Business Can Be A Leading Light In The Struggle Against Global Warming

By Steve Holliday, chief executive of National Grid

As an engineer, I like to think I view the world with a degree of dispassion. We are taught to go where the facts take us, and that is why I am so concerned about global warming. No one has a monopoly on the truth, but there is clearly too much evidence now for us to stand idly by.

I am not alone in that concern. Over the past few years, almost every nation, aided by the UN, has taken part in the most complex and painstaking treaty negotiations this planet has ever seen. The latest round – COP 21 – is due to culminate in Paris this December.

Its ambition is to create the first truly global treaty to control and then reduce the emissions of greenhouse gases. It is a valiant goal, but one that has met with little success in previous attempts.

COP 3 in 1997 gave us the Kyoto Treaty. Its targets have largely been achieved, but that has more to do with global recession and the exploitation of US shale gas than the treaty itself. And Kyoto didn’t attempt to control the regrettable ballooning emissions of the developing world, particularly China.

COP 15 in 2009 was supposed to deliver a global treaty to succeed Kyoto, but the world’s most powerful people emerged from the room with a piece of paper (the Copenhagen Accord) