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State and Corporate Action on Climate Change: Multiple Benefits From Multiple Approaches

State and Corporate Action on Climate Change: Multiple Benefits From Multiple Approaches

Speech by Eileen Claussen, President
Pew Center on Global Climate Change

National Governors Association Workshop
Washington, DC

February 28, 2002

Thank you. I'm delighted to be here this morning to talk with all of you about climate change. And, before I begin, I want to tap into the spirit of the recently concluded Olympics by awarding a few medals. The first medal goes to the White House. It is for speed skating around an issue, and is awarded in recognition of the Bush Administration's recently announced climate policy. This policy could just as easily have won the slalom competition for the way it zigs and zags around the real problem. Or perhaps it should have been entered in the downhill race, because that's where it will inevitably lead us-downhill.

That said, I think there are plenty of medals to go around. The former administration, for example, is a prime candidate for the gold in the biathlon. This is the competition, of course, in which you do two entirely different things-such as talking big on the international stage about your commitment to addressing climate change while doing next to nothing at home to put any kind of serious policies in place. I apologize for being so harsh in my assessment, but you can rest assured I was not pressured in any way by other judges on the panel.

Seriously, though, it's always a pleasure to spend some time with a group of people who are not only interested in learning about climate change, but are in a position to do something about it. A little later on I'll talk about what many states already are doing about it, and why it's in your state's interest as well as the national interest for you to do even more. But first I'd like to spend just a couple of minutes looking at where we stand in our efforts to address climate change, both here in the United States and abroad, and where ultimately we need to go.

The best place to start, I think, is with the science. And here, I believe, the consensus that has emerged is quite clear. Both the Intergovernmental Panel on Climate Change and the report prepared last year by a panel of the National Academy of Sciences are agreed on three main points: 1) the earth is warming; 2) human activity is largely to blame; and 3) the warming trend is likely to accelerate in the years ahead. And the implications are profound, affecting everything from farming and tourism to the reliability of the water supply and the livability of our coasts. Of course there are always uncertainties, and there always will be. But these uncertainties cut both ways, and are not an excuse for inaction. For example, it is possible that the impacts will be less severe than we expected. But it is equally possible that the effects will not be linear, and that we are in for some serious and negative climate surprises, such as a dramatic shift in the Gulf Stream current that warms Western Europe.

So, with or without uncertainty, I believe it is absolutely essential that we act. Now what is it we need to do? There are lots of ways we can begin to attack this problem, and I'll come back to those. But right now I want to lay out the big picture - the grand scheme, if you will. I'll be blunt about it: In the long run, the only solution is a fundamental transformation in the way we power our global economy. To keep our planet from overheating, we must dramatically reduce emissions of carbon dioxide and other greenhouse gases. The primary source of these gases is the combustion of fossil fuels. So our goal, over time, must be to end our reliance on coal and oil and to develop new sources of energy that can power our growing economy without endangering our climate. Yes, it is a tall order. It implies technological and economic transformation on an unprecedented scale. In fact, it demands nothing short of a second industrial revolution.

Is this revolution underway? Let's look first at the international picture. Over the last year we saw both the greatest success and the greatest setback since the international effort to address climate change was launched a decade ago. The success was that after years of wrangling nations finally agreed on a set of rules for implementing the Kyoto Protocol, which sets the first binding international limits on greenhouse gas emissions. European nations are well on track to ratifying the Protocol. Vigorous debates are underway in Japan, Canada and other industrialized countries that face some serious challenges in meeting their targets, but the prognosis is for the treaty to enter into force either this year or next.

The setback, of course, was President Bush's outright rejection of Kyoto. I do not intend to spend any time here debating the merits of the Protocol. It's true, the Protocol is at best a modest first step on a long journey. But from my perspective, the basic architecture of the treaty is sound. In fact, it's an architecture largely designed in the United States. It uses emissions trading, a concept born and bred here in America, to ensure that emissions are cut as cost-effectively as possible. I happen to believe that the emissions target for the U.S. negotiated by the previous Administration was unrealistic. It couldn't be met. But there were ways that could have been fixed short of a unilateral withdrawal.

And what has President Bush offered as his alternative? The President has offered a promise - a promise that the United States will do really no better than it's doing right now. When you do the math, the President's goal of an 18 percent reduction in greenhouse gas intensity by 2012 amounts to a 12 percent increase in actual emissions. It essentially continues the same trends we've seen over the last two decades. In other words, the target is nothing more than business as usual. On the positive side, the President has recommended that companies that make emission reductions should not be penalized in the event there is a future regulatory regime that requires reductions. A first step, perhaps, but a very modest one.

Fortunately, that's not the end of the story. There are people in this town who think climate change is a serious issue that warrants serious action. (If there were not, I think I would be a very lonely person.) In fact, some of those who are supporting serious action happen to be members of Congress. It may come as a surprise to you, but there is growing bipartisan interest in Congress in doing something about climate change. In fact, nearly twice as many climate change bills were introduced in the past year as in the previous four years combined. There is, of course, a serious debate over whether or not carbon should be covered in new multi-pollutant legislation for power plants. But there are literally dozens of other bills that would do everything from raising fuel economy standards to boosting research and development to encouraging farmers to adopt practices that suck carbon out of the atmosphere, or use some of their land for wind farms. Several bills would establish a national system for tracking and reporting greenhouse gas emissions - an important first step, which, if coupled with provisions that legally recognize the private sector's accomplishments in reducing emissions, would at least begin to put us on a constructive path for dealing with this issue. And finally, Senators Lieberman and McCain plan to introduce legislation later this year to establish a comprehensive nationwide emissions trading system. That's a bold idea - one that frankly I can't see being enacted for some time, probably years. But for the first time, serious debate about how the United States should meet its responsibilities on climate change is now underway.

What we really need, of course, is action, not debate. And I'm pleased to be able to tell you that real action is indeed taking place. To find it, though, you have to look beyond the Beltway. You have to look in two places - first, in the boardrooms and factories of major corporations that are taking it upon themselves to tackle their greenhouse gas emissions; and second, you have to look to the states and local communities that instead of waiting for leadership from Washington are taking up this challenge on their own. None of these efforts can in the end substitute for a credible, comprehensive national effort. Ultimately that is the direction we need to go. But addressing climate change requires a multiplicity of strategies at all levels. And the states and corporations that are taking the lead right now are the laboratories and proving grounds that will help us identify the smartest, most cost-effective strategies that can best serve the nation as a whole. That's not all. In the process, they are discovering that addressing climate change delivers a host of other benefits as well.

Let me begin by telling you about some of the efforts underway in the private sector. The Pew Center's Business Environmental Leadership Council now includes 37 major companies that accept the need for action on this issue and are taking concrete steps to protect the climate. These are primarily Fortune 500 companies such as Weyerhaeuser, Intel, Boeing, Dupont, Shell and Alcoa. Together they employ more than 2 million people and generate annual revenues of nearly $900 billion.

The Pew Center recently released a report that takes a close look at six companies that are members of the Council and that have adopted voluntary greenhouse gas targets. It also looks more broadly at a total of 31 companies with emission reduction targets. The report assesses the reasons why these companies took on targets, and what the results have been. The companies cited a number of reasons for taking on a target. They believe that the science of climate change is compelling, and that over the long term, their climate-friendly investments will pay off. They also believe that by taking the initiative, they can help the government create climate change policies that work well for business. It is one thing to advocate policies such as reasonable targets and timetables and flexibility for businesses to use various means to implement clearly defined goals. It is another thing to actually demonstrate via corporate action that these measures work.

But each of the companies cited one other important motivation for taking on a target - to improve their competitive position in the marketplace. And that, in fact, has been the result. Each company is on track to meeting or exceeding its greenhouse gas goal. Together, they've delivered reductions equal to the annual emissions of 3 million cars. And all the companies are finding that their efforts are helping to reduce production costs and enhance product sales today.

I think one of the most important lessons to be gleaned from this analysis is the variety of approaches employed by these companies. For example, a number of companies have greenhouse gas emission targets that relate directly to their industrial processes: Alcoa plans to reduce its direct process emissions by 25% below 1990 levels by 2010; and Dupont is on track to reducing its greenhouse gas emissions by a remarkable 65% by 2010.

Others have determined that their greatest contribution comes from the use of their products: Ford Motor Company will reduce the greenhouse gas emissions from its European fleet by 25% by 2005; and IBM will have 90-100% of its computers Energy Star-compliant each year.

Some have chosen to use relative measures for their targets: Toyota North America will reduce its energy use per unit of production by 15% below 2000 levels by 2005; United Technologies will reduce its energy consumption per unit of sales by 25% below 1997 levels by 2007; and Baxter International will reduce its energy use and associated greenhouse gas emissions per unit of production by 30% below 1996 levels by 2005.

Still others have chosen to increase their purchases of renewable energy, thereby creating greater demand for clean energy. For example, Dupont will get 10% of its electricity from renewable sources by 2010; and Interface is aiming for 10% by 2005.

BP and Shell have set up internal emissions trading systems among their business units, and have much practical advice to offer based on their experiences. And many companies, including American Electric Power, PG&E and others have invested significantly in carbon sequestration projects to offset their emissions. So as you can see, companies are experimenting, innovating and coming up with an array of strategies best suited to their individual circumstances.

