India) relative to those operating in countries with such a regime (e.g., the EU). The reluctance of larger developing countries to agree to international audit and monitoring standards further reinforces the misgivings of energy-intensive companies regarding a level playing field on carbon input pricing. Add to this the pressures to move to even more stringent targets (for example, the proposed move to a 30 per cent reduction in GHG emissions, from 20 per cent, by 2020 on the part of the EU), and one can see why business leaders should remain very concerned about the continuing uncertainties regarding non-market drivers of profits after Copenhagen.
Perhaps the most important implication of Copenhagen for business leaders is the importance of improved risk management for companies in every sector going forward. Whether one is a believer or a sceptic on the science of climate change, Copenhagen clearly demonstrates a strong and continuing move forward by the international community, and pressures by an increasingly concerned public from all over the world. These movements and pressures will almost certainly lead to further national and international regulations and commitments in the foreseeable future.
Ready or not, these changes will have huge implications for business. For investors and managers, how well-prepared companies are to digest the uncertainties (political and economic) present in the climate change area will be central to company profitability. For energy-intensive manufacturing, developing new competencies in carbon measurement and trading will be central. For retailers, developing increased visibility and supply chain-wide measurements on energy, carbon and water use will be required to satisfy consumer and NGO demands for this information. For insurers and financial institutions, tracking and pricing the changing nature of weather-related risks and providing appropriate risk management services and risk transfer instruments to companies and governments will provide new challenges and new opportunities. Consulting companies are already booking a great deal of business in the sustainability and climate change area. Companies with global reach and significant stakes in emerging economies will be partners in the increased vulnerability of these countries to climate change risks and in the benefits from adaptation strategies. Given the scope of these consequences, business must play an active role to maintain the global economy on a course that continues to facilitate markets and trade, the great levers of wealth. At the same time, we must realise the critical role that political and scientific institutions of the planet will necessarily play in crafting the constraints and incentives that will help the citizens and businesses of the planet move from the current fossil-fuel economy to a sustainable future. More than anything else, the complexity of this task, but also the willingness to confront it and get on with it, are the basic messages of Copenhagen.
Paul R. Kleindorfer is the Dubrule Chaired Professor of Sustainable Development and Distinguished Research Professor at INSEAD
Copenhagen: What Should Investors Be Demanding From Companies?
Courtesy of INSEAD Knowledge
by Grace Segran, London
Environment ministers and officials will soon be negotiating a deal on climate change in Copenhagen. If successful, the agreement – also known as the Global Deal – will lock the world into emissions reductions at around 80 per cent.
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Bruce Duguid
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“The Global Deal refers to the hope of a new binding legal treaty to take place between the nations at the United Nations conference in Copenhagen in December,” says Bruce Duguid, head of investor engagement at UK’s Carbon Trust. “The aim is to find a successor to the Kyoto Protocol which runs out in 2012.”
The Kyoto Protocol is generally seen as an important first step towards a truly global emission reduction regime that will stabilise greenhouse gas (GHG) emissions, and provide the essential architecture for any future international agreement on climate change.
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Adopted in 1997 and enforced in 2005, the Kyoto Protocol sets binding targets for 37 industrialised countries and the European community for reducing GHG emissions. These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012.
“For investors, the Global Deal can fire the starting gun on the low-carbon race, showing that all countries are now properly pledged to move to a low-carbon economy,” he told INSEAD Knowledge on the sidelines of the EIRIS’s ‘Beyond Copenhagen - what next for the City?’ seminar held recently to debate the role and response of the investment community in tackling climate change.
Duguid believes that investors will ultimately realise successful investments if they invest in activities that will do well. This requires an understanding of the environment they are operating in. “Most investors implicitly act as though the world is heading to a high carbon world of, say, 700 parts per million (ppm) carbon in the atmosphere and 4-5C (degree celcius) temperature rises. If a Global Deal is achieved, this will aim to reduce CO2 emissions to a maximum of 450ppm and a 2C rise.”
Risks and opportunities
With the economic downturn, there are risks associated with near-frozen capital markets, as well as certainty and opportunities linked to government stimulus packages focusing on energy efficiency, renewable energy, clean technologies, taxation and forest protection, says Stephen Hine, head of responsible investment development at Experts in Responsible Investment Solutions (EIRIS).
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Stephen Hine
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“The goal of achieving a low-carbon economy will favour low-carbon activities. At a time when global capital is in short supply, businesses which continue to pursue unmanaged high-carbon strategies will be risking their investments as well as the climate,” he argues.
Businesses will also need to work closely with governments to create effective and practical rules to push forward with low-carbon investments and guarantee sustainability.
The Copenhagen meeting could result in beneficial outcomes for various industries linked to the development of stimulus packages and a clearer regulatory framework.
“A number of improvements have been observed in the strategies that companies have put in place with regard to their climate change impact. A higher proportion of companies have policies and systems in place, while the number of companies that report on their performance has also increased,” says Hine. “However, there are areas where further progress can be achieved, such as the involvement of the board in the company’s climate change initiatives through linking remuneration to performance in this area.”
