Summary report, 11 December 2009

The Copenhagen Business Day event convened at the headquarters of the Confederation of Danish Industry, in Copenhagen, Denmark, on 11 December 2009. Organized by the World Business Council for Sustainable Development (WBCSD) and the International Chamber of Commerce (ICC), together with the Confederation of Danish Industry, Copenhagen Business Day met in parallel to the UN Copenhagen Climate Change Conference. This event was the third Business Day, and featured more than 40 speakers and panelists. Over 400 participants registered to attend the one-day meeting, including representatives of governments, international organizations, business, academia, non-governmental organizations and youth.

Copenhagen Business Day featured: an opening plenary entitled “Let’s get moving,” during which United Nations Framework Convention on Climate Change (UNFCCC) Executive Secretary Yvo de Boer challenged participants to consider their role in addressing climate change; three parallel sessions on “2012: Realizing the potential of today’s solutions,” “Actions now that set the course for 2020” and “Envisioning our 2050 future,” respectively; and a panel discussion entitled “Taking the gloves off.” The event concluded with the launch of the WBCSD Value Chain Initiative. This report summarizes the presentations and discussions during the one-day event.

A BRIEF HISTORY OF CLIMATE CHANGE AND BUSINESS ISSUES

Climate change is considered to be one of the most serious threats to sustainable development, with adverse impacts expected on the environment, human health, food security, economic activity, natural resources and physical infrastructure. While the global climate varies naturally, scientists agree that rising concentrations of anthropogenically-produced greenhouse gases (GHGs) in the Earth’s atmosphere are leading to further changes in the climate. These increasing GHG emissions are caused or influenced by factors such as economic growth, technology, population and governance. According to the Intergovernmental Panel on Climate Change (IPCC), the effects of climate change are already being observed, and scientific findings indicate that prompt action is necessary.

Certain sectors of the business community have long been recognized as significant producers of GHG emissions. Increasingly, the business community is also being recognized as important for identifying business-led solutions to climate change challenges. A growing number of corporations acknowledge the importance of corporate social responsibility, risk mitigation and performance dimensions associated with the sustainable production and use of energy. As a result, issues relating to clean technology, carbon markets, energy efficiency and demand-side management, sectoral approaches, voluntary emission reduction commitments, adaptation and forestry are of increasing interest to the business community.

The first Business Day, called the Bali Global Business Day, was organized in parallel with COP 13 of the UNFCCC in Nusa Dua, Bali, Indonesia on 10 December 2007. The Bali Global Business Day included panels on energy efficiency, zero-carbon technologies, large-scale carbon control, and clarity in climate policy. Business participants at that event made clear that they favored the successful completion of a new global climate change policy framework, valid beyond 2012, which promotes urgent and sustained mitigation and adaptation plans.

The second such event, “Business Day at COP 14,” convened in Poznań, Poland, on 9 December 2008. This event featured panel sessions on: a shared long-term vision; mitigation; adaptation; technology; and financing and investing. Participants sought to contribute to the UNFCCC negotiation process by interrelating the themes of the Bali Action Plan, which charted the course for a new negotiating process designed to tackle climate change, with business capability and initiative: energy efficiency and demand-side management; technology development and deployment; carbon markets and financing; and sectoral approaches.

COPENHAGEN BUSINESS DAY REPORT

Björn Stigson, President, WBCSD, opened Copenhagen Business Day, encouraged participants to engage intensively in the day’s discussions, and introduced the host of the event, Hans Skov Christensen, Director General and CEO, Confederation of Danish Industry. Christensen said business has formulated a number of climate change solutions, clean technologies are ready, and business and politics must join forces to lead to the future. He stressed that, inter alia, solutions should be global and we need global prices on emissions.

OPENING PLENARY: LET’S GET MOVING

Nik Gowing, international journalist and broadcaster, moderated the plenary and introduced the Copenhagen Business Day agenda, inviting participants to raise innovative ideas for discussion.

UNFCCC Executive Secretary Yvo de Boer discussed the need for the climate change agenda to reinforce and be reinforced by other public policy agendas, such as employment and security. He presented his expectation that COP 15 would produce a set of decisions to: address climate change as a long-term goal; provide clarity on developed country targets, developing country engagement, and finance to make such engagement possible; and identify specific actions, such as reducing emissions from deforestation and forest degradation in developing countries (REDD) to quick-start immediate progress. He noted the business community’s lack of relevance to the negotiations at the international level and said business needs to “define an attractive product” to elicit government attention.