Let me turn now to the equally impressive efforts taking shape at the state level. Over the past year, the Pew Center has worked with the National Association of State Energy Officials to gather information on state programs that reduce greenhouse gas emissions. Earlier this month, we officially unveiled the results: a searchable database on our website describing 21 programs that have delivered real emissions reductions. We'll be adding more programs in the weeks and months ahead. What's different about this database-and the reason I recommend it to your attention-is that it provides detailed information about how these programs started, what kinds of barriers states encountered, and how they dealt with them. It also quantifies the emissions reductions resulting from each of the programs. We posted the database two weeks ago and it's been accessed more than 1,000 times already.

Let's look at some of the examples it provides. We all know about Nixon going to China. But what about George W. Bush as a champion of renewable power? It's true. Legislation signed by then-Governor Bush to restructure the Texas electricity industry requires that all electricity providers generate about 3 percent of their power using renewable sources. The Texas Renewable Portfolio Standard was expected to bring more megawatts of renewable power on line in 2001 than in the prior 100 years. The result should be a reduction of approximately 3.3 million tons of CO2 per year, as well as reductions in sulfur dioxide and nitrogen oxides.

Oregon, meanwhile, was the first state in the nation to enact mandatory controls on carbon dioxide. The state requires that all new power plants meet a tough new emissions standard, and allows utilities to comply by paying a fee to the nonprofit Climate Trust, which in turn invests in projects that reduce or sequester CO2 emissions.

Other states are reducing emissions - while also reducing the burden on taxpayers and consumers - by investing directly in energy efficiency. New Hampshire, for instance, is saving $4 million a year through energy-saving retrofits on state-owned buildings. And Colorado has provided free energy efficiency upgrades to more than 70,000 low-income households, trimming their energy bills an average of 20 to 25 percent.

In the transportation sector, Washington State is leveraging nearly $8 in private funding for every dollar from the state for a program that gives commuters alternatives to the single-occupancy auto. The payoff is enormous: The program is generating roadway capacity at just a third the cost of building and operating new roadways.

Farmers are also pitching in. A program in Georgia that gives growers access to special "no-till" equipment has not only cut emissions and saved energy, but also conserved more than 2 million tons of soil. And finally, on the local level, high school students in Pattonville, Missouri, teamed up with state officials to fuel their school's boilers with methane captured from a neighboring landfill.

So what do all these examples from companies and from the states show us? First, that despite the lack of leadership here in Washington, there are significant efforts underway across America to address climate change, and the momentum is growing. These efforts are delivering real reductions in greenhouse gas emissions-and, better yet, they are doing it cost-effectively.

A second important lesson is that these efforts pay multiple dividends. In the case of the companies, they deliver operational efficiencies, reduced energy costs, and increased market share - all things that contribute to a healthier bottom line. In the case of the states, they deliver cleaner air, smarter growth, new energy sources, and real savings for taxpayers. The fact of the matter is that many of these initiatives were launched for reasons having nothing to do with climate change. The emissions reductions they are producing are simply side benefits - but they are real, and they are making a difference.

A third important lesson is the sheer diversity of approaches being taken. Climate change is an enormous challenge. It has to be tackled on many fronts. If ever there were an issue that defied one-size-fits-all solutions, this is it. The efforts being initiated right now in the boardroom and in your state capitols demonstrate that we have the drive and the ingenuity to come up with strategies of all different shapes and sizes. We must be careful not to squash that drive and ingenuity. Yes, we ultimately need a comprehensive national program to meet this challenge. But it must be one that provides the necessary incentives - and the flexibility - to encourage and allow a broad array of strategies.

In closing, I'd like to commend all of you from states that are already stepping up to the challenge of climate change and seizing the very real opportunities it presents. I'd like to encourage the rest of you to go back home to your bosses and tell them why it's in the interest of their constituents to do the same. Many times in the past, when we couldn't count on Washington to take the lead, the states have stepped into the breach. Climate change is another opportunity for you and your states to demonstrate that real leadership and real innovation are not top-down but bottom-up. If you lead, Washington will follow. And only then will the United States be able to become a real gold medal contender in the global effort to meet this global challenge. Thank you very much. I will be very happy to answer any questions. 

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Implications for U.S. Companies of Kyoto's Entry into Force without the United States

This working paper examines some of the potential implications for U.S. business of the Kyoto Protocol's entry into force – in particular, the effects of the U.S. decision to stay out of the Protocol.

The Bonn and Marrakech meetings adopted generally sound rules regarding the Kyoto mechanisms. However, the implications for U.S. business will depend as much or more on the domestic policies and measures of Annex B parties1 as on the Kyoto rules themselves. The Kyoto rules merely establish the general framework within which national implementation will take place. Although bad Kyoto rules might have precluded efficient implementation of the Protocol, the Bonn and Marrakech rules do not ensure efficiency, since this will depend on the extent to which governments choose to utilize the Kyoto mechanisms to achieve their targets.

The implications of Kyoto for U.S. business will also depend significantly on whether the United States decides as a matter of domestic policy to undertake emission reduction requirements, and the stringency of any such requirements. This paper generally assumes a scenario in which the U.S. does not take significant domestic action to control emissions. In the final section, it considers an alternative scenario involving adoption of strong U.S. domestic measures to reduce emissions.

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by: Daniel Bodansky, University of Washington

Daniel Bodansky
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Corporate Greenhouse Gas Reduction Targets

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Corporate Greenhouse Gas Reduction Targets

Prepared for the Pew Center on Global Climate Change
November 2001

By:
Michael Margolick and Doug Russell, Global Change Strategies International, Inc.

Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

In the United States and around the world, many businesses are demonstrating their commitment to solving the problem of climate change. Not only are companies speaking out on the severity of the problem, they are setting and meeting corporate targets to reduce greenhouse gas (GHG) emissions from their businesses.

DuPont has committed to reduce its GHG emissions by 65 percent from 1990 levels by 2010. Shell will reduce its GHG emissions 10 percent from 1990 levels by 2002. And earlier this year, Alcoa announced it would reduce its GHG emissions by 25 to 50 percent by 2010.

In this report, authors Michael Margolick and Doug Russell of Global Change Strategies International, Inc. provide guidance to companies contemplating targets. Based on in-depth case studies of six diverse members of the Center’s Business Environmental Leadership Council—ABB, Entergy, IBM, Shell, Toyota, and United Technologies Corporation—the authors trace the corporate target-setting process from the point of deciding to act on climate change, to the factors involved in setting a target, to management and employee engagement, and to evaluating, monitoring, and performance review.

A number of underlying themes emerged regarding companies’ motivations for setting targets. Among the most salient are these: companies that set GHG reduction and energy efficiency targets do so because they believe that setting and meeting the targets will improve their bottom line and drive innovation. They believe that over the long term, the world will have to deal with climate change, so their climate-friendly investments will pay off. They also believe that by taking the initiative, they can help the government to create a climate change policy regime that works well for business. It is one thing to advocate policies such as reasonable targets and timetables and flexibility for businesses to use various means (such as emissions trading) to implement clearly defined goals. It is another thing to actually demonstrate via corporate action that these measures work.

However, in taking these actions, these leading businesses are taking risks. They are betting that there will ultimately be government policy on climate change, that it will allow companies flexibility, and that it will reward and not punish early movers. If they turn out to be wrong, these companies could be disadvantaged relative to their less proactive competitors.

As climate policy continues to develop, we should keep the following lessons in mind. First, it is clear that GHG emissions can be substantially reduced, and that there are many approaches that can be employed to meet this objective. Second, emissions can be reduced in ways that are cost-effective, and that generate ancillary benefits that improve companies’ competitive positions. Finally, the diversity in the type and scope of targets and implementation activities that companies have taken on voluntarily indicates that policies to reduce emissions should be as flexible as possible. Flexibility not only allows for more cost-effective reductions, but also ensures that companies can focus their limited resources on achieving the greatest reductions. Companies and countries have only so much money to invest in addressing climate change. The more flexibility we allow, the more economically efficient our response will be, and thus the more environmental progress we will achieve.

The authors and the Pew Center would like to thank the companies featured in this report for sharing their experiences and perspectives, and acknowledge the members of the Center’s Business Environmental Leadership Council, as well as Jennifer Nash of the John F. Kennedy School of Government and Sarah Wade of Environmental Defense for their review and advice on a previous draft of this report, and Matt Jones and Bob Masterson for their valuable contributions. Additionally, the Pew Center would like to thank the Energy Foundation for its generous support of this project.

Executive Summary

A growing number of companies have voluntarily adopted climate-related targets—numerical performance objectives for indicators related to climate change, such as energy efficiency and greenhouse gas (GHG) emissions. This report explores companies’ reasons for adopting targets, their choices of target types and levels, their plans for meeting the targets, and their progress to date. It also provides guidance, based on their experiences, to other companies that are considering climate-related targets.

The report is based on in-depth case studies of six members of the Business Environmental Leadership Council (BELC) of the Pew Center on Global Climate Change, supplemented by surveys and a workshop with additional BELC members. The case study companies are ABB, Entergy, IBM, Shell, Toyota Motor Manufacturing North America (TMMNA), and United Technologies Corporation. These particular companies were chosen to reflect a diversity of industries, target types, and headquarters locations.