The role of investors
Investors are in a key position in relation to climate change — they have a motive and opportunity to tackle this problem, Hine told INSEAD Knowledge. “As the owners of companies, they are able to exert influence in order to encourage companies to improve their response to the challenges of climate change, reduce their overall emissions and begin the transformation of their business models to enable them to compete in an emerging post-carbon world.”
EIRIS, a global provider of independent research into the social, environmental governance and ethical performance of companies, analysed the impact and response of some of the world’s largest 300 companies on the basis of 24 climate change indicators covering governance, strategy, disclosure and performance elements. Comparing the data with the results of a report published in 2008, they found there is a high level of unmitigated risk among the top global companies.
In view of this, Hine says that asset owners should demand that their asset managers integrate climate change into their investment process and monitor their performance in this regard.
The report also shows that high-risk companies are improving with regard to how managers of companies are responding to climate change but there is still a long way to go. “There is an opportunity for investors to exercise their voting rights and to engage companies to minimise risk,” he adds.
Investors, though, need to demand greater transparency from companies to evaluate their exposure and performance regarding climate change.
Protecting and enhancing investments
Hine says investors can take steps to protect and enhance their investments by identifying portfolio risks. Understanding the carbon profile or footprint is an important first step.
Another step is to ‘factor in carbon’. This involves fully understanding carbon risks and opportunities within both the portfolio and the wider economy. “This isn’t really about divesting from high-impact companies, and more about the investor engaging with companies to improve their response to climate change. Investors should factor in carbon when pricing … high-impact companies,” he says. “Another way is to focus on investing in climate change solutions companies, such as those focusing on renewable energy or energy efficiency.”
Investors can further protect their investments by engaging with the company, focusing on specific climate change issues and the wider policy debate.◊
Climate Un-Changed
Experts Say Copenhagen Conference A ‘Process’, Not A Resolution
Courtesy of INSEAD Knowledge
by Karen Cho
Even as the highly-anticipated United Nations Climate Change Conference is about to begin in Copenhagen next week, two energy experts are already warning against expecting huge strides to be made at the global warming talks.
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Daniel Yergin
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“I think it does seem that Copenhagen is being cast more and more as a process and not as a conclusion, to not have expectations that there’s going to be an agreement there. I think there’s still a lot of tough negotiating that’s going ahead and I think it’s probably harder to do it during a time of economic recession,” says Daniel Yergin, Chairman of IHS Cambridge Energy Research Associates and Pulitzer-prize winning author of ‘The Prize: The Epic Quest for Oil, Money and Power’.
Likewise, Harvard Kennedy School Professor Bill Hogan, who is also the Research Director of the Harvard Electricity Policy Group, thinks “declared success but little else” will emerge from the summit. Speaking in Singapore ahead of the summit, he said: “Perhaps next year maybe in Mexico, when the next round of the COP (Conference of the Parties) meets in Mexico, some stronger agreement would take place. But I think it’s too late for Copenhagen.” Those comments though were made shortly before the White House stated that President Barack Obama will pledge to cut greenhouse gas emissions in the US in several stages, beginning with a 17 per cent cut by 2020.
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Bill Hogan
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“The process is working extremely well and I think there’s no question that the United States is committed to doing something,” Hogan told INSEAD Knowledge on the sidelines of the Singapore Electricity Roundtable, held in conjunction with Singapore International Energy Week (SIEW). “I think the attitude that’s been expressed by many other countries, particularly China, is very much pointing in the direction of some agreement. I think we have reached the stage now where it’s not a matter of principle; I think we’re just negotiating and that’s a very good sign.”
“We’ve never seen such an emphasis on energy innovation all across the energy spectrum that we see today,” Yergin said during his keynote address at the Singapore conference last month. “We do know that unprecedented efforts are going into renewables and alternatives. I think wind probably shouldn’t be called an alternative anymore: it’s another form of electricity generation. Solar has an ultimate logic but it’s behind in scale and it needs improvements in cost. The hot thing today is how batteries and electric cars have come to the fore.”
Yergin in fact believes we have moved from an “age of oil” to a “century of energy innovation,” adding that the intense push for innovation is being driven by two powerful forces — the quest for clean energy and the need to provide energy for economic growth.
He also believes the most important energy innovation of this decade to be the development of natural gas extracted from shale. Though it’s been known to be a resource for many years, he says the technology has only been recently “liberated” in the US.
But according to Hogan, innovation can also upset the natural order of things. He says the discovery of unconventional shale gas, which even the experts could not have predicted, has changed the energy mix in the US. “One of the biggest impacts on the LNG (liquefied natural gas) market came because of the massive expansion of the production of natural gas from shale … So the United States had been expected to be a big importer of LNG, and now it’s probably not going to happen.”
Nevertheless he believes the benefits of innovative technology far outweigh its propensity to be unpredictable, as innovation will be a key driver for change in the green agenda, an agenda that also encompasses the electricity sector — also part of his ongoing research at Harvard.