In ensuing discussions, one participant underscored business’s incoherence in presenting their views at the international level. Another said certain governments have specifically asked for business’s perspectives on climate change. A participant stressed that the race towards a low-carbon future is a “marathon, not a sprint.”

When asked what companies can offer at the global level, participants pointed to technology development, in particular with regard to carbon capture and storage (CCS), smart transport systems and renewable energy, and finance for mitigation and adaptation in developing countries. One participant, however, noted challenges in facing “intransigent perceptions” vis-à-vis business. Another participant called for regulation on building energy efficiency to support investment in that sector.

De Boer stressed the lack of business influence on international negotiations for linking public and private financing. In response, one participant underscored the need for the private sector to better understand “customers,” so as to present a more coherent message to the international community. De Boer called for business to influence the design of new institutions, funds, rules and market-based approaches.

On a call for changing consumer lifestyles, de Boer responded that this is a “non-starter” in the North because people in those countries do not want to lose their lifestyle and the South because people in those countries want the same lifestyle as the North. In this context, he noted the need for ambitious targets to “allocate gain rather than pain” and achieve technological leaps. One participant called for focusing on green growth rather than sacrifices and risks, with another cautioning that markets are out of fashion in many areas. Others focused on, inter alia, the need for: concrete business pledges on investment and technology transfer; certainty and predictability; transparency and regulation in order to build trust that the market is well-run and fair; and a change in the equation from loss to benefit for business.

Various participants bemoaned: the lack of coherence in the business community’s responses to climate change, with some businesses favoring less ambitious emissions reductions than those preferred by governments; the fact that people engaging in technology transfer lack representation on national delegations; and the lack of politicians’ willingness to hear progressive messages from the business community. One participant called for a deal between the developing and developed world on reciprocal reductions in new coal plants. De Boer concluded by suggesting that participants should develop messages from the business community to the climate change negotiations.

PARALLEL WORKSTREAMS

Three workstreams addressed actions that could and should be taken by 2012, 2020 and 2050, respectively. Following initial presentations by issue leaders, participants conducted their discussions using the Chatham House Rule, which provides that the identity and affiliation of speakers may not be revealed. Accordingly, the summaries below report on the ideas expressed during the discussions without speaker attribution.

2012: REALIZING THE POTENTIAL OF TODAY’S SOLUTIONS: Malini Mehra, Chief Executive, Social Markets, India, moderated this workstream, calling for participants to consider issues related to changing lifestyles, technologies and business models in discussion groups on different topics. Rick Bradley, International Energy Agency (IEA), noted challenges, including the fact that atmospheric carbon is still increasing and that energy demand is increasing such that the Organization for Economic Cooperation and Development and IEA countries can no longer set energy prices. He called for new technologies and their worldwide dissemination, and noted the window of opportunity provided by the world financial crisis.

Dennis Welch, American Electric Power, spoke on the need for changing wasteful lifestyles, citing the increasing size of US doorways to accommodate obesity. On technology, Laura Ipsen, Cisco, noted that today’s technologies can reduce up to 20% of emissions and called for positive solutions and for sharing best practices with emerging markets. On the role of business models in accelerating change, Rachel Kyte, International Finance Corporation, queried why trust is so low. She called for an enabling environment, with public finance leveraging private finance.

In separate groups participants discussed transport, consumer goods, sustainable forests, waste, buildings, and alternative energy, identifying a specific issue within each on which to focus through the lenses of lifestyle, technology and business models.

The transport group rapporteur reported on its focus on biofuels, citing the need for enablers, such as certification, regulations, standards, tax policy and clear methodologies. She noted that increased use of biofuels would require few changes in consumer lifestyle and that biofuels have huge potential in the short term.

The consumption group rapporteur reported that for 100% recycled clothing, there is a need for more factories and more consumer demand. She called for consideration of what stops consumers from adopting low-carbon lifestyles and business’s role in this regard.

On sustainable forests, the rapporteur noted a focus on sustainable wood products and recommendations for: common approaches on standards for sustainable forest management to address consumer confusion; scientifically accepted indicators for certification; and further efforts to define forest sustainability at the UN level.

The waste group’s rapporteur called for considering “waste” as a resource. He said the price signal is the main barrier as long as recycling is more expensive than virgin materials. He called for regulatory frameworks to set the right prices and consumer education.

The rapporteur for the buildings group said roadblocks include: the cost of building technologies and materials; the lack of transparency on long-term costs of electricity, water and heating; the high prices of alternatives; and a lack of political will. On recommendations, he said participants differed over the role of subsidies. They also suggested new policies to boost fossil fuel costs or prices and education on the health and other benefits of greener buildings.

