After Copenhagen investigates the current corporate perspective on climate change and carbon reduction issues across a range of industries.After Copenhagen: Business and climate change is an Economist Intelligence Unit report that investigates the current corporate perspective on climate change and carbon reduction issues across a range of industries. The lead sponsors of the research are The Carbon Trust, Hitachi and IBM. 1E is a supporting sponsor of the programme.

This report builds on our 2009 report on climate change, Countdown to Copenhagen: Government, business and the battle against climate change, which outlined the carbon reduction journey that many firms have embarked upon. In this paper, we review the progress that business has made on this journey and examine the impact of the global economic recession on carbon reduction issues. We also consider three possible scenarios for the medium term, to assist corporate leaders in their planning on the issue of climate change.

At the outset of 2009, hope was running high for a watershed year for progress on the climate change agenda, with fallout from the devastating global recession presenting the only major potential stumbling block. By the end of the year, the mood was very different. The December summit was a washout, public scepticism about climate change was on the rise, and the likelihood of a US cap-and-trade bill was diminishing. Now the absence of a binding international agreement leaves business facing another year of uncertainty over the direction of global policy. But does this mean that corporate efforts on carbon reduction have taken a back seat? Or has the keen appetite for potential cost reductions prevalent in the current economic environment heightened interest in energy efficiency?

This report seeks to provide a snapshot of where business is at today with regard to climate change—and how the setbacks at a global policy level are being interpreted at a corporate level. It also maps out a set of scenarios, which explore potential policy and economic outcomes over the medium term. These are not intended to provide predictions of where carbon policy is going, but rather are aimed at providing business leaders with a set of potential environments they might find themselves operating in and some associated implications.

The key findings of this report are highlighted below.

• Public scepticism has crept into business too: more than one-half of executives think “the jury is still out” on the seriousness of climate change. The past year has seen a surge in public scepticism about the seriousness (and cause) of climate change, as reported in a range of public polls. This survey confirms that this uncertainty is reflected in offices around the world too, regardless of industry, location or size of company. More than one-half (52%) of executives agree that conflicting evidence on climate change means the jury is still out on the seriousness of this issue. Just 31% disagree. For most, however, this is not outright denialism: seven out of ten respondents (71%) have made some change to their personal habits as a result of heightened concern about climate change.
• Attitudes matter: companies where executives believe in the science of climate change tend to do far more on the issue. As might be expected, climate change believers tend to work within companies that have gone further along the carbon reduction journey. When comparing the believers against the sceptics, similar proportions have implemented greater energy efficiency in their operations. This simply makes good business sense. But far more companies with believers have actually developed new “green” products and services—and more than twice as many have improved the environmental footprint of existing products and services.
• PR considerations appear to be the most common driver of carbon reduction efforts... More than one in three (35%) executives say their firms always take climate change considerations into account when it comes to public relations (PR). This is higher than for any other business consideration, whether overall business strategy or research and development (both 24%), or risk management (17%). Furthermore, seven out of ten (71%) respondents believe that carbon reduction policies at their rivals’ firms are primarily driven by PR considerations. This is not necessarily a bad reason, but it seems unlikely that genuine in-depth change will occur while this is the main motivator.
• …despite significant non-PR-related business opportunities. Even without the additional benefits of PR, the direct business merits of carbon reduction are already significant. For 59% of executives, cutting carbon presents an opportunity to gain a competitive advantage over rivals. In addition, a wide range of businesses—from Kingfisher, a retail group, to 3M, Siemens and GE, three manufacturing conglomerates—have built major businesses on the back of new environmental products and services. Research from McKinsey & Co. suggests that the US on its own could yield gross energy savings of US$1.2trn by 2020, for non-transport energy alone, from an investment of US$520bn. This begs the question of why so few firms are chasing these opportunities. This is where the fragile economic environment appears to have had the greatest influence. Of the three primary barriers to progress on climate change, two are cost-related: unease over implementing possibly expensive infrastructure and prioritising spending simply to keep the business afloat. The third relates to regulatory uncertainty.
• Business has less confidence than ever in the ability of governments to deliver a level regulatory playing field. The failure of December’s Copenhagen climate summit has left executives with deep uncertainty about whether political leaders can collaborate effectively on this issue, especially in an international context. Nearly one-half (46%) of those polled are now more pessimistic about the ability of their government to deal with climate change. Only one in four are more optimistic. This is a serious concern. Government, policymakers and regulators have by far the greatest influence over corporate environmental strategies, selected by 56% of respondents, compared with 29% who selected public opinion or consumers as the next highest influences.