AXA Futures panel debate on climate change: ‘Can Business Save the Planet?'

These notes were taken from a climate change panel debate hosted by AXA and are provided as a reference for ClimateWise members, members of the Cambridge Institute for Sustainability Leadership network and others. They have been written up in good faith and reflect the views of the panel (below) and do not necessarily reflect the views or position of ClimateWise or the University of Cambridge. 

AXA Futures panel debate

Panel

Chair: David Williams, Managing Director Underwriting, AXA Insurance

a) Professor Martin Siegert, Co-Director, Grantham Institute for Climate Change & Environment, Imperial College, London

b) Dr Paolo Taticchi, Director of the MSc Management and Director of Global Initiatives, Imperial College Business School, London

c) Dr Alan Whitehead, Shadow Minister for Energy & Climate Change, DECC

d) Juliet Davenport, Chief Executive, Good Energy

e) Emma Pinchbeck, Head of Climate Change and Energy, WWF-UK

Research by Carbon Tracker and the London School of Economics has suggested that 60–80 per cent of fossil fuel assets would have to be stranded for global temperatures to stay within the IPCCs key target of 2°C global warming in order to avoid catastrophic climate change;[1] this feeds into mounting evidence that it makes simple sense for large corporates and investors not to invest in fossil fuels.[2] Yet government policy today does not reflect this. The reversing of legislation to support renewable energy (such as subsidies for renewable energy technologies) has been damaging to the sector both directly, and indirectly in terms of falling share prices, even leading to closures, due to the uncertainty created by policy changes. Other areas that require policy intervention include petrol prices – evidence for this is the plummeting adoption of hybrid cars in the USA as petrol prices have fallen. The key action that governments need to take is to regulate for decarbonisation of the energy sector. This is not only legislation to specifically combat CO₂ emissions, but as a signal to encourage businesses to voluntarily change behaviours more broadly on issues of environmental sustainability. Currently, by not engaging with the issues, the government is writing itself out of the debate (Dr A Whitehead).

Much of the carbon ‘budget’ has been used up and so to remain below 2°C global warming small actions are no longer enough. The world needs to undergo a second industrial revolution in which industry changes the way it understands natural resources and energy, and where consumers adapt their ways of life to curb consumption that is so damaging to the environment. Businesses, cities and other non-governmental actors are key to bringing about these changes. However, governments need to create the conditions to allow the changes to flourish and grow with confidence (Dr A Whitehead).

Five years ago global reporting initiatives had weak structures and content but this is now greatly improved, with strong case studies emerging on how corporates are changing their business models to support sustainable practices[3]. Yet there is still a real need for increased government funding for research – matched by industry partners – to better understand how and why businesses should change their operating models (Dr P Taticchi). The most recent AXA Futures research has found that while 78 per cent of SMEs are concerned about climate change – rising to 96 per cent for SMEs in emerging markets – just a quarter of those surveyed have implemented climate adaptation plans. Changing business models takes time – but the potential for new services and products means there are great opportunities available too (D Williams).

Renewable energy technology is approaching maturity, where capabilities and costs will be at parity with traditional energy sources by 2020. After this point business will be able to make active savings by switching to these alternative energy sources. There are challenges in moving to a new type of energy system, such as the issues of decentralisation and small-scale producers compared to old-style giant power plants, alongside questions over affordability and security. These changes will become even more achievable with effective policy in place (J Davenport).

In this context, the insurance industry in particular has the potential to play a strong leadership role, using its reputation for trustworthiness and reliability, as well as its expertise in understanding risk, to be an example to other industries and consumers by taking strong, decisive action. All businesses need to better understand exactly how to act in order to be effective leaders (D Williams).

There is currently strong focus on the COP21 meetings in Paris and the outcomes of the international agreement to act on climate change. However, businesses need to be aware that large parts of the action that is required will fall to them. A lack of funding and political engagement are some of the key factors preventing a move to a more proactive stance- but ultimately they can only create the facilitating environment. It is vital that businesses, governments and consumers work together, maximising their individual powers and collaborating to achieve the revolution that will prevent the impending catastrophe of climate change. (D Williams)