Asia faces some clear choices on greenhouse gases

By Chandran Nair

This column appears in the Ethical Corporation December 2006 issue.

Asian business leaders have a central role in global efforts to combat climate change. They must not be tempted to take the easy path.

Climate change has brought Asia’s leaders and business chiefs to a crossroads. Which direction they choose may well affect the future of the planet. When it comes to meeting future energy needs, this is the region with the largest unserved population in the world and thus likely to burn the biggest amount of fossil fuels.

But why should this fall to only them, and not equally to those of the developed west, with their wealth, and historical and current contribution to carbon dioxide emissions?

Within the definitions of the Kyoto Protocol there is the potential for Asia to both meet the undeniable needs of its people and to do great good, while taking advantage of the market mechanism. The impetus should come from business leaders and heads of state. Under Kyoto, developing economies are under no obligation to achieve emission-cutting targets, but what if they took it on themselves to work towards them?

Critically, China and India are part of this group: the two most populous nations, two of the fastest growing economies – each with its demands on energy, water and other resources, and increasingly seeking to secure them overseas – and two countries whose leading businesses are looking to expand abroad. They are emblematic of the region.

How are Asia’s leaders deciding which of the roads before them to take? The first of the three choices, the road to the left, is business as usual. A second path, to the right, is to pay lip service to sustainability – dabbling in buzzwords, catchphrases, and PR treatment of its issues.

A third path, straight ahead, confronts reality with responsibility. Along this, business and national leaders need to fully understand the issues fully, accept the responsibilities, and act to achieve significant reductions in greenhouse gases and get tough with the profligate wastage that has been a hallmark of economic development in the region. This is not about being “green”. There are economic benefits, as well as social and environmental ones.

It's the economy

With thinking on climate change focused on resources and consumption, many forget that at the core of much destructive behaviour lie the poverty trap and rampant capitalism. Addressing both is the big challenge and will provide the key to the region’s future.

But today, the depth of understanding of the climate change issues among industries is disappointing. Some companies exploit their mitigating actions as PR exercises. Others treat climate change as an opportunist market, especially with carbon or emissions trading, where a classic north-south game is also being played out. There are some, for example in the financial services, that consider carbon neutrality simply as a balancing act, compensating the fossil fuel emissions from executives’ plane trips with planting trees.

This kind of offsetting may be well intentioned, but it says more about the extent companies misunderstand their contribution than about their efforts to fight climate change. Dumbing down is fashionable. Understanding will come when Asia’s business leaders answer basic questions: what in their daily operations contributes to carbon dioxide? How much of this is can be avoided? What can be done at a fundamental, operational level to resolve this? There are no short cuts.

Asia’s leaders should grasp this chance to take the lead. They need to see how much more than they think is at their disposal to effect change. They should get their act together and stop playing second fiddle to the western counterparts on the international stage on these issues.

Asia’s status under Kyoto opens many possibilities: this is where the market can be developed, with the scale it needs. Decisions leaders take now will affect the course of development. Industry leaders must use this influence to shape the market and advocate policy change.

National leaders must commit, and follow through: in the long run, applying Kyoto-like cap-and-trade standards to their own emissions is cheaper, more sustainable and the right thing to do. They will need to stay clear of the geo-political alignments being drawn around the climate change response globally.

From a national perspective, China’s central government has enshrined some of the toughest environmental laws around. What is important now is for provincial and city governments to enforce them, shift from a purely economic focus, and seek business and civil society to co-operate on the civil aspects of development. Such “compacts” are crucial in providing a fuller, more inclusive picture of needs and workable solutions.

Much of the climate changing emissions can be reduced, but tough actions will be needed by political and business leaders. If business leaders continue to only see the opportunistic side, and not appreciate the need for dramatic shifts in business models and operations, then regulators must get tough. While the kind of action needed may mean less fuel for splashy headlines of little substance, it will bring quiet but real achievements.

Asia’s leaders cannot fall for the window-dressing of dabbling, the second choice at the crossroads. The road ahead is clear.