The companies in this study vary widely in their reasons for adopting climate-related targets, and most have done so for several reasons. All of the companies see targets as improving their competitive market position by reducing production costs and enhancing product sales today, and in anticipation of regulatory and market environments of the future. Other reasons for setting climate-related targets include: to prepare for future regulation by investing in GHG emissions reductions now, to contribute to the design of efficient and equitable international and domestic GHG policies and programs, and to enhance corporate reputation via environmental leadership. However, voluntary targets can present risks to shareholders. Like the motivations for setting a target, the risks of doing so also vary by company. Risks include the following possibilities: governments will not recognize early action; governments will select a late baseline, rendering early reductions less valuable; and governments will not regulate at all, essentially punishing companies with targets for their good deeds because they, but not their competitors, will have incurred costs of making emissions reductions.

Companies have adopted several different kinds of targets. Some targets apply to purchases, others to companies’ own energy use or emissions, and others to products; some focus on greenhouse gases, and others on energy use; some serve as absolute limits, and others are relative to indicators such as production levels and revenues. Which type of target an individual company chooses depends on its products and production methods, policy environment, and business models. The target’s effect on emissions reductions, the existence of uncontrollable factors relating to emissions or energy use, the opportunity for cost-effective emissions or energy reductions, and the potential impact on company growth are four general considerations that influence a company’s choice of target type.

Companies also have different methods for setting the target level. A “top-down” target-setting process sets the level for the whole corporation at once, without a plant-by-plant analysis. Under a “bottom-up” process, the corporate target level is based on analysis of potential reductions by individual plants.

Top-down and bottom-up elements occur within each company’s target-setting process, but in widely varying proportions. Common steps in setting the target level include an emissions or energy use inventory, choice of target year, projection of business-as-usual emissions, and an iterative process that weighs potential target levels against the feasibility and costs of prospective action plans. It is beneficial to involve those who will be responsible for implementing the action plan in this process, in order both to ensure a reasonable target, and to put the organizational elements of the action plan into place. The case studies suggest that an environmental management system is a valuable tool for these purposes.

Naturally, the specific components of action plans to achieve climate-related targets depend on the target type and the products and production methods of each company. However, every company must make several general design decisions, including whether the plan will be designed through a “top-down” or “bottom-up” process, how the target will fit in with other environmental management activities, to what extent the plan will feature market mechanisms such as internal emissions trading and external offsets, and how to use research and development (R&D) resources and other means to drive technology innovation. Emissions trading may be useful for companies that wish to drive down costs by using market competition to encourage efforts to discover least-cost reductions. Internal emissions trading is especially useful for companies that are uncertain as to whether their allocation of the target among business units is least-cost, that are uncertain as to how their target will be achieved, and that have low trading transaction costs. Offsets may be valuable where the cost of emissions reductions within a company’s own operations is high. The action plan may also need to respond to external risks imposed by markets, technological change, and regulation. An assessment of these factors may be useful in explaining the target results, both internally and externally, should emissions or energy use trend off-target.

The companies studied found that incentive systems for specific ideas and initiatives, as well as reinforcement of commitment by senior management, motivated employees and managers throughout the company. Many managers indicated that targets drive innovation within the company. Sometimes the mere existence of emissions or energy use data generates interest in, and ideas for, improvements that turn out to be profitable on their own. Companies also found that climate-related targets have a positive influence on employee morale. Internal communications are important in all cases — increasing employee understanding of climate change helps gain buy–in to the target, and generates new ideas on how to improve environmental performance.

Communications efforts and styles also vary by company. Typically, firms with relatively high direct emissions and top-down target-setting processes have higher-profile climate change communications efforts, including speeches and public presentations by the CEO. Companies with lower direct emissions, that have had environmental management systems in place for a number of years, and that have bottom-up target-setting processes, tend to take a more low-key approach to communications. Several companies have benefited from collaboration with third parties, such as environmental non-governmental organizations, to help get the message across. Partnerships with non-governmental organizations can build credibility and provide useful services.

Finally, all the companies studied are committed to reach their targets systematically, at low cost, and according to conditions in their particular businesses. The companies consider the achievement of climate-related targets to be as important as other critical indicators of the health of the business.

About the Authors

Michael Margolick, Ph.D.
Global Change Strategies International, Inc.

Dr. Margolick is one of Canada's leading experts in energy planning and in the economics and policy development of climate change. He was a Research Associate in the Program in Natural Resource Economics and the Senior Scientist of the Forest Economics and Policy Analysis Project, both at the University of BC. He has also worked for the Corporate Strategic Planning Unit at BC Hydro and was the Executive Director of the British Columbia Energy Council. Related expertise includes research and program evaluation, and public/stakeholder consultation. He is an adjunct professor in the School of Resource and Environmental Management at Simon Fraser University.

Douglas J. Russell
Global Change Strategies International, Inc.

Mr. Russell is President of GCSI - Global Change Strategies International Inc., a Canadian firm dedicated to working with progressive corporate and public sector organizations to anticipate and respond to the challenges and opportunities of global change. Mr. Russell is responsible for the overall management and operation of GCSI. Prior to moving to the private sector, Mr. Russell was a senior executive in the Canadian government where he managed the development of Canada's National Action Program on Climate Change, and co-headed the Canadian delegation to the UN Framework Convention on Climate Change. He was the chief negotiator for Canada for the Berlin Mandate approved in April 1995 at the first meeting of the Conference of the Parties, and he chaired the international work of the OECD and IEA to define the reporting guidelines for Annex I countries under the Framework Convention. His professional experience includes complex international negotiations, federal-provincial and business- government relations, development of strategic plans, financial and personnel management, and management of organizations during periods of change.

Doug Russell
Michael Margolick
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Press Release: Hewlett-Packard Joins Effort To Mitigate Climate Change

For Immediate Release:  
November 6, 2001

Contact: Katie Mandes, 703-516-4146

Hewlett-Packard Joins Effort To Mitigate Climate Change - Pew Center's Business Environmental Leadership Council Climbs to 37 Members

Washington, D.C.- The Pew Center on Global Climate Change today announced that Hewlett-Packard Company has joined the organization's efforts to battle global climate change.

The Pew Center established the Business Environmental Leadership Council (BELC) with 13 members in May 1998. The addition of Hewlett-Packard Company brings the BELC's total membership to 37 companies. Members of the BELC are committed to take steps in their domestic and foreign operations to assess their greenhouse gas emissions and establish programs to reduce those emissions. The BELC considers the Kyoto Protocol a first step in global efforts to mitigate climate change and supports the development of market-based mechanisms as called for in the Kyoto Protocol.

The BELC includes many Fortune 500 companies in a diverse group of industries including energy, chemicals, metal, consumer appliances and high technology. These companies do not contribute financially to the Pew Center, which is supported solely by contributions from charitable organizations.

"These companies understand that the world cannot avoid dealing in a serious way with climate change," said Eileen Claussen, President of the Pew Center. "An important aspect of Hewlett-Packard's philosophy is its dedication to operating in an environmentally responsible manner, said the Pew Center's Claussen. "HP's decision to join the Pew Center demonstrates their commitment to the climate change issue and we look forward to working with them."

The other members of the BELC are: ABB; Air Products and Chemicals; Alcoa; American Electric Power; Baxter International; Boeing; BP; California Portland Cement Co.; CH2M HILL; Cinergy Corp.; Cummins Inc.; Deutsche Telekom; DTE Energy; DuPont; Enron; Entergy; Georgia-Pacific; Holnam; IBM; Intel; Interface Inc.; John Hancock Financial Services; Lockheed Martin; Maytag; Ontario Power Generation; PG&E Corporation; Rio Tinto; Rohm and Haas; Royal Dutch/ Shell; Sunoco; Toyota; TransAlta; United Technologies; Weyerhaeuser, Whirlpool and Wisconsin Energy Corporation.

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The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Press Release: Businesses Gain Competitive Edge, Other Benefits by Adopting Greenhouse Gas Reduction Targets

For Immediate Release:  
November 2, 2001

Contact: Katie Mandes
703-516-4146

Businesses Gain Competitive Edge, Other Benefits by Adopting Greenhouse Gas Reduction Targets

Washington, DC - By committing themselves to reducing their greenhouse gas emissions, leading companies in the United States and worldwide are doing more than addressing the problem of climate change. They are also improving their competitive positioning, according to a new report from the Pew Center on Global Climate Change.

The report, Corporate Greenhouse Gas Reduction Targets uses case studies of a variety of companies that have established climate-related targets for reducing their emissions and/or energy use to show how the adoption of such targets, along with concerted efforts to meet them, can help improve performance and bottom-line results. All of the profiled companies view their efforts to set and meet climate-related targets as a way to reduce production costs and enhance product sales today. The companies also report that, in working to achieve their targets, they are improving their prospects for success under future regulatory and market environments.

"These companies understand that the world cannot avoid dealing in a serious way with climate change," said Eileen Claussen, President of the Pew Center on Global Climate Change. "They know that their climate-friendly investments will pay off. And they see that taking action now and not later can drive new efficiencies, performance improvements and innovation."

