Winds of change - Getting ready for climate action

Joseph Fourier can boast a lot of discoveries to his name. The French mathematician was an expert in the science of heat transfer and conduction, creating a number of laws that engineers still live by today. But it was his discovery of heating on a planetary scale that could yet be his most important. In 1824, he argued that gases building up in the atmosphere could translate into the gradual warming of the earth. Nearly 200 years later, this “greenhouse effect” has earned the attention of the world’s political and business leaders – enough for them to consider entire new economic models through which to limit the buildup of carbon dioxide in the Earth’s atmosphere.

This came to a head last December, when an extraordinary summit of the United Nations tried to negotiate an international treaty to curb emissions. While the watered-down agreement that was eventually signed has failed to inspire many climate change activists, the meeting did signal an intention for world action. Leaders have agreed on the basic strategy; but are currently hung up on the detail.

For business, whether it is located in New York, Hong Kong, Mumbai or Vanuatu, this should be seen as an opportunity. Rarely does the world change with such advance notice. If, and when, a compulsory international market for carbon emissions comes into being, it will be those organisations that prepared earlier that will thrive. For HR, it means acting now to drive a more sustainable approach to business activities, reducing energy use through all departments and considering new solutions to old problems. Because, as Fourier may well have known 186 years ago, this is a problem that isn’t going to go away.

The job for business

The business case for action on climate change can be a fairly simple one. With or without a fully-fledged trading system, every ounce of carbon emitted into the atmosphere will soon have a price attached. It might be a so-called “carbon credit”, it could be a Government-imposed tax, but there’s no doubt polluters will be asked to contribute more to this invisible cost. As will their customers.

By getting a head start on reducing dependence on these factors, employers can save money now – but even more when the inevitable price rises materialise.

There is also a talent-related reason to take immediate action. Awareness and responsiveness to the climate change problem is increasingly considered part of an organisation’s employer brand. For a great deal of talent, particularly the skilled, educated and mobile staff that organisations have grown to rely on, climate change is a burning issue. Employers that are seen to be responding to it positively can expect greater attraction and retention rates for their best people.

It’s something the Ford Motor Company has woven into its overall mission statement. “Sustainability is one of our core values at Ford,” spokeswoman Jennifer Moore tells HRM. “We have led by example on a variety of environmental topics ranging from water reduction, waste avoidance, energy efficiency, and greenhouse gas reduction.”

As an automotive manufacturer, Ford obviously has a bigger than average carbon footprint. But Moore says that also gives it a lot of room to make reductions to its overall emissions, both in terms of how its vehicles operate, and their manufacture and assembly.

“We have long recognised that climate change is a global challenge and one that we can play a part in addressing,” she said. “In 2008 we spelled out how we planned to reach our goal of reducing by at least 30% the greenhouse gas emissions from our new vehicle fleet by 2020.”

She says Ford is now recognised as an industry leader in reducing greenhouse gas emissions from manufacturing operations. “Ford has reduced carbon dioxide emissions by over 11% since 2007, and by over 44% compared to 2000.”

Sustainability is also high on the agenda of fast-moving consumer goods manufacturer Henkel. Jan-Dirk Auris, regional president for Henkel Asia-Pacific, tells HRM it not only helps the multinational attract and retain talent throughout the world, it also earns it respect among customers and retail partners.

“Long before sustainability became a mainstream issue, Henkel consciously took it on board, giving it the high priority due and integrating the associated requirements within its general business processes,” he said.

Henkel actually throws open its books to key stakeholders so they can directly understand the ways it reduces the environmental impact of its business activities. “Henkel’s approach and long-standing commitment to the sustainability issue have made us an attractive partner for the industry and our customers.”

The job for HR

The business cases are clear; and many organisations are going out of their way to make an impact. But these are more often the exceptions than the rules. Particularly in Asia with its heavy manufacturing base, businesses overall have been slow to reduce make real reductions in their environmental impact.

In these cases, it should be HR driving the necessary change. It is, after all, a natural place for HR departments to get involved with their organisations and business strategies. As well as the employer branding benefits, a focus on environmental concerns can build teamwork and camaraderie. Many of the best energy-reducing initaitives come from the lower and middle ranks of an organisation.

HR departments responsible for internal communication also have a role to play, particularly in multinational organisations.

Moore says the creativity and input from the team level provides much of the drive for Ford’s emission reduction programmes. “Much of this success comes from teams implementing best practices shared throughout our global organisation,” she says, noting that worldwide internal communication is also at the heart. “Our environmental professionals meet regularly via audio or web conference, and in person annually, to share ideas and exchange best practices.”

Eugene Tay, founder of Green Future Solutions, a Singapore-based environmental consultancy, says HR is also needed to communicate environmental programmes throughout the organisation, ensuring staff see the direct connection with the business itself.

“HR can improve communication on the reasons and benefits for going green,” he told HRM. “If the reasons and benefits are not clearly communicated to employees, (they end up) not motivated and treat green practices as extra work for them.”

Don’t wait for the world

While the United Nations Climate Change Conference in Copenhagen last year failed to create a worldwide carbon-trading system, many smaller scale carbon trading blocs are developing. One of the first legitamate systems still operates in the US. The voluntary Chicago Climate Exchange (CCE) asks members to create legally binding emission reduction targets. Those that pollute more than this are forced to buy “credits” from other members who succeeded in reducing their emissions below their target. That voluntary system has been repeated with exchanges now also operating in China, Canada and Europe.

Ford, the only automotive manufacturer involved, says the CCE has proven an excellent learning experience in advance of a wider system in North America or the world. It is now preparing to adhere to the compulsory European Union Emissions trading scheme. “We learned a lot from the CCE and developed a Global Emissions Manager database that ensures environmental metrics such as carbon dioxide emissions are tracked consistently around the globe,” Moore says.

She notes that it is these sorts of internal improvements that should allow the carmaker to flourish if and when a full carbon trading scheme is implemented.

Other large multinationals are seeing that same light. Léo Apotheker, CEO of SAP, says the business imperatives are visible now, and delays will only add to the cost of creating greener organisations. “We, as business leaders, cannot wait for global regulations to be agreed upon and put into practice,” he recently blogged. “We must act today as carbon management and sustainable business will only become more critical over time.”