The alternative energy group’s rapporteur noted challenges caused by “not in my backyard” attitudes, low government financing, and consumer confusion about sources of fuels and electricity. He noted the group’s recommendations for: comprehensive global education tailored to local needs; leadership from WBCSD and ICC to drive public-private partnerships on education about options; and greater use of existing clean technologies.

In the afternoon plenary, Mehri highlighted the group’s conclusions that the challenge is to achieve: the right price; regulatory and policy framework changes; more public engagement and education; and training of engineers. She also recommended gaining trust through greater transparency and a multi-stakeholder approach.

2020: ACTIONS NOW THAT SET THE COURSE FOR 2020: Christine Loh, CEO, Civic Exchange, moderated the workstream that considered how current infrastructure investments can be scaled up to set a course for a low-carbon 2020 pathway. Peter Taylor, IEA, said energy efficiency and renewable energy offer options for the coming decade, but he also emphasized the need to think about what framework is needed to take us beyond 2020.

Katherine Sierra, World Bank, asked participants to consider how places without power that are urbanizing quickly could get the necessary technology and finance. Richard Gledhill, PricewaterhouseCoopers, encouraged participants to think of new fund structures. Joan MacNaughton, Alstom Power, suggested that delegates consider how to: get more energy efficient technologies; get the right mix of technologies; and ensure innovation.

Participants then divided into small groups to discuss barriers, enablers and solutions related to three themes: investment; technology; and development. Barriers identified included: the lack of a price on carbon; risk; costs and complexity of current market arrangements; lack of capacity; lack of investment at a large scale; and lack of regulatory framework and governance structures to attract large scale investments. The enablers included: capacity building; government regulation; risk management tools; public-private partnerships; and multi-stakeholder involvement in a technology platform.

Solutions included: development of a stable regulatory framework; development of finance packages for technology transfer to reduce underlying investment risks; transparency and clarity on funding mechanisms; consumer education; development of an energy efficiency platform to exchange best practices and a technology research and development database on carbon and energy management; pricing that reflects true costs; support to small and medium enterprises and best practices; and development of minimum global efficiency standards and of more sectoral agreements and initiatives.

Speakers favored improvements to the Clean Development Mechanism, including simplifying it and making it technology neutral. The benefits of public policy, development and capacity building, public finance in risk mitigation, public support for innovation networks, and early implementation of agreements in the building and construction and cement sectors were highlighted.

Participants suggested establishing a global fund to support divestment in old, “dirty” assets, while providing incentives to scrap old technology. Sharing best practices among businesses, supporting the needs of small and medium enterprises, and capacity building in developing countries were highlighted, as was the need to protect and also encourage intellectual property. One speaker highlighted that, whereas the previous message from the private sector was that free markets would solve problems, speakers at Copenhagen Business Day were now saying that business does not have the solution and, therefore, noting the need for regulatory frameworks. The benefits of short-term reporting on progress were highlighted.

In her summary, Christine Loh highlighted, inter alia, the gap in messaging to government negotiators and the importance of: dialogue; innovation networking; training for clients and customers; setting standards; and sectoral initiatives.

2050: ENVISIONING OUR 2050 FUTURE: Isabel Hilton, CEO, China Dialogue, noted that in 2050 the world population will: total 9 billion; be mostly concentrated in cities; and have witnessed the largest migration in human history. She wondered whether the emission reduction commitments by developed countries and the promises of CCS will have been fulfilled by then.

Nijma Khan, WBCSD, stressed that to achieve a sustainable world by 2050, defined as nine billion people living well within the limits of resources and without negatively impacting the natural environment, business will need to ensure efficient production by collaborating with governments and civil society. Christopher Tuppen, BT, underlined the need to move towards sustainable energy production and consumption, noting that there is an insufficient debate on reducing energy consumption through technology innovation or behavioral change.

Christian André Weinberger, Henkel, discussed innovative sustainable consumption, stressing that the new quality standard will refer to sustainability-based performance. Mark Spelman, Accenture, noted that there will be winners and losers in the low-carbon economy, and called for a fundamental change in business models. He identified the need for private companies to factor in externalities through innovative materials, production systems, product design, marketing and distribution.