This report was authored by a team from Global Change Strategies International. Drawing on the experiences of companies that are part of the Pew Center's Business Environmental Leadership Council (BELC), the report explores the companies' reasons for adopting targets, their choices of various types and levels of targets, their plans for meeting the targets, and their progress to date. The report also provides guidance to businesses that are considering climate-related targets, based on the experiences of the profiled companies, which include ABB, Entergy, IBM, Shell, Toyota, and United Technologies Corporation.

Talking Targets

Corporate Greenhouse Gas Reduction Targets defines climate-related targets as quantitative performance objectives for indicators related to climate change, such as greenhouse gas emissions or energy use. One of the report's key conclusions is that setting climate-related targets can help companies prepare for future mandates by investing now to reduce greenhouse gas emissions. In addition, by taking the initiative and showing how emissions can be reduced in cost-effective ways, the companies profiled in the report believe they can contribute to the design of efficient and equitable climate policy. They also believe that their adoption of climate-related targets enhances their reputation as environmental leaders in the marketplace.

"The diversity in the type and scope of targets and implementation activities that companies have taken on voluntarily indicates that policies to reduce emissions should be as flexible as possible," reports Eileen Claussen, President of The Pew Center on Global Climate Change.

At the same time that it cites the business advantages that can accompany a commitment to climate-related targets, the Pew Center report also notes the inherent risks of such a strategy. The companies profiled in the report are acting on the assumption that government will sooner or later develop a policy on climate change, that it will allow companies flexibility, and that it will reward and not punish early movers. If these assumptions turn out to be wrong, the companies could be disadvantaged in relation to competitors who were less proactive.

Part of "Solutions" Series

Corporate Greenhouse Gas Reduction Targets was authored by Michael Margolick and Doug Russell of Global Change Strategies International. The report is part of the Pew Center's Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change. Other Pew Center series focus on domestic and international policy issues, environmental impacts, and the economics of climate change.

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The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is conducting studies, launching public education efforts and working with businesses to develop market-oriented solutions to reduce greenhouse gases. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs. The Pew Center includes the Business Environmental Leadership Council, which is composed of 36 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center - it is solely supported by contributions from charitable foundations.

Press Release: Report Highlights Lessons Learned from Corporate Efforts to Verify Greenhouse Gas Emissions

For Immediate Release:  
October 25, 2001

Contact: Katie Mandes
703-516-4146

Report Highlights Lessons Learned from Corporate Efforts to Verify Greenhouse Gas Emissions

Washington, DC - As international negotiators gather in Marrakech, Morocco, this month for the latest round of talks on climate change, the issue of how to count, track and verify greenhouse gas emissions will be a key focus. According to a new report released today by the Pew Center on Global Climate Change, leading companies throughout the world are developing a range of innovative approaches that hold critical lessons for the development of emissions verification regimes at all levels. "It is for good reason that the commodities that are bought and sold in the emerging greenhouse gas emissions trading market are referred to as 'verified emissions reductions,'" said Eileen Claussen, President of the Pew Center on Global Climate Change. "Verification is absolutely essential to the emergence of a viable emissions market-and, in turn-a viable and effective response to climate change."

The Pew Center report, An Overview of Greenhouse Gas Emissions Verification Issues, describes leading companies' efforts to verify their greenhouse gas emissions and emissions reductions. Authored by a team from Arthur D. Little, Inc., the report addresses the experiences of individual firms, the approaches to verification embodied in various greenhouse gas programs sponsored by governments and non-governmental organizations, and the factors that drive verification. The authors also review general verification issues, including who should verify, what should be verified, and when verification should occur.

Veni, Vidi, Verify

Emissions verification refers to the assessment of the completeness, accuracy, and conformance with established criteria of reported greenhouse gas emissions and emissions reductions. As increasing numbers of companies track and report their emissions, commit to emissions reduction targets, and engage in emissions trading, verification will play a vital role in ensuring that companies, governments, and others have the accurate information they need to make true progress in reducing emissions.

"Stakeholders and potential trading partners need to know that their reported emissions and reductions are real," said Claussen. "And, while we have not yet established uniform approaches to verifying greenhouse gas emissions, there is a great deal we can learn from the evolving medley of corporate, governmental, and non-governmental initiatives."

The report also issues a series of recommendations for companies and other organizations that are weighing the best approaches to verification:

  • Conduct an emissions inventory as if it is going to be verified, regardless of whether your organization is planning to verify it;
  • Be clear on the purpose of emissions verification, so that all stakeholders who rely on the results will be satisfied with how it's done;
  • Choose verifiers carefully-be sure they understand your organization, its type of business, and its emissions; and
  • Learn from the verification experience-use it to improve your inventory process, to enhance the reliability of reported information, and to facilitate future verification.

Part of "Solutions" Series

An Overview of Greenhouse Gas Emissions Verification Issues was authored by Christopher Loreti, Scot Foster, and Jane Obbagy of Arthur D. Little, Inc. The report builds on last year's Pew Center report, An Overview of Greenhouse Gas Emissions Inventory Issues, which offered a set of principles for conducting greenhouse gas inventories. Both of these reports are part of the Pew Center's Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change. Other Pew Center series focus on domestic and international policy issues, environmental impacts, and the economics of climate change.

A complete copy of this report -- and previous Pew Center reports -- is available on the Pew Center's web site, An Overview of Greenhouse Gas Emissions Verification Issues.

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The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is conducting studies, launching public education efforts and working with businesses to develop market-oriented solutions to reduce greenhouse gases. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs. The Pew Center includes the Business Environmental Leadership Council, which is composed of 36 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center - it is solely supported by contributions from charitable foundations.

An Overview of Greenhouse Gas Emissions Verification Issues

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An Overview of Greenhouse Gas Emissions Verification Issues

Prepared for the Pew Center on Global Climate Change
October 2001

By:
Christopher P. Loreti, Scot A. Foster, and Jane E. Obbagy
Arthur D. Little, Inc., Cambridge, Massachusetts

Press Release

Download Entire Report (pdf)

Foreword Eileen Claussen, President, Pew Center on Global Climate Change

The need for information on how to count, track, and verify greenhouse gas emissions has never been greater. Many of the world’s nations are working toward international, national, and subnational regimes for reducing emissions. These efforts have been accompanied by a growing number of corporate targets to reduce greenhouse gas emissions, as well as the emergence of a greenhouse gas trading market. To ensure that the numbers on which governments determine compliance, and on which companies stake their finances and reputations, are real, greenhouse gas emissions verification is critical.

In this Pew Center report, authors Christopher Loreti, Scot Foster, and Jane Obbagy of Arthur D. Little, Inc. describe the evolving approaches to corporate greenhouse gas emissions verification. They identify factors that drive verification activities and suggest a number of principles that organizations should consider when verifying greenhouse gas emissions, with an eye toward the experiences of the firms, governments, and non-governmental organizations that have been involved in verification activities.

This report builds on An Overview of Greenhouse Gas Emissions Inventory Issues which the Pew Center released last year, and which offered a set of principles for conducting greenhouse gas inventories. Both of these reports are part of the Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change.

The authors and the Pew Center would like to thank the companies featured in this report for sharing their experiences and perspectives, and acknowledge the members of the Center’s Business Environmental Leadership Council, as well as Jean-Bernard Carrasco of the Australian Greenhouse Office, Nick Hughes of BP, and Janet Ranganathan of the World Resources Institute for their review and advice on a previous draft of this report.

Executive Summary

The growing number of companies that inventory greenhouse gas (GHG) emissions, implement emissions reductions projects and targets, and trade GHG emissions reductions has generated increasing interest in emissions verification. Stakeholders in the corporate, governmental, and non-governmental sectors recognize the need for complete, credible, and accurate information about GHG emissions and emissions reductions. To address this issue, some government bodies have developed standards for verifying GHG emissions for specific programs. More general approaches to verifying emissions are just beginning to evolve, however, as uniform approaches to inventorying and reporting GHG emissions are not yet fully established.

This paper describes the evolving approaches to corporate GHG emissions verification. The authors discuss the experiences of leading firms that inventory and verify GHG emissions, the approaches to verification embodied in various GHG programs sponsored by governments and non-governmental organizations, and the factors that drive verification. They also review general verification issues, including who should verify, what should be verified, and when verification should occur.

This paper builds on an earlier publication of the Pew Center on Global Climate Change, An Overview of Greenhouse Gas Emissions Inventory Issues (Loreti et al., 2000). Much of the content is the result of discussions with the Pew Center’s Business Environmental Leadership Council, a survey of leading corporations on approaches to GHG emissions verification, a review of the current literature on corporate GHG emissions verification, discussions with representatives from governmental and non-governmental organizations involved in GHG emissions issues, and prior experience of Arthur D. Little, Inc. in environmental auditing and GHG verification.

Just as there are multiple purposes and methods for performing emissions inventories, there are a variety of reasons for verifying emissions inventories and a range of approaches to verification. However, the authors’ review of the work to date on GHG emissions verification suggests several principles for any firm that conducts a GHG emissions inventory:

  1. Conduct your inventory as if it is going to be verified, regardless of whether your organization is planning to verify it. Rigorous reporting, emissions estimation, and data management systems will facilitate any future verification. Indeed, these systems will make it possible to conduct third-party verification of today’s emissions in the future should it become necessary, for example, to establish a baseline or obtain credit for early emissions reductions.

