Harmonious Living - The Cost of Climate Change

The Cost of Climate Change

Provided by Global Carbon Exchange

Friday, 28 November 2008

The effects of climate change pose serious social, economic and environmental threats to the world today. Over the next 50 years an estimated 200 million people will be displaced due to the rising sea level. 15% to 40% of the Earth’s species face extinction, and the malaria death toll will be greatly increased due to the expansion of the tropics.

“Extreme weather events are becoming increasingly frequent, wreaking havoc and destruction, costing companies and countries billions of dollars”, says Kevin James, CEO of Global Carbon Exchange, a South African/Australasian-based carbon and energy reduction consultancy. A study conducted by a Deutche Bank economist states that “forest decline could be costing about 7% of global GDP”. This translates to staggering global losses of between $2 and $5 trillion per year – losses we can ill afford in the current economic market.

For businesses, addressing climate change is becoming increasingly important and the risks of inaction could have far reaching and dire effects on traditional business models. The introduction of carbon tax based on a company’s CO2 emissions could ”soon” be implemented according to Environmental Affairs and Tourism Minister, Martinus Van Schalkwyk, when addressing cabinet in late July. ”This would immediately create a liability on a company’s balance sheet that just wasn’t there before. Forward-thinking companies have identified this as a risk to their future commercial sustainability and are taking action to at least know where they stand,” added James.

In addition, the cost of energy on individuals and corporations is also a growing financial burden. One of Eskom’s proposed policies is to penalise consumers across the board should they not reach sector-specific energy reduction targets. The reductions necessary would be 5% for agriculture, 10% for commercial and household consumption, 15% for the industrial sector and 20% for hotels and shopping malls. So, as stated in The Stern Review, it is clear that “The earlier action is taken, the less costly it will be”.

A growing number of South African companies are taking action and enjoying savings by utilising the services of climate change and carbon reduction consultancies. There are four steps companies should take to reduce their impact on climate change and maximise their energy efficiency, advises James.

The first step is determining a carbon footprint, which quantifies the amount of carbon dioxide and other greenhouse gases a company emits per annum or per product. This is followed by an investment case detailed financial energy audit, which pinpoints exactly where and how much energy is being used in the company’s operations. This information is then used to implement reductions which maximise energy efficiency and lead to massive cost and emissions savings. Comprehensive staff-education and awareness programmes often lead to the greatest energy reductions in this step. Companies should ensure that the vendor they select offers this crucial service. Finally, should any emissions remain, there are a number of community-driven carbon reduction and offset projects available in which to invest, which also enhance a company’s social investment and reputation.

“Taking action on climate change has a strong moral appeal to consumers and this translates into extremely valuable marketing and branding opportunities for companies,” says James, who has been educating management of various businesses on these opportunities in South Africa over the last 12 months.

Case Study: New Clicks Gets Carbon Footprint

New Clicks Holdings Ltd. has joined a growing group of companies striving towards energy efficiency and carbon awareness. This strategic move is crucial as we enter a new financial era. An unprecedented announcement by the South African cabinet in July 2008 that they are considering the introduction of a carbon tax, coupled with Eskom’s decision this year to implement energy-reduction quotas on companies, are two strong motivators behind businesses choosing to quantify and reduce their carbon foot prints.

With the help of carbon and energy reduction consultancy, Global Carbon Exchange, Clicks has now determined their total annual emissions and is looking to make significant reductions to these emissions through a number of innovative solutions. The report, in accordance with ISO14064 and the internationally recognised GHG Protocol, shows their overall annual carbon footprint to be 131 350 tonnes of CO2. This equates to 13.14 tonnes of CO2 per employee per year and 11.72 tonnes of CO2 per million rand turnover.

When broken down the report shows that New Clicks Holdings’ two largest sources of their total annual carbon emissions are the consumption of electricity, amounting to 66.1%, and the work commuting of their nearly 10 000 employees accounting for 17.7% .

Global Carbon Exchange CEO Kevin James says “New Clicks Holdings could reach savings of up to 15% in both carbon emissions and operating costs should they pursue the option of implementing reduction strategies. Identifying exactly where and how energy is being used through a detailed energy audit is a vital next step in this positive process. This would be followed by a staff education program aimed at changing behavior which would result in surprisingly high savings.”

The company indicated that it also has a longer-term goal to reduce its environmental impact by reducing its annual carbon emissions and increasing its energy efficiency. According to James, not only do they recognise the environmental and financial benefits derived from such a process, but also the benefit of creating awareness regarding climate change amongst employees and customers.

New Clicks Holdings is one of many international companies reporting to the Carbon Disclosure Project, an independent not-for-profit organisation which acts as an intermediary between shareholders and corporations on all climate change related issues.

Global Carbon Exchange’s is a leading South African and International carbon and energy reduction consultancy which helps clients develop a comprehensive strategy to address climate change. Services include determining a client’s carbon foot print, then conducting an investment grade energy audit, to determine where and how energy efficiency can be maximised in a company. A reduction plan including a comprehensive internal staff education campaign is then implemented, leading to cost and energy savings of up to 30%. Unless the reductions lead to total carbon neutrality, Global Carbon Exchange will then provide advice and decision making criteria for the company to select an offset project most aligned with its brand or existing company policy. Global Carbon Exchange also helps the company explore the many existing branding and marketing opportunities which open up to it by investing in our climate. Unlike many other consultancies, Global Carbon Exchange offers brokerage and trading of Carbon Credits in the Mandatory and Voluntary Carbon Emissions Market.

Some of Global Carbon Exchange’s clients include Nando’s, New Clicks Holdings, Spier, Peugeot, Kleine Zalze, Old Mutual and Fair Cape.

Share |

Disclaimer: Harmonious Living is written for and read by a community of individuals with strong and independent opinions. While the publishers of Harmonious Living are dedicated to providing a forum in which views can be openly expressed, those views do not necessarily reflect those of the publishers.

Air Conditioning

Global eWaste Solutions (Pty)