Participants then broke into working groups, tasked to describe the low-carbon life of an imaginary citizen of the future, and to identify ways to further reduce the carbon footprint of future citizens through technology innovation. Among proposed solutions identified by the working groups were: high-tech devices to optimize individuals’ carbon footprint; improved transportation and distribution systems through the use of biofuels based on waste; dietary changes involving reduced consumption of meat; widespread use of renewable energy; use of biotechnology for recycling; and a shift in taxation from labor to materials.

In ensuing discussions, participants underscored the: possibility of using technology to verify carbon footprints at the individual level; carbon intensity of the health care sector in the future; likelihood of small business coming up with new “disruptive” technology, and need to create a business culture looking to the future. Participants also discussed the need for: smart, flexible regulation to prompt change in business; consideration of both micro- and macro- levels; a role for business leadership according to a longer-term vision; and focus on gross domestic wellbeing and happiness rather than gross domestic product.

In the afternoon, Hilton summarized the outcomes of the discussions in this workstream, highlighting: optimism about technology development; the importance of culture in framing views on consumption in 2050 and in integrating sustainability into business practices; consensus on the fact that global challenges will drive business; and pessimism that business can drive the agenda.

PANEL DISCUSSION: TAKING THE GLOVES OFF

Nik Gowing opened the afternoon session, identifying three “C” challenges for business: clarification, communication and coherence of business’s medium to long-term vision on climate change.

Reporting on a closed morning CEO session, one panelist stressed that business needs to have one voice and called for the immediate establishment of a government framework on climate change to provide long-term predictability. He also noted that certain private companies are already behaving as if there were a price on carbon. An afternoon panel discussion, consisting of a series of panels composed of CEOs, focused on selected themes.

Quick-start initiatives: One panelist encouraged leadership to ensure that tomorrow’s products are either recyclable or sustainable. Other panelists: called for stability and returns as necessary preconditions for investment in the low-carbon economy, underscoring the importance of carbon pricing; stressed the role of education that targets consumers and citizens; identified sustainable cities as a quick-start initiative; encouraged companies to publish information on their carbon footprint so as to build trust; and noted that the carbon market will generate large sources of financing and said it is necessary to have trust that the funds will be used appropriately.

Speakers also noted: the benefits of clear, equitable targets in a long-term framework; the misconception of “business versus government”; governments need to hear from early adopters; WBCSD should develop a communication strategy with governments; and most governments’ primary concern is to not increase the price of energy.

Business Unusual: Panelists focused on innovative businesses and new business models. Speakers highlighted: the market for satellites is developing, calling for government assistance to enable it provide practical tools to end users; developing CCS can solve the coal problem; and the importance of good regulation and carbon prices.

Panelists also noted that 40% of carbon emissions come from construction, calling for new construction technologies, rapid uptake and changes in stakeholder attitudes, and said companies along the supply chain could work together for mutual advantage and they need to stop relying on governments for all solutions.

Panelists also: called for business transformation, a new carbon accounting infrastructure, and use of the context of climate change in order to foster changes and innovations; said sectoral thinking is the biggest obstacle to widespread implementation of new concepts, and that value chains and business models that are more effective for society should be established; and agreed that acceptance of new technologies depends on the risk acceptance of a company’s investors, demonstration of possibilities for future value, and shareholder understanding that businesses have social values. One panelist said intellectual property rights and technology transfer to developing countries do not have to conflict.

Public-private partnerships: One panelist pointed to successful partnerships between legislators and business representatives in devising economically and environmentally sound legislation. Other areas identified as ideal for partnerships were: technology development, energy-efficient building, adaptation in developing countries, and combined food and biofuel production. Some participants noted that businesses from developing countries were under-represented at Copenhagen Business Day.

Participants also: supported the continuity of international financing to support developing countries; called on private companies to contribute to international carbon financing mechanisms; and underscored the importance of setting targets at the international level to drive innovation.

Consumers: Panelists: noted the win-win situation of getting a 200% return on every dollar invested in energy efficiency in California through retrofitting of buildings and other efficiency measures; called for targets, legislation and incentive schemes to encourage customers to switch from old technologies; cautioned that sectoral approaches will not lead to a comprehensive outcome; noted an increasing willingness of consumers in both developed and developing countries to change their behaviors, saying the challenge is innovating more rapidly to bring new goods to the market faster and at competitive prices; said consumers like to indulge and do not want to be told what to do; noted a coming battle over scarce resources, arguing for a systemic institutional ‘smart grid’ approach to electricity; and said businesses lose trust by not keeping promises and taking a short-term rather than long-term view.

Meeting wrap-up: Ed Crooks, Financial Times, underscored that although business may have differing views on climate change, it can have a significant role to play in partnering with government for technology development and in demanding the stability and predictability needed for investment.