  2. Be clear on the purpose of verification. Verification can be conducted for many reasons and the results of verification performed for one purpose may not be applicable to another. Be sure that all stakeholders who rely on the verification result will be satisfied with the scope and methods of the verification.

 3. Choose your verifiers carefully. Be sure the individuals conducting the verification understand your organization, its type of business, and its emissions. The verifiers’ knowledge and experience are more important than the type of organization they are from. If the verification is performed as part of an established GHG reporting or reduction program, be sure the verifiers you choose have the qualifications that that program requires.

 4. Learn from your verification experience. Organizations will maximize the value of the verification if they use it to improve their inventory process, improve the reliability of reported information, and facilitate future verification. When hiring third-party verifiers, be sure that they provide specific recommendations for improving your organization’s GHG inventory.

About the Author

Christopher P. Loreti
Arthur D. Little, Inc., Cambridge, MA

Christopher P. Loreti is a Senior Manager in the Global Environment and Risk practice of Arthur D. Little, Inc., and the author of two Center reports, An Overview of Greenhouse Gas Emissions Inventory Issues, and An Overview of Greenhouse Gas Emissions Verification Issues. Since joining Arthur D. Little in 1985, his work has focused on the assessment of the release, fate, and transport of pollutants in the environment. He has conducted numerous air pollutant emission inventories for conventional and toxic air pollutants and greenhouse gases. He has co-authored reports examining trends in Canadian emissions of selected greenhouse gases and technologies to reduce these emissions, economic instruments for reducing U.S. emissions of carbon dioxide, and the potential for electric vehicles to reduce emissions of greenhouse gases and conventional air pollutants in Hong Kong. Mr. Loreti holds an M.S. in Technology and Human Affairs from the Department of Engineering and Policy at Washington University and B.S. degrees in Chemical Engineering and Environmental Engineering from Northwestern University.

Christopher P. Loreti
Jane E. Obbagy
Scot A. Foster
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Climate Change: A Strategy for the Future

Climate Change: A Strategy for the Future

Speech  by Eileen Claussen, President
Pew Center on Global Climate Change

Honors Colloquium on a Just and Sustainable Future
University of Rhode Island

September 25, 2001

I am very happy to have the opportunity to address this honors colloquium, and I want to pay tribute to the faculty, staff, and students here at the University of Rhode Island's Sustainable Communities Initiative for trying to come to terms with a very serious question-and that is, how do we create a just and sustainable future?

This, of course, is an extraordinary time, and a just and sustainable future may seem very far away as we ponder the horrific events of two weeks past. Usually, when I give a speech, I try to begin with some humor, and I do this because I think it is important that we not take ourselves, or our specific issues and interests, too seriously. But I think the events of September 11th have cast an enormous shadow over all of us-and, with it, a sadness and a seriousness of purpose that we cannot escape. And so I ask you, for the next short while at least, and for longer if you can, to be thoughtful about the issue of climate change, because it, too, requires us to be serious and reflective and determined about what we need to do to make the world a safer place.

In talking about climate change today, I want to touch first on the science - and, more specifically, on the ever-solidifying scientific consensus that this is a very serious problem that demands very serious action. I'd like to talk broadly about the challenge we face, and the ways in which many in the business community are rising to that challenge. I'll turn then to the essential role of government - both internationally and here in the United States. And, finally, I will suggest how we might forge a common path forward that is sustainable, just, and fair to all.

Our goal must be to facilitate the arrival of a second industrial revolution. And this means doing all we can to accelerate the development of new technologies that will move us closer to a low-carbon world economy.

The Science of Climate Change: A Few Observations

Let us focus first on the science of climate change. The Intergovernmental Panel on Climate Change (or IPCC) is a body created by the United Nations to reach scientific consensus about the magnitude and nature of the climate problem. In its "Third Assessment Report," approved in January of this year, the IPCC said it now expects the global average surface temperature to rise by between 2.5 and 10 degrees Fahrenheit over the course of the 21st century. This is a much greater increase than projected just five years ago. Even at the low end of the projection, the warming trend is expected to cause significant problems-more sea level rise, droughts and floods; increasingly violent storms; damage to our ecosystems; effects on the availability of water; and impacts on our forests and agriculture. And the higher-end projections of 10 degrees or more could prove catastrophic. Studies from the IPCC and others also confirm that greenhouse gases produced by human activities, mainly the burning of fossil fuels, are the principal cause of the continuing warming trend.

These findings were confirmed in June by a panel of the National Academy of Sciences, put together at the request of President Bush, and including some scientists who had previously expressed skepticism about the nature and pace of global climate change. The NAS report also affirms that temperatures at the Earth's surface already are rising and that the warming trend has intensified in the last 20 years.

What will be the impact of climate change here in Rhode Island? While it is hard to pinpoint impacts on a state-by-state basis, it is fair to say that Rhode Islanders-and, indeed, all New Englanders-will see temperatures rise, along with significant increases in precipitation. Fragile coastal ecosystems could be at risk as global sea levels rise, barrier reef islands are inundated, and we see an increase in the frequency and severity of storms-as scientists expect we will. Sea-level rise also could lead to flooding of low-lying property, loss of coastal wetlands, erosion of beaches, saltwater contamination of drinking water, and damage to low-lying roads, causeways, and bridges. Agricultural production will surely be affected both here and elsewhere because of warmer temperatures, less soil moisture, and other climate change-related problems. And the possibility of health problems, including increases in heat-related illnesses, cannot be discounted.

The bottom line is that if we need a reason to act on this issue, the latest science certainly provides one. The fact that there is uncertainty about exactly how much temperatures will rise or what the precise effects will be should be expected. Both the IPCC and the NAS have identified a number of critical research challenges that need to be addressed in the coming years. But, increasingly, the science tells us we would be irresponsible not to take the threat of climate change very seriously.

A Second Industrial Revolution

How, then, do we address this threat? How do we avert the many risks that the scientific community is warning us about? Quite obviously, we must reduce our emissions of the greenhouse gases that are contributing to climate change. And to do that, we must launch a new industrial revolution.

This will be a revolution characterized more than anything else by a growing reliance on low-carbon and even no-carbon energy sources to power the world's continuing economic development and growth. We must embrace the possibility of "decarbonizing" our economies. At the same time, we must also be realistic about what can be done and in what time frame. Before you start to think of me as a latter-day Pangloss, let me assure you that I am fully aware that all countries will continue to use petroleum and coal for many years to come. The challenge with respect to these traditional fuel sources will be to promote ever-increasing levels of efficiency in their transmission and use at the same time as we are working to develop and deploy cleaner energy sources for the future. Coal currently accounts for 24 percent of the United States' total primary energy supply-and a remarkable 57 percent of China's. Even if these numbers edge downward-as they are already doing with the introduction of increasing numbers of natural gas-fired power plants-the predominance of coal in the worldwide energy mix means we need to find and embrace cleaner-burning ways of using it. And we need to think seriously about sequestering coal-related carbon dioxide emissions.

But these types of steps clearly will not be enough. The bottom line is that we need new technologies to meet the energy and environmental challenges we face. To effectively address climate change, we need to lower carbon intensity (that is, the amount of carbon we emit per unit of GDP); we need to become more energy efficient, so that we use less energy to achieve the same results; we need to promote carbon sequestration, so that the carbon we do emit does not enter the atmosphere and affect the climate; and we must find ways to limit emissions of non-CO2 greenhouse gases. This will require fundamentally new technologies, as well as dramatic improvements in existing ones. New, less carbon-intensive ways of producing, distributing, and using energy will be essential. The redesign of industrial processes, consumer products, and agricultural technologies and practices will also be critical.

These changes need not take place overnight. They can be introduced over decades as we turn over our existing capital stocks and establish new infrastructure. But we must begin making the investments needed to usher in this new industrial revolution, and we must begin making those investments now.

Industry Takes the Lead

Many businesses, in fact, already are taking important steps to address climate change. About half of the 36 companies that are part of the Pew Center's Business Environmental Leadership Council have set specific, quantitative targets to reduce their greenhouse gas emissions, and others are working toward establishing these objectives. Consider DuPont, a corporation that is well on its way to achieving its goal of reducing greenhouse gas emissions by 65 percent before 2010, relative to 1990 levels. Or Baxter International, which is committed to improving its energy efficiency by 30 percent below 1996 levels by 2005. Or IBM, which has committed to having 90 to 100 percent of its new model computers meet Energy Star criteria for energy efficiency.

Other companies, too, are making process and efficiency improvements that are yielding real reductions in emissions. The energy company Enron, for example, reduced its greenhouse gas emissions by controlling leaks in its natural gas pipelines. And TransAlta Corporation improved its energy efficiency by about 4 percent when it upgraded old, less efficient turbines and other systems.

In addition to these types of steps, some companies are investing in dramatic changes to their production processes. Alcoa, for example, is developing a new technology for smelting aluminum that, if successful, will allow the company to reduce its greenhouse gas emissions to half their 1990 levels over the next nine years. Similarly, Shell aims to achieve its greenhouse gas reduction target by revamping its disposal of the waste gases resulting from oil and gas production, even as it puts increasing emphasis on renewable energy sources.

The States are Moving

We are also beginning to see real movement on this issue from a number of states. On August 28th of this year, the New England Governors and Eastern Canadian premiers approved a comprehensive Climate Change Action Plan at their annual meeting. This plan includes goals of returning the levels of greenhouse gas emissions to 1990 levels by 2010, reducing them to 10% below that level by 2020, and putting in place a process to review, adjust and add new goals.

