TalkClimateChange

Is tackling climate change the responsibility of world governments, or is it the responsibility of the individual? Are we guilty of protesting too loudly, and demanding government action and policy change, whilst doing little to address the problems through our own behaviour? And what role should businesses play in reducing emissions as the largest emitters of all?

Despite all of the excuses we can make, we can all be more selective about the products we buy, we can choose short haul instead of long haul holidays, we can switch off, turn down, economize and even go without - but there is still a limit to the personal difference that we can make.

Transport is a good example. I’m one of the lucky people that can feel good about having a stress-free daily commute on an electric tram, powered by 95% carbon free energy. However, for most of us this is not an option. Infrastructure is regulated, built and monopolized largely by governments, meaning that government policy has to change to reduce the big ticket Co2 emissions in our lives.

The challenge for industry - good firms and bad firms

Industry suffers from similar problems, being similarly constrained by regulatory frameworks and markets influenced by governments. Much as been written about the potential for industries to reduce emissions and increase profits through seeking greater efficiencies. However, getting industries to obtain real improvements is no easy task. Director of the McKinsey Global Institute, Diana Farrell recently told Reuters "We’ve identified huge opportunities to reduce energy demand and carbon emissions through improved efficiency, but few are acting on the opportunities"

How can that be?

The link between reduced emissions and higher profits seems strangely reminiscent of the rush some years ago to implement formalized quality management programs. Consultants would point out that the most profitable companies had successfully implemented quality management, whilst the least profitable companies had not. Skeptics pointed out that firms made money because they were competent, and that quality programs were merely another result of this competence, not the cause.

Poorly run companies failed to implement quality programs due to the same lack of execution that prevented them from making large profits. Those same firms will be unable to leverage efficiency improvements and will merely be hit harder by additional energy costs, which will continue to be passed on to consumers.

You can either look at this as a huge injustice, economic disaster, or a good excuse for a clear out.

A question of inertia

Much of the problem stems from the inertia behind our energy and transport infrastructure. The investment required to break out of current practices, find new energy sources and build new infrastructure is such that there are very few individuals and organizations that really have the power to bring about significant change - businesses have to answer to shareholders who expect mid term returns, and are often nervous of expensive, long term, and uncertain investments. Governments, on the other hand, have the power to create the incentives which will attract investment, and more importantly the entrepreneurial talent to break the current cycle.

But we need to play our part too. There is little point in addressing supply if we don’t create the demand. If we can all be demonstrably greener in our outlook and actions then governments and businesses will react to meet the demands of the people they ultimately serve. Responsibility starts here.