LAUNCH OF THE WBCSD VALUE CHAIN INITIATIVE

Bjorn Stigson announced the launch of the WBCSD Value Chain Initiative, led by the Coca-Cola Company and Unilever, which will focus on optimizing carbon reductions throughout the value chains of consumer goods companies. Muhtar Kent, Chairman and CEO, Coca-Cola Company, stressed the importance of influencing behavioral change in suppliers and consumers. Paul Polman, CEO, Unilever, noted that sustainable business is not just about energy, but also about reducing poverty, sustainably managing waste water, and increasing food production. He expected increasing demands for more responsible business models.

Stigson thanked the Copenhagen Business Day participants and noted that the event was characterized by companies’ indication of their willingness to do more. Stigson expressed WBCSD’s willingness to convene other Business Days in the future and closed the meeting at 5:15 pm.

UPCOMING MEETINGS

WORLD ECONOMIC FORUM ANNUAL MEETING 2010: This meeting will take place from 27-31 January 2010, in Davos, Switzerland, under the theme “Improve the State of the World: Rethink, Redesign and Rebuild.” For more information contact: tel: +41-22-869-1212; fax: +41-22-786-2744; e-mail: contact@weforum.org; Internet: http://www.weforum.org/en/events/AnnualMeeting2010/index.htm

BUSINESS FOR THE ENVIRONMENT (B4E) SUMMIT: This event will convene from 21-23 April 2010, in Seoul, Republic of Korea, co-hosted by UNEP, the UN Global Compact and WWF. For more information contact: tel: +65-6534-8683; fax: +65-6534-8690; e-mail: michelle.ko@globalinitiatives.com; Internet: http://www.b4esummit.com/

UNFCCC SUBSIDIARY BODIES: These meetings will convene from 31 May-11 June 2010, in Bonn, Germany. For more information contact: tel: +49-228-815-1000; fax: +49-228-815-1999; e-mail: secretariat@unfccc.int; Internet: http://unfccc.int/meetings/unfccc_calendar/items/2655.php?year=2010

DELHI INTERNATIONAL RENEWABLE ENERGY CONFERENCE (DIREC): This event will take place from 27-29 October 2010, in New Delhi, India. It will be the fourth global ministerial level conference on renewable energy, and will consist of a ministerial meeting, business-to-business and business-to-government meetings, side events and a trade show and exhibition. For more information contact: Rajneesh Khattar; tel: +91-11-4279-5054; fax: +91-11-4279-5098/99; e-mail: rajneeshk@eigroup.in; Internet: http://direc2010.gov.in

SIXTEENTH SESSION OF THE UNFCCC COP AND SIXTH MEETING OF THE COP SERVING AS THE MEETING OF THE PARTIES TO THE KYOTO PROTOCOL: This meeting is expected to convene at the end of 2010, in Mexico City, Mexico. For more information contact: tel: +49-228-815-1000; fax: +49-228-815-1999; e-mail: secretariat@unfccc.int; Internet: http://unfccc.int/meetings/unfccc_calendar/items/2655.php?year=2010

The Business Day Bulletin is a publication of the International Institute for Sustainable Development (IISD) <info@iisd.ca>, publishers of the Earth Negotiations Bulletin © <enb@iisd.org>. This issue was written and edited by Deborah Davenport, Ph.D., Elisa Morgera, Ph.D., and Lynn Wagner, Ph.D. The Digital Editors are Kate Harris and Diego Noguera. The Editor is Robynne Boyd <robynne@iisd.org>. The Director of IISD Reporting Services is Langston James “Kimo” Goree VI <kimo@iisd.org>. Funding for coverage of this meeting has been provided by WBCSD. IISD can be contacted at 161 Portage Avenue East, 6th Floor, Winnipeg, Manitoba R3B 0Y4, Canada; tel: +1-204-958-7700; fax: +1-204-958-7710. The opinions expressed in the Bulletin are those of the authors and do not necessarily reflect the views of IISD. Excerpts from the Bulletin may be used in other publications with appropriate academic citation. Electronic versions of the Bulletin are sent to e-mail distribution lists (in HTML and PDF formats) and can be found on the Linkages WWW-server at <http://enb.iisd.org/>. For information on the Bulletin, including requests to provide reporting services, contact the Director of IISD Reporting Services at <kimo@iisd.org>, +1-646-536-7556 or 300 East 56th St., 11A, New York, New York 10022, United States of America.