Both Australia and the US are releasing policies on global warming today. In the case of Australia, the proposal of the Prime Minister’s task force is for the implementation of an emissions trading system by 2012. However, no policy on targets is recommended, which makes the implementation of a ‘cap-and-trade’ system problematic, since the key to actually reducing the emissions is the ‘cap’ (the ‘trade’ side of it is intended to ensure economic, though not allocative, efficiency). In the case of the US, the proposal is to bring together the 15 largest emitting nations to develop a common goal and to facilitate the exchange of relevant technology. There is an expressed refusal to enter into a global emissions trading scheme. Neither plan is convincing; it is yet to be seen whether they effect any real change, or are more directed to securing domestic political advantage.
For the US plan, report from The New York Times link here.
For the Australian plan, report from The Age link here.
The complex interactions between business and the physical and social environment are nowhere shown more dramatically than in the challenge of global warming. Here is a report on the planned expansion of an airport in the UK, Stansted Airport in Essex. The expansion planned will lead to a substantial rise in flights and passengers, the majority of them on low-cost holiday flights.
At a first level, there is concern at the local level about the impact of pollution and noise on communities, and on the 1000-year old Hatfield Forest, a relic and irreplaceable patch of vegetation.
But because aviation is such a significant contributor of greenhouse gases (13% of UK carbon emissions), which have a global reach, there are now global stakeholders to consider.
This article reports on the submission to the UK Planning Council considering the submission by the Inuit people of Canada, who, as an Arctic Circle people, have already suffered considerable environmental, social and cultural change through global warming, and see themselves as legitimate stakeholders in this decision, although it is taking place in another country.
Global warming, by definition, doesn’t respect borders. For Stansted Airport, as a business, environmental and social externalities have taken on global dimensions.
Report from The Independent link here.
It’s been clear for some decades that intangible assets are more important in driving business success than tangible assets. To take a dramatic example, the Microsoft balance sheet has only a few billion dollars of tangible assets on it, yet a market capitalisation of hundreds of billions–the gap is the knowledge capital, human capital, and brand and reputation capital that in most cases doesn’t make it onto the balance sheet, but which the market well knows has significant value.
Now AMP wants to add ‘organisational culture’ to this list of intangible drivers, and to class it as an element of ‘sustainability’ in business. There’s no doubt that culture is extremely powerful in any business; some would say, the most powerful human element, and the most difficult to change for the better. The debate is the degree to which culture can be evaluated and directed towards share price valuation.
My own view is that the principle is on the right track, but that the details of implementing it are very challenging; not least the definition of organisational culture itself, and even an ordinal ranking of it along the ‘good-bad’ continuum, let alone moving it into the numbers that valuation requires. Simplistic answers may be more confusing than no answers at all. An interesting and important topic of valuation research.
Report from The Human Resouces Magazine link here.
There is a push from the US coal industry and its Congressional representatives for massive government subsidisation to develop coal-to-liquid technology. It is known that liquefied coal can be used much as diesel is, in transport and industry. It is argued that, with carbon capture and sequestration, this technology could be cleaner than conventional petrol. However, analysis of the full life-cycle of the product makes it clear that at best the technology would produce no change in emissions, and at worst could be twice as polluting. The debate highlights the tension that exists, particularly in the US, between the goal of national energy self-sufficiency and reducing global warming.
Report from The New York Times link here.
Renewable energy sources such as wind and solar power are receiving much legitimate attention from governments, companies and investors. However, it is widely agreed that a rapid way to reduce carbon emissions in the short term is to increase energy efficiencies. This requires an appropriate engineering of economic incentives, so that it becomes more attractive for utilities to invest in efficiencies in existing equipment and systems than to build new plants–the default decision to this point. The introduction of a carbon tax would materially strengthen the incentive regime.
Report from The New York Times link here.