Global warming is a cause of concern for all those present and there is no doubt, the impact of this will cause the different wings of society to take steps to cut the green house gas emission. Though in today’s world there is uncertainty as to when the situation will become bad enough to cause all elements of society to take its cognizance and the extent to which normal manufacturing and production methods will have to be changed. The climate change is going to cause market shift . As has been in the past this will wipe out some industries and create new ones. There is no doubt that whenever the shift will occur it will have cost implications for different companies and as such it is the fiduciary duty of the managers to determine the exposure due to possible changes in this front and start taking corrective measures.
Companies can treat this issue in two ways. They can act like nothing has happened; continue with their present technology and operation style till changes are introduced by local government and made compulsory and then face the daunting task of making huge investment to become greener and be acceptable to the society. This is probable 15-20 years from now. These companies will then have to make the struggle for existence on this ground. Resistance to accept the truth or delay taking remedial steps can be dangerous in face of the impending market shift. This market shift will affect all industries, the extent however may vary and the ripple effect is very difficult to calculate today.
Another approach can be to accept the fact that becoming greener is a bitter truth, it cannot be escaped. There is a very high probability that companies will have to switch to low emission technology. The companies that are making the change for low emission technologies (LET) are in not doing charity or practicing CSR, rather they are taking strategic steps to safeguards their huge investments from becoming obsolete and making new investments considering a carbon constrained future in mind. The industries that are going to be most affected are energy, transport and heavy industries. In the following discussion I will point out signs which indicate a market shift is in happening. To ensure that the global warming stays in the limit of 2 degrees we need to increase global carbon productivity by 5 to 7 % which had been growing at the rate of 1 % historically . There is no doubt there is an enormous value at stake in the next 2 decades. The managers need to understand the changes that may be needed in the coming years so as to take advantage of the changes that are very likely to happen.
The facts that the mangers and business owners need to understand is the fact that across the supply chain and the value chain there will be effort to make the entire process (es) more carbon efficient. It is time to start looking for low carbon intensive sources of power. There will be increased demand for new low carbon solution that can provide sustained power. Also increasing oil prices and government regulations will also lead to the demand for the above two things.
So we have a future where we can envision that the power generation methodology is likely to change and as much many industries will also have to change the equipments they use, their production methodology. Hence this is a scenario where we have an uncertain future in the 20-30 years horizon. This will give rise to many new business opportunities and can disrupt many existing ones.
These changes have huge implication for suppliers of energy as demand for greener form of energy is very likely to increase. Corporate leaders and business owners need to assess the impact of these changes on the business and take appropriate steps accordingly. Companies can improve the carbon efficiency by recycling the waste energy to increase the efficiency and make the process more efficient. Examples can be to tap the heat energy in the steam exhausts. Use better insulations and use of solar cells for day time lightening purposes. Companies can make more out of the process of going green by designing their products that can be made from more carbon efficient raw material. In their article Per-Anders Enkvist and all suggest that a new technology of carbon capture and storage is evolving. If it process to be technically and commercially viable, “it could create an industry with annual turnover in the €40 billion to €90 billion range by 2030”. People are serious about such concepts to the extent that they are developing ultra low carbon emission cities which shall have car free urban areas that will be driven by magnetic trainsii.
The green house gases are causing climate changes, which are causing physical changes in the world (melting of polar caps, increased frquency of cyclones). Hence if the different elements of society, companies being one of them, do not take steps to control green house gases emission the government will force it on them sooner or later. It will be in the interest of the companies particularly those at greater threat to search for alternative commercially viable energy sources and to start thinking of ways to raise capital for investing in these technology, come up with greener products before the government forces them to do so or their consumers start rejecting them for not being eco-friendly. This will become a need; the only question is how soon and in what magnitude.
________________________________________________________________________________________________[i]. Hoffman, A., September2007 ;Business Strategy and climate change; web-source:http://www.eoearth.org/article/Business_strategy_and_climate_change
[ii] Per-Anders Enkvist, Tomas Naucler, and Jeremy M. Oppenheim; The McKinsey Quarterly; Business Strategy for climate change; web-source:http://www.mckinseyquarterly.com/Business_strategies_for_climate_change_2125_abstract