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As electricity is a major emitter of CO2, Hogan believes restructuring the electricity markets and implementing a ‘smart grid’ system will be important in terms of curbing emissions. “So having efficient markets, having clear price signals, having the prices reflect the reality, as opposed to something which is masked through the effects of regulation, would be very important in going forward.”
“There’s a lot of talk for example about building smart grids, and a smart grid means many things to many people: like intelligence and information in the grid; smart meters that can keep track of consumption; smart devices that can use that information. But if you have smart grids and you have dumb prices, you’re not going to give people the incentive to take advantage of the opportunities that are there. So I think it’s critical that we improve the quality of the pricing models that we’re using.”
Another plausible way of curbing CO2 emissions, Hogan says, is by tackling the carbon itself. “I think the more relevant question is that can we capture the carbon and sequester it and deal with that kind of problem … in a world in which we do use a lot of coal. And I think that’s one of the game changers that we need, and exactly how well it’s going to work and how successful it’s going to be and competitive is an open question.”
| Why China’s vote counts in the global green agendaWith China’s economy currently growing by almost nine per cent and industrial production running at around 16 per cent, it continues to be hungry for resources such as oil. So just how exactly the energy crisis will unfold will depend heavily on China’s action — or inaction.
“I think on energy demand you just have to look at the roads in China and — maybe it was the stimulus policy — to go from eight million cars to 12 million cars from 2008 to 2009 tells you that China is going to play a very important role in oil demand. And a lot of their policies have been saying how do we deal with that, because as the incomes go up, you start to get people buying a lot more cars and that’s what’s happening,” says Daniel Yergin, chairman of the IHS Cambridge Energy Research Associates. |
He is also in favour of putting a price on carbon to motivate people to become more energy efficient. “When there’s a price on carbon, not just in Europe but in the United States and in China and in Singapore, that’s going to provide a very strong incentive for innovation and new green technologies that will transform new businesses and what happens particularly in the electricity sector.”
The energy market, however, may be a little less daunting. Yergin explains: “The thing about energy efficiency, when you look at it in all its pieces, it’s not very dramatic, it doesn’t sound very dramatic. The cumulative impact is dramatic … It’s how companies organise themselves, what kind of investments (they) make. And it does — and I think that’s a key point — it really does require investment.”
“We have not yet ever seen an energy-efficient refinery, but it’s a process and shaped by pricing, by policy, by mandate to regulation, by security, by the pace of technological innovation. Our attitudes and values are very important part of it, and of course climate.”
With all eyes on Copenhagen next week, Yergin hopes that any climate change initiatives coming out of the UN climate talks, and thereafter, will reflect a “spirit of cooperation” and avoid becoming confrontational and disruptive to trade. Because, otherwise, these could have some very serious unintended economic and political consequences.
While the US will propose a tentative target of 17 per cent reduction in carbon emissions by 2020 over 2005 levels and 83 per cent by 2050, China says it will propose a reduction of 40-45 per cent in carbon intensity by 2020.
Daniel Yergin and Bill Hogan were in Singapore for International Energy Week which was held in mid-November. In the lead up to Copenhagen, the Singapore government has announced it is ready to cut its carbon emissions by 16 per cent by 2020 – if there is a legally-binding global deal.◊
Copenhagen: Malaysia to offer ‘credible’ carbon cuts
December 16, 2009 by admin
Filed under News Bites
The Malaysian government will offer “credible” cuts in its emissions of carbon dioxide at the Copenhagen Climate Change summit in a bid to halt global warming, according to Reuters.
Prime Minister Datuk Seri Najib Razak told Reuters:
We are willing to offer our commitment, I am not just going to call on the developed world; I am going to commit Malaysia and I am going to commit Malaysia to very credible cuts which means, we have to spend, which we will do.
Najib will be among world leaders meeting in Copenhagen to attend the climate change summit, held to persuade rich nations to cut their greenhouse gas emissions cuts even more, as well as providing assistance to developing nations to cut their carbon pollution and finance to help the poor adapt to climate change.
According to a new report, UN data shows Malaysia’s carbon emissions in 2006 stood at 187 million tonnes or 7.2 tonnes from each Malaysian. Even though Malaysia’s emission is less than neighbouring Indonesia, the world’s third largest emitter with 2.3 billion tonnes or 10 tonnes per capita, Najib has been reported to have said that all nations must contribute. He was quoted as saying:
We are willing to offer our commitment, I am not just going to call on the developed world I am going to commit Malaysia and I am going to commit Malaysia to very credible cuts which means we have to spend, which we will do.
Amongst which, the most important being the common but differentiated responsibilities that the developed world must deliver against larger cuts in terms of carbon emissions and that the developing world should be assisted, particularly in terms of financial assistance, capacity building and technology.
Najib was reported to have said that despite the current economic situation, the fight against climate change needs to take priority.
The United Nations wants to raise USD10 billion (RM34 billion) a year from 2010-12 to assist the poor deal with global warming and to move away from fossil fuels. In the longer term, the United Nations estimates the fight against global warming is likely to cost USD300 billion a year from 2020, largely to help developing nations adapt to impacts such as droughts, floods and heatwaves.
