Step Beyond Carbon Footprint. Leap into Green Growth

Perhaps it's the sea air. But after the disappointment of last year's Copenhagen climate summit, which slid from 'Hopenhagen' to 'Brokenhagen', the atmosphere at this week's gathering in Cancun, Mexico is very different. There's still open frustration with politicians but also a positive and continuous movement for change from business.

Yesterday, Sir Richard Branson spoke further about his Carbon War Room and its focus of applying sustainable solutions sector by sector. Lord Stern praised the business community for leading the charge and enticed them with the opportunities of what he calls the sixth industrial revolution (the fifth was the information technology and communications).

There is a degree of schizophrenia here, of course: it is voices in the business community that are lobbying climate negotiators against carbon taxes. But there are two reasons to be optimistic about business action. Not only are big players taking steps to monitor and reduce their carbon footprint, using the many technologies available today. But some are beginning to re-configure their business to take advantage of the growth markets that the low carbon economy is creating.

Altogether, most companies have less time than they think and not just because temperatures are rising. The talk here is all about China and how it is putting energy efficiency at the heart of its 12th five year plan. This includes a focus on seven 'magic industries' that will grow their combined share of GDP by a factor of five by 2015. China will commit almost infinite resources to make this happen, forcing businesses elsewhere to move swiftly if they are not to lose their competitive position. This is probably the biggest change of perspective since Copenhagen: everyone in Cancun recognizes that while the negotiations continue to progress at snail pace, China's economy has put on its racing shoes.

More companies than we might think are already trying to join that race. In a survey we conducted with the United Nations Global Compact, 81 per cent of 766 CEOs said that sustainability issues had become part of their company's strategy and operations, up from 50 percent in 2007. And some companies have been here before. Adam Muellerweiss of the Dow Chemical Company, told an audience in Cancun how, a century ago, Dow and Westinghouse joined forces to develop a simpler form of a technology that we now regard as crucial to emissions reductions: Combined Heat and Power (CHP).

Entrepreneurial initiatives like Richard Branson's $25m earth challenge should not be underestimated in their contribution to this race. From the first transatlantic flight to the first commercial space flight, business prizes have been a great source of breakthrough innovation. Today, they are encouraging companies in all sectors to put innovation at the heart of their business strategy with a focus on energy efficiency that can also help improve productivity and reduce costs.

But this goes far beyond energy intensive companies. Consider that five industrial sectors account for 20 per cent of all global emissions and that residential housing and private vehicles account for another large share. Most of the companies at the Mexico climate talks are not heavy emitters. For them, sustainable business models mean something far more substantial. As low carbon products and services are produced and consumed around the world, companies need to respond to their customers and supply chain partners in ways that fundamentally challenge traditional business models. In this sense, sustainability is now a critical driver as well as a reinventor of business value.

How will high street retailers prepare to enter the market for energy services? How will high street banks introduce green loans to help homeowners improve their energy efficiency? How will corporate banks create new capital markets to fund this sixth industrial revolution to which Lord Stern refers?

In most cases the answer lies in breakthrough business model innovations including the re-allocation of assets, the relocation of operations, and the redesign of the commercial ecosystems. It may demand the acquisition of niche businesses or the divestment of others. It will certainly require improved capabilities for assessing and calculating risks. In most cases it will harness the power of new technologies, particularly in communications and IT.

From my conversations with business leaders, city mayors and other stakeholders at Cancun, it's clear that companies and public organizations have already recognized this new reality of sustainable business. They are stepping beyond their carbon footprint and seeing the low carbon economy as a new era of opportunity which goes to the core of their organizations. As Lord Stern says, it's all about ‘Global Green Growth'.

Bruno Berthon is Managing Director of Sustainability Services at Accenture