Speech by Joan Ruddock MP at the Carbon Disclosure Project Fifth Annual Forum, London - 9 October 2007
Good morning and thank you for inviting me to today’s launch of the Carbon Disclosure Project 2007; Hilary Benn sends his apologies.
Let me open by saying how pleased I am that Government has been able to support the CDP – from its launch in 2000. In the last seven years, CDP has established itself as the gold standard for carbon disclosure, the largest investor collaboration in the world and an example of how voluntary approaches can achieve results.
This would be an achievement for any organisation, but I would say it is even greater for a sector historically focussed on short term profit rather than long term challenges.
Transparency and accountability are key. Management gurus have written whole libraries demonstrating how internal accountability makes companies efficient. CDP is showing the value of external accountability too.
Companies have responded positively to the call from their investors to disclose their climate impacts. This demonstrates that investors are not only interested in profit, but also in the impact generating that profit may have on the world we live in. And this turns out to make business sense too. Avoiding environmental damage is avoiding costs the whole economy would otherwise have to bear.
This theme has been reflected more widely. Sir Nicholas Stern highlighted this issue in his Report in which he made the case for global co-operation and domestic action. As he said, the costs of inaction far outweigh the costs of action.
In a modern global economy, economic success goes hand in hand with social and environmental goals. In Government we have been working hard to bring about that vision.
Globally, the past year has seen the momentum for international action gathering pace - galvanised by clear messages on both the science and the economics.
At the G8 leaders summit in June, we saw for the first time a clear commitment from all G8 leaders to a UN-based process, and a strong signal for global agreement to be concluded by 2009. Following that, the Gleneagles Dialogue meeting held in Berlin provided a forum for valuable straight talking on the shape of a post-2012 framework, and reinforced the key role of both the global carbon market and carbon finance.
On 24 September Hilary Benn attended an unprecedented gathering of world leadersto discuss climate change, hosted by the UN Secretary General, Ban Ki Moon. Later that week Phil (Woolas) attended the Major Economies meeting in Washington, which was a useful opportunity for countries to voice their positions, and demonstrated the United States’ increased engagement on climate change since the G8 Summit. We look forward to seeing what the US will bring to the table at Bali, and to continuing discussions about the commitments needed from developed countries.
To support this we are working on a wide range of fronts to achieve a global deal on climate change that includes a long term goal and international carbon trading driven by deeper emission reduction targets for developed countries. We are also seeking further fair and effective reductions from other countries, funding for technology development and transfer, agreements to avoid deforestation, and funding for adaptation.
Up-scaling of finance is a necessary building block of the global response to climate change. We need to ensure that a global post-2012 climate change agreement drives the investment flows necessary to enable a global transition to a low carbon economy. The carbon market is key - it can deliver a significant part of the scale up required – but it needs strengthening through broader and deeper participation.
We will also need new and innovative financing instruments to incentivise developing countries to put measures in place to attract investment for low carbon growth. The Clean Energy Investment Frameworks being developed by the International Finance Institutions will play a major role.
And we should not forget adaptation - the cost of adaptation is far more uncertain and less well studied than the costs of mitigation. Well-defined markets for adaptation are more difficult to envisage, but that should not stop us considering how we could use market-related finance to fund adaptation needs in developing countries.
The UNFCC Bali Conference in December gives us the chance to take stock of progress under these initiatives and to clearly map out the route to a comprehensive, global agreement on a post-2012 framework.
But to keep this profile internationally, we must deliver domestically. The Climate Change Bill – which we published in draft on the 13 March will be the first of its kind in the world.
The Bill will set a UK framework for legally binding targets to reduce emissions. This will drive the transition to a low carbon economy and help us show that emissions reduction and prosperity can go hand-in-hand.
There is evidence to support this link already. Our current climate change programme is putting us on track to not only meet our Kyoto greenhouse gas reduction commitment, but actually achieve almost twice that commitment. And, we have managed to secure this over the last 10 years when the UK’s economy has risen by around 28%. Decoupling growth from environmental impacts is possible.
We will build on measures such as the Climate Change Levy, and the EU Emission Trading Scheme and introduce policies to promote energy savings such as the future Carbon Reduction Commitment. We will also push forward microgeneration, low polluting fuels, and measures in the Energy White paper, which will help us cut carbon emissions in the home and at work.
The transition to a low-carbon economy will require the biggest restructuring in how we live and work since the industrial revolution. Government is just part of this modern global economy and cannot achieve this alone.
It is imperative for Government and business to work closely together – as business leaders, investors and advisors – to question our practices, challenge them and make business choices that reflect the importance of a low carbon economy.
Within the CDP process those of you who are investors have a particularly key role. Through giving due weight to environmental and social factors in decision making, you can signal to companies that carbon disclosure is vital and that it will affect your investments.
Since 2000, your support has resulted in a year on year increase of company carbon disclosure. This year has the highest disclosure level with a 91% response rate from the FTSE 100. In comparison to our international competitors this makes the UK a world leader.
And, we are also seeing this reflected in the markets. I understand that companies who proactively invest in climate change mitigation and adaptation have been performing very well. But, could investors do more? What more could you do to ensure the future environmental risk and reward of all companies is included in your investment decisions?
Many of you here will represent companies who responded to the CDP’s information request. I would like to congratulate you for being forward thinking and prepared to be accountable and transparent. As business leaders, you clearly demonstrate that you see effective management of your environmental risks as fundamental to your success.
In the space between preparing this year’s response and starting on next years, I’d be interested in your reflections on the process.
- What did you learn about your company’s carbon emissions?
- What more should companies or Government be doing in this area?.
If you have any ideas please speak to my officials who have been here all day and will be here for the rest of the conference.
Perhaps I should remind you that from this month the new requirements in the Companies Act 2006 come into force. In the next reporting round, you will be preparing your annual and CSR reports with the added challenge of deciding how environmental issues are relevant to the development, performance or position of your company and how this should be presented to shareholders. I am looking forward to seeing what impact the new requirements will have on how seriously companies take these issues.
I would also like to encourage you to get involved with the CDP Secretariat’s work to develop an international standard to help companies report on their entity wide emissions – for example to include their impacts overseas. Could you look further down your supply chain at the impacts of your suppliers and overseas operations?
And for those of you who advise business, consultants, accountants and auditors, think back to the last client you advised. Are issues such as environment or climate change fundamental to their business strategy and did you advise them that they should be?
And, as well as representing organisations here today, we should not forget that we are all also individuals with your own carbon footprint. If you haven’t had a chance to look at it so far I would recommend that you complete our Act on CO2 calculator on the Directgov website and take heed of the tailored action plan, which can make sober reading.
Finally my congratulations again to all of you, and especially the Secretariat for all their hard work. I am optimistic that social and environmental issues are increasingly being considered as core to investment and business activities, and Government looks forward to continuing to work with you.
Thank you for your time. I would welcome any questions you have.
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9 October 2007