Cost a key barrier to climate change steps

Posted on March 31, 2011

HIGH CAPITAL COSTS are a main barrier for Philippine-based businesses "to take sufficient action on climate change," even as partial results of a survey among 72 respondents showed that more than half were "very concerned" about this phenomenon’s impact.

Partial results of the 2011 Climate Change and Sustainability Survey -- as of March 23 -- conducted by London-based professional service firm PricewaterhouseCoopers (PwC) were discussed by Dan Hamza-Goodacre, climate change and sustainability advisor of PwC Financial Advisors, Inc., before some 180 participants in the Business Climate Action Summit at the Hotel InterContinental Manila last March 29.

The survey started last March 1 and is scheduled to end today.

Specifically, the results showed that 67% of respondents were "very concerned" with the impact of climate change and 27% were "somewhat concerned," while 67% believed this phenomenon would affect their organization "to a great extent" and 33% said it would do so "to some extent."

When asked: "What are the key barriers for your organization to take sufficient action on climate change," high capital costs got 42% of responses when it comes to mitigation and 36% as regards adaptation, while lack of government policies and fiscal incentives got 16% for mitigation and 27% for adaptation.

The other barriers considered, which garnered much less responses, were low return on investments, return on investments "too remote," lack of internal buy-in, impact of mitigation costs on competitiveness, lack of knowledge/capacity, lack of demand for related goods/services, insufficient expertise on how to take action, and uncertainty in the future environment.

Mr. Hamza-Goodacre noted that the respondents’ top choices of high cost as well as lack of policy and incentives as the main barriers to action were "consistent with global views."

Asked which aspects of their organization would be most affected by climate change, 38% selected "impacts on economies and markets"; 24% chose "changing consumer behavior"; and 16%, "damage to physical assets or infrastructure."

The other choices were: "challenges in obtaining resources," which got 11%; "impacts to work force location and availability," 4%; "administration of health/safety hazards," 4%; and "induced changes in human and cultural environments, e.g. migration," 3%.

Moreover, 89% said their organizations consider the long-term impact of climate change on their strategic plans and investment decisions.

‘Somewhat prepared’

Asked how their groups’ climate change investments will be affected in the next 12 months, 51% said they would increase such outlay, although 33% said there will not be any change.

Fifty-eight percent said they were "somewhat prepared" to manage the impact of climate change, 22% said they were "neither prepared nor unprepared," 18% said they were "very prepared" and 2%, "somewhat unprepared."

To the question, "Does your organization have a formal management-approved climate change plan/strategy?" 64% said "no" and 36% said "yes."

Of that 64%, however, 90% said they have "informal plans" to cope with climate change.

Respondents also prescribed behavior change (20%), energy efficiency (18%) and use of low-carbon energy resources (16%) as the top priorities for mitigation measures, as well as "greening" of urban areas (38%), building of flood and assistance shelters (27%) and water efficiency (16%) for adaptation steps.

The same presentation noted that while these choices were also "consistent with global response," it raised the question of "who will pay?"

The survey respondents were composed of corporations (87%), sole proprietorships and partnerships (4% each) and "others" (5%).

Still looking for opportunities

"As the first of its kind in the country, the survey serves to establish baseline information on climate change awareness in local corporate culture," PwC Executive Director Gene Alfred S. Morales said by phone yesterday.

"The new data also allow Philippine-based businesses to determine their standing against the global business community," he added.

Another PwC executive cited the need to establish a clear business case for climate change measures.

"Carbon budget management has been around for 10 years, but there doesn’t seem to be a strong initiative from the private sector to reduce emissions, because they still do not see business opportunities in climate change," PwC Managing Partner and Chief Executive Officer Rossana S. Javier observed.

But one participant in the summit noted that while cost could be a consideration when preparing for climate change impact, it should not be a hindrance.

"If you look only at how much you will spend to address climate change, then you will never do anything to act on the problem," Unilever Philippines, Inc. Vice-President Ramon Gil S. Macapagal told reporters at the sidelines of the summit.

The government, another participant said, is doing its part.

Specifically, Climate Change commissioner Mary Ann Lucille L. Sering said a National Climate Change Action Plan would be unveiled in May.

"The action plan strives for balance and its policies are pro-business without having to sacrifice environmental integrity," Ms. Sering said without elaborating on specific policies directed to the business sector.

Local survey results were in line with global trends seen in PwC’s 2010 Carbon Disclosure Project.

That project noted that 48% of the 410 respondents from global firms surveyed had incorporated climate change and carbon management into their business strategies, while 28% reported developing products and services to enable customers to cut carbon emissions, Mr. Hamza-Goodacre said. -- EJD