The state of New Jersey is hoping to reduce its levels of greenhouse gases by 3.5% from 1990 levels by 2005. The state of Oregon has put in place carbon dioxide standards for new power plants. The state of Massachusetts is regulating its highest emitting power plants, and expects to see significant reductions in emissions by 2008. And many others are experimenting and beginning to implement different approaches to addressing the climate change issue.

The Role of Federal Government Action

All of these are important developments-and they show how increasing numbers of leading companies and states see a clear interest both in reducing their emissions and in helping to shape the energy economy of the future. But voluntary actions undertaken on a largely random basis by some members of the business community or by a small handful of states are not enough. In the United States, we have had voluntary efforts in place for much of the past decade, and still we have seen a dramatic rise in emissions - almost 12 percent over 1990 levels.

In the end, there is little incentive for any company or state to undertake real action unless, ultimately, all do-and unless all are in some manner held accountable. Markets, of course, will be instrumental in mobilizing the necessary resources and know-how. Market-based strategies such as emissions trading will also help deliver emissions reductions at the lowest possible cost. But markets can move us in the right direction only if they are given the right signals. It is our national government's job to send the right signals.

Government can and must play a critical role in establishing the ground rules for the energy economy of the future. Because this is a global problem that must eventually be solved globally, it means sending global signals and establishing mandatory global frameworks for action, because each country must be assured that others will act too. And it means, in turn, the adoption of mandatory programs on a country-by-country basis. What truly matters, of course, is what individual countries and individual businesses do to reduce their individual contributions to this problem. And there is no substitute for actually requiring countries and businesses to reduce emissions, because it is in the process of trying to meet clear objectives that innovation will flourish.

The Significance of the "Kyoto Compromise"

Is government rising to the challenge? Looking first to the international arena, we see that the world community-minus one very important player-has at long last agreed on a set of first steps to address climate change.

As all of you know, over the summer in Bonn, Germany, 178 nations reached a tentative compromise on the rules that will allow the Kyoto Protocol to enter into force. The Kyoto Protocol, of course is the agreement first negotiated in 1997 that requires developed countries to reduce or limit their emissions of greenhouse in relation to 1990 levels, with different countries agreeing to different targets.

In addition to establishing targets, the Kyoto Protocol outlines how countries can achieve them-for example, by making emission reductions at home, by trading emission credits with others, and by using "sinks" such as farms and forests to remove carbon from the atmosphere. Although many of the details on how these mechanisms will work still need to be decided, the compromise reached in Bonn will likely provide countries with a high degree of flexibility in how they use these various strategies. And this, I believe, is a very important and positive development, because it will permit countries and businesses to meet their objectives in the most cost-effective ways.

But the Kyoto Protocol is just a first step on what will be a long march to a less carbon-intensive world. Its initial targets for emission reductions take us only to the 2008-2012 period, and they represent just a very small down payment on the level of reductions that scientists say we must achieve in order to have a real effect on mitigating climate change.

It is also important to note that the ultimate impact of the Kyoto Protocol will be severely limited by the United States government's decision not to be a party to the agreement. The Bush Administration has said repeatedly that it believes Kyoto is fatally flawed and not acceptable to the United States. Granted, the Protocol does have its problems-it is, after all, an agreement of approximately 180 countries with differing aspirations, differing economies, and differing views of the environment. But I believe that the other nations of the world, in agreeing to a compromise solution in Bonn, decided to send a message to the United States that an imperfect agreement is better than none-and that we cannot wait any longer to begin working together to solve the most important environmental issue facing the world today.

The Kyoto compromise very clearly does not amount to a solution to the problem of climate change. Rather, it is a first, strong statement of purpose and will to deal with this problem. And, therefore, it is an essential and historic step.

Launching Domestic Efforts in the U.S.

And what of the United States? Interestingly, in the same way that the Bush Administration's rejection of Kyoto seems to have galvanized international support for the Protocol, it appears to have generated new momentum on Capitol Hill to finally begin tackling the challenge of climate change. It is too early to know how the tragic events of September 11 will affect this and so many other vital issues in the months ahead. But prior to those events, there were strong indications that Congress was more prepared than ever to begin building the programs needed to reduce greenhouse gas emissions here in the United States.

It is important to note that this new support comes from both sides of the aisle. Perhaps the biggest sign of a "changing climate" in Congress is legislation introduced by Senator Robert Byrd of coal-producing West Virginia and Senator Ted Stevens of oil-producing Alaska. In addition to providing money for technology research, the Senators' bill would require the President to develop a climate change strategy aimed at stabilizing greenhouse gas concentrations in the atmosphere. Senators John McCain and Joseph Lieberman - another bipartisan team - are going even further. They have announced that they plan to introduce major legislation to require greenhouse gas reductions throughout the economy under an emissions trading system - a proven way to cut emissions cost-effectively, and one that we strongly support.

What are some of the other key elements of a serious domestic program? We need, first and foremost, an energy policy that is climate-friendly. We need policies to deal with energy-using products, such as automobiles and appliances, so that they use fuel more efficiently and are compatible with different, non-fossil fuels. And we need a technology policy that will speed our development and diffusion of new technologies.

None of this will happen overnight. But there is good reason to believe that as we approach the mid-term congressional elections next year, and the presidential election in 2004, the prospects will grow only stronger. And as the United States begins to demonstrate real effort to curb its own emissions, it can credibly reenter the international dialogue and work more closely with other nations to chart a common path forward.

Which leads me to the "strategy for the future" that is mentioned in the title of my remarks. The strategy, in my view, is to insure that the Kyoto Protocol stays on the road to ratification and entry into force, while the United States begins to pursue good-faith domestic efforts to reduce its greenhouse gas emissions. To the extent that U.S. efforts are compatible with the Kyoto framework-and I hope they will be compatible-then the world can still hold out hope that the two roads will eventually merge, yielding a truly global plan of action.

Resolving the Equity Issue

Achieving that global strategy, however, will mean coming to terms with an issue that has loomed over the climate debate from the start, but has yet to be faced head-on - and that is the issue of fairness. For as the title of your colloquium, "A Just and Sustainable Future," rightly suggests, this is not about sustainability alone, but justice as well. Indeed, it is hard to imagine a future that is truly sustainable unless it is also fair and just.

From Rio in 1992 through Kyoto in 1997 and up to the most recent round of negotiations in Bonn, the international climate talks have proceeded on the basis of a common understanding: developed countries must act first. This bargain of sorts - which obligates one group of countries to act with the understanding that the other group will follow - acknowledges the fundamental inequities presented by climate change. It is an undeniable fact that developed countries account for the vast majority of the greenhouse gases put in the atmosphere over the past century, and that their per capita emissions are many times those of developing countries. (The United States, for example, contributed nearly a third of worldwide emissions last century and continues to produce roughly a quarter of global emissions with only 4 percent of the world's population.)

But historic responsibility for climate change is just one piece of the equity equation. It is also undeniable that those least responsible, the developing countries, face a disproportionate share of the impacts of global warming - from flooding to disease to famine - while having fewer resources with which to cope.

So while many in the United States, including President Bush, fault Kyoto for letting developing countries off the hook, I believe it is only fair that the developed countries act first. But I also believe that, in time, the developing countries must act too. Indeed, the emission reduction efforts finally getting underway in the industrial world will be pointless unless developing countries agree in some way to restrain the rapid rise in their own emissions.

It is important to recognize the steps already being taken by developing countries. Measures such as market reforms and energy efficiency improvements, while more often motivated by concerns other than climate change, are, in fact, resulting in significant emissions savings. China, for example, cut carbon dioxide emissions by more than 10 percent over the last five years. But far more effort is needed. In a series of reports looking at electric power in developing countries, the Pew Center found that emissions from that sector alone will triple by 2020 under a business-as-usual scenario. However, we also found that efficiency improvements and the introduction of low-emission technologies could cut this increase in half while maintaining economic growth. Once again, technology is absolutely critical.

Arriving at a truly global strategy, then, will require a fundamental rethinking of the approach taken so far. The straightforward targets set by Kyoto - cutting each country's emissions by an agreed percentage - will hopefully succeed in starting industrialized countries on the right path. But a framework that encompasses both developed and developing countries, and fairly apportions responsibility among them, will have to be more sophisticated. It will have to accommodate the legitimate desire of developing countries to raise their living standards. It will have to recognize that different countries face very different challenges - for developed countries, the challenge is converting from the existing energy infrastructure to a clean one, while for developing countries, it is much more a matter of building the infrastructure right in the first place. An effective global strategy also will have to mobilize the flow of technology, know-how and resources from wealthier nations so that poorer countries are in a position to keep up their end of the bargain. In that sense, our challenge is to ensure not only that the new industrial revolution is launched, but also that its fruits are shared quickly and fairly.

These are my thoughts on where we stand in our effort to spare future generations the grave risks of an overheated planet. Enormous challenges lie ahead. But there are promising signs, both internationally and here in the United States, that we are at last mustering the will to begin confronting them. We must seize on that momentum, and keep moving forward. Thank you.

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Press Release: Three More Companies Join The Fight Against Climate Change

For Immediate Release:  
June 28, 2001

Contact: Katie Mandes, 703-516-4146
Dale Curtis, 202-777-3530

Three More Companies Join The Fight Against Climate Change

Washington, D.C.—Three more companies are joining the Pew Center's Business Environmental Leadership Council (BELC), in another sign of industry commitment to reduce the greenhouse gas emissions that contribute to climate change. The new BELC members are:

  • Cinergy Corp. of Cincinnati, OH, one of the leading diversified energy companies in the United States;
  • Deutsche Telekom of Bonn, Germany, and New York, NY, Europe's largest telecommunications company; and
  • John Hancock Financial Services of Boston, MA, one of the largest insurance and investment companies in the United States.

T hese three companies will join 33 others that already comprise the BELC, bringing the total to 36. Just last month, London-based Rio Tinto, one of the world largest mining companies, became the first mining company to join the environmental leadership council.

"While the governments of the world are continuing to talk about global climate change, these companies are taking action," said Eileen Claussen, President of the Pew Center on Global Climate Change. "Like the other members of the BELC, they believe the costs of inaction are greater than the costs of taking steps to protect future generations. And they are coming up with cost-effective, pro-growth solutions that all governments, including our own, should recognize as a basis for domestic and international policy decisions."

Members of the BELC believe enough is known about the science and environmental impacts of climate change to take action to address its consequences. They are committed to taking steps in their U.S. and international operations to reduce their greenhouse gas emissions. They believe it is possible to address climate change and sustain global economic growth by adopting reasonable policies and transition strategies. And they support further negotiations to develop an international climate change regime that is efficient, effective and fair to all nations.

The corporations that compose the BELC include various Fortune 500 companies, and represent a diverse group of industries including energy, chemicals, metal, consumer appliances and high technology. These corporations do not contribute financially to the Pew Center, which is supported solely by contributions from charitable organizations.

The other members of the BELC are: ABB; Air Products and Chemicals; Alcoa; American Electric Power; Baxter International; Boeing; BP; California Portland Cement Co.; CH2M HILL; Cummins Inc.; DTE Energy; DuPont; Enron; Entergy; Georgia-Pacific; Holnam; IBM; Intel; Interface Inc.; Lockheed Martin; Maytag; Ontario Power Generation; PG&E Corporation; Rio Tinto; Rohm and Haas; Royal/Dutch Shell; Sunoco; Toyota; TransAlta Corp.; United Technologies; Weyerhaeuser, Whirlpool and Wisconsin Energy Corporation.

For more information about global climate change and the activities of the Pew Center and the BELC companies, visit www.c2es.org.

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The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Making Collaboration a Matter of Course: A New Approach to Environmental Policy Making

Making Collaboration a Matter of Course: A New Approach to Environmental Policy Making

Speech by Eileen Claussen, President
Pew Center on Global Climate Change

Society of Environmental Professionals Meeting
Washington, DC

June 25, 2001

Thank you very much. It is a pleasure to be here with a group of environmental professionals from around the country. And I must say I am glad you have all gathered here in Washington. Judging from what's been going on over the last several months—and, indeed, over the last several years—this town could certainly use a few more environmental professionals.

Allow me to begin my remarks with a little bit of equal-opportunity criticism of the two political parties' approaches to these issues. In the White House, it seems we have an administration that believes environmental policy-making consists entirely of deciding which of the environmental policies of the previous administration to keep in place, and which to unceremoniously send away to the local landfill. And, among the Democrats on Capitol Hill, the idea seems to be to charge an enormously high political "tipping fee" for the dumping of established policies, regardless of their merit.
I suppose you could sum up the Bush administration's approach to environmental policy by using the EPA's three R's for managing solid waste: reduce, reuse and recycle. As in, reduce environmental regulation while reusing and recycling proposals from the past. The Democrats, meanwhile, have their own three-R strategy for dealing with the environment and other issues: recruit recalcitrant Republicans.
Seriously, all of you are to be commended for your commitment to the environment and for advocating on behalf of sound and responsible environmental policies. In my remarks today, I would like to talk a little bit about how sound and responsible policies can and should be crafted in a world that is very different from the one that greeted the heyday of U.S. environmental policy making in the 1970s. And I want to tell you a little bit about how two organizations I am affiliated with—the Pew Oceans Commission and the Pew Center on Global Climate Change—are trying to adopt a new, cross-sector approach to getting things done.
But first a little history. My own career as an environmental professional began in the 1970s, when I joined the staff of the Environmental Protection Agency. I worked at EPA for more than 20 years and dealt with issues from hazardous waste and energy efficiency to acid rain and the depletion of the ozone layer. And let me assure you that this was a real education for someone whose academic degrees are in English literature.
From EPA I moved onto the National Security Council and then the Department of State, where I was responsible for developing and implementing policy on such international issues as climate change, chemicals, fisheries and wildlife conservation, and more. I left the Clinton Administration in mid-1997, created the Pew Center on Global Climate Change in 1998 and, in 2000, helped launch the Pew Oceans Commission.
The reason I offer you this quick resume is not because I am looking for a job, although I can provide references if you would like. Rather, I simply want to make the point that I have been in the environmental policy arena very literally since the first Earth Day. And, in that time, I have had the opportunity to gain an up-close-and-personal view of the U.S. government's role in these issues. It all began when federal policy makers carved out a very assertive and, in many respects, unilateralist role for Washington in the protection of our natural environment.
This role was spelled out very clearly in the National Environmental Policy Act of 1969. This is the law in which Congress boldly declared its intent to "create and maintain conditions under which man and nature can exist in productive harmony," and to "assure for all Americans safe, healthful, productive, esthetically and culturally pleasing surroundings." (Sort of the chicken in every pot approach to environmental policy.)
During the 1970s, our national policymakers took this vision of strong government action on the environment and made it real. NEPA and the creation of the Environmental Protection Agency were just the start of it. There was the Clean Air Act of 1970, the Clean Water Act of 1972, the Safe Drinking Water Act of 1974, and much more.
Former New York Times reporter Philip Shabecoff, in his recent book about American environmentalism, Earth Rising, had this to say about environmental policy making in the 1970s:

"In its totality, the explosion of congressional activism that produced these landmark environmental statutes must be considered one of the great legislative achievements in the nation's history."

And, as we all know, it was an explosion of activism that produced very real results—two-thirds of the nation's waters now safe for fishing and swimming, up from one-third in 1970; dramatic improvements in air quality due to reductions in carbon monoxide, lead, ozone, particulates and other pollutants.
In spite of these successes, however, government began to see its role a little differently as the years went by. Rather than requiring the best available control technologies and adopting a prescriptive approach to environmental protection, we began to see a still-strong government experimenting with the notion of setting objectives and then allowing industry and the market to figure out how best to meet them.
A perfect example of this performance-based approach was the Acid Rain Program created under the Clean Air Act Amendments of 1990. These provisions require significant reductions in emissions of sulfur dioxide and nitrogen oxides from electric utilities, but the law set out to accomplish this objective in a new way.
Rather than saying here's what the utilities have to do, the implementing regulations established a cap on national emissions while allocating pollution allowances to individual sources for trading. The results are now well known: in the first year of compliance in 1995, U.S. SO2 emissions dropped by a very impressive 3 million tons. And there have been even greater improvements in the years since, along with sharp declines in acid deposition. Perhaps most importantly, the costs of the new requirements have been far lower than anticipated. The acid rain cost projections were estimated at over $900 per ton. They are now selling for less than $150.
A flexible, market-based approach to reducing emissions was not the only innovation we tried under the Acid Rain Program. To successfully implement the program, EPA followed the guidelines of the Federal Advisory Committee Act and established an Acid Rain Advisory Committee. This group included 44 individuals representing a wide range of organizations and interests, from large and small utilities to environmental organizations and state air agencies.
Bear in mind that this was not a window-dressing committee. It actually did a lot of good, hard work. Over a six-month period, this group (and I chaired it) became actively involved in formulating solutions to problems and offering critiques of various regulatory options. Not only did this ensure that potential problems were identified early on, but it also helped smooth the way for implementation of the new rules. The reason: there was a cadre of individuals who already were very familiar with the program and the thinking behind it, and who were committed to making it work.
So over the years our government has moved from prescribing what industry should do, to establishing performance standards for industry to meet, to beginning to involve stakeholders directly in the formulation of new policies and regulations. When you dig beneath the surface, however, the success of the Acid Rain Advisory Committee is the exception to the rule. All too often, our government's outreach to industry and other sectors is doomed from the start because these partnerships and collaborations often lack a clear sense of mission and goals. They also often lack a clear definition of roles and responsibilities. Adding to the problem, government entities are notoriously reluctant to relinquish control of the policy process to others. And this, I believe, must change.
My point is that environmental threats such as rising levels of greenhouse gas emissions, the deteriorating health of our oceans, and the wasteful destruction of natural resources will pose serious and mounting problems for both the United States and the world in the decades ahead. And we will not be able to deal effectively with these problems without a better system of environmental governance—governance that includes an active and appropriate role not just for government but for business, nongovernmental organizations, scientists, citizens and others.
The world is very different today than it was in the 1970s—this despite the recent return of such 70s icons as Charlie's Angels, Fleetwood Mac, bell-bottoms and the entire administration of President Gerald R. Ford. It is even a different world today than it was in the early 1990s, at least with respect to the power and capacity of government to unilaterally shape the nation's environmental policies.
So what has changed? The answer is a number of things, starting with the government itself. Between 1968 and 2000, the United States had a divided government for all but six years—and, as of last month, it was divided yet again. While in the 1970s you saw a unique consensus emerge among Republicans and Democrats alike around the importance of strong action on the environment, today the issue is much more partisan in nature—and the result is a lack of sustained leadership. Like many other issues in today's highly competitive political arena, the environment is used far too often as a way to score political points—and not often enough as a way to bring Americans together behind an agenda for action.
At the same time that environmental issues have become more polarized and politicized, we also have seen a devolution of authority away from the federal government and towards the states and localities. This happened in part because the environmental laws enacted in the 1970s were designed to build capacity at the state level. And the fact is, they did precisely that. Devolution has not necessarily meant less environmental protection. But it has meant that the states are increasingly interested in adapting national objectives to individual state circumstances. And the result is a patchwork of policies, some of them stronger than others and all of them serving as a collective reminder that Washington is no longer the policy making force it once was on the environment.
Among the other factors that have contributed to Washington's declining capacity to make and enforce strong environmental policy are budgetary pressures that are sure to persist in the wake of the tax cut approved by Congress in May. And then there is the state of environmental science. Recent years have seen the emergence of a sizeable body of scientific consensus supporting the need for action to address most of the environmental problems we face. Nevertheless, as time has gone on, our ability to understand the uncertainties in the science has also improved.
And this has meant a tendency in the political arena to focus on uncertainties rather than certainties—making it difficult for policy makers to take strong or effective action on these issues. The unfortunate result is that science—which is the necessary underpinning for action—too often is employed in the cause of those who wish to take no action at all.
At the same time that we have seen our government become weaker and more inclined to inaction on the environment, we have seen nongovernmental organizations become ever-stronger. The 1997 Mine Ban Treaty, to cite one example, was largely the product of NGOs throughout the world coming together around a common concern and persuading world governments to take action. In the environmental arena, we have seen nongovernmental organizations enter the mainstream of society. Twenty or thirty years ago, these groups essentially operated on the fringe of politics and governance, advocating for sound environmental laws and suing the government to make sure that the laws were implemented. Today, however, these groups have developed into sophisticated and, dare I say it, "corporate" organizations that act not only as advocates but as lawyers, communicators, educators, and policy analysts.
These changes in the not-for-profit sector have been accompanied—perhaps not coincidentally—by a growing sensitivity to environmental concerns in the private sector. Many businesses in the United States and throughout the world no longer view environmental concerns as a threat to their very existence. Rather, progressive business leaders (and not all business leaders are progressive) accept that something must be done to address these concerns, and they understand that the smartest approach for industry is to help shape solutions instead of having solutions imposed by others.
Both independently and in response to pressure from government, NGOs and the communities where they operate, many companies have now embedded social and environmental ethics into their management structures. This makes the blatant disregard of the environment far more difficult, and it opens the door to a more constructive role for the private sector in identifying and solving environmental problems.
So there you have it. Our government is weaker, NGOs are stronger, and industry is more attuned to the environmental consequences of its actions. Looking at these trends, and coupling them with the ease of modern communications and the growth of the internet, you start to see the outlines of a new approach to environmental policy making.
Some have argued for greater self—policing by the private sector-based on the belief that it is in industry's best interests to deal aggressively and responsibly with these issues. But I am talking about something different. I am talking about a governance model that requires a heightened level of interaction and cooperation among government, NGOs, industry and others—an approach that draws on everybody's strengths, interests and expertise to forge solutions that everybody can support.
Can this approach work to achieve progress on other issues from cleaning up our air and water to reducing the risks of climate change and protecting the health of the oceans? My answer is yes. At the Pew Oceans Commission, we have sought to assemble government, fishing industry and NGO representatives—together with scientists, economists and others—to recommend a series of policy measures designed to restore and sustain the health of the marine environment. This is a bipartisan, multi-sector group that includes members from all of the coastal regions of the nation, as well as federal, state and local governmental perspectives.
And we are not stopping there in our efforts to reflect a truly national, cross-sector consensus on these issues. In a continuing set of workshops and other convenings throughout the country, we are inviting the public to share its concerns about ocean issues. And we are hearing from local commercial fishers, business people from tourism and agriculture, and regional officials and scientists about ways to improve ocean management and conservation.
The result of all this will be a set of policy recommendations that we will present to Congress in 2002. Our intention is for these recommendations to be substantive, bold and visionary rather than a watered-down list appealing to the lowest common denominator. And we believe that by working through these issues together, with all of the stakeholders at the table, we will make a real and substantive contribution while raising the profile of ocean issues among the American public.
At the same time that the Pew Oceans Commission is applying a new governance model to the making of ocean policy, the Pew Center on Global Climate Change is reaching out in different and more targeted ways. We now have 33 major companies that are part of the Pew Center's Business Environmental Leadership Council. This is a group of industry leaders who have come together based on the belief that we know enough about the science of climate change to begin taking concrete steps now to reduce emissions of greenhouse gases. And that is precisely what these companies are doing — they are reducing their emissions, some very substantially, and they are playing a constructive role in the domestic and international policy debates on this issue.
In addition to working with our Business Environmental Leadership Council, the Pew Center is collaborating with top scientists and other experts to produce authoritative analyses of the environmental impacts of climate change, as well as the economics and the public policy issues involved. And, we are working with government representatives and other NGOs, both here in the United States and throughout the world, in an effort both to move the dialogue on this issue forward and to forge innovative policy solutions.
The more I work at both of these efforts—the Pew Oceans Commission and the Pew Center on Global Climate Change—the more I am convinced that very little can be accomplished today in the environmental policy arena without the active participation and support of businesses, NGOs, scientists and others. And one of the principal reasons for this is the sheer size and complexity of the environmental agenda today.
Think about it. Included among the issues that demand the attention of government, industry, NGOs and others is a wide range of topics that touch on virtually every aspect of our relationship with the natural environment. On a global scale, we're seeing problems and potential crises involving the atmosphere, oceans and biodiversity. And, at the national and regional levels, the issues include everything from air and water pollution to water and land use issues, toxics, the destruction of forests, and more.

To see how the prevailing model of environmental governance is not delivering the results we need, one has only to take a cursory look at where things stand today on the two issues that are currently the focus of my work.
First there is the issue of climate change. Most of the world's best scientists now agree that the global climate is changing in important and alarming ways, and that these changes have serious consequences for the environment and human life. But we have yet to show that sustainable international and national regimes for mitigating climate change can get off the ground.
With respect to the actions of the current Administration, allow me to state very clearly that it does no good to flat-out reject one approach to this issue—and, equally important, an approach that reflects years of hard work and consensus building among the world's governments—before considering what a better approach might be. That said, our inability to develop a responsible and thoughtful national policy on the issue of climate change is a problem that dates to well before the current President. While the Clinton administration agreed to a tough emissions reduction target in Kyoto, Japan, in 1997, it never put forward anything approaching the kind of domestic strategy that would be required to meet it.
And then there are the oceans. Overfished and polluted, our seas are in trouble. Approximately 70 percent of commercially important fish stocks are fully or over-exploited. And every year, 27 million tons of fish, marine mammals and birds are caught unintentionally and thrown back dead or dying into the sea. We have several pieces of national legislation addressing these issues, and a handful of institutions and treaties are in place at both the regional and global levels. But none of these efforts has yet been able to respond effectively to the problems of unsustainable fishing practices, pollution, and other threats to ocean ecosystems and marine life.
So the bottom line is this: what we have done until now is not working to address the environmental problems of today. Despite high-profile events such as the 1992 Earth Summit, and despite such groundbreaking achievements as the Clean Air and Clean Water Acts and the Montreal Protocol, our environment is still very much at risk. And what needs to happen now is for all of us to come together—governments, businesses, NGOs and others—and to form new collaborations, new models of environmental governance.
What are the ingredients that will make these collaborations successful? Let me list a few. First, we need a vision of where we are going and where we must go. Second, all the major stakeholders have to believe that the problem is real and needs to be addressed. Third, those who do good voluntarily shouldn't be penalized if doing good becomes mandatory down the line. Fourth, all the players have to be willing to take risks. Fifth, business has to put what it knows on the table, since the private sector generally has the most useful information. And, last but not least, NGOs have to buck the heat and say that compromise is acceptable.
In closing, I would like to tell you all a joke I recently heard. A Little League baseball game is under way, and one of the coaches pulls one of his young players aside to ask a question.
"Do you understand what cooperation is? What a team is?" the coach asks.
The little girl nods in the affirmative.
The coach then asks another question: "Do you understand that what matters is whether we win together as a team?"
The little girl nods yes.
"Do you understand," the coach continues, "that when a strike is called, or you're out at first, you don't argue or curse or attack the umpire. Do you understand all that?"
Again the little girls nods yes.
"Good," says the coach. "Now go over there and explain it to your mother."
Just like that little girl and her mother, all of us in the environmental arena need to understand anew what cooperation means and what it means to work together as a team. There is no other way, I believe, to achieve true progress in meeting the many environmental challenges we face today.
Thank you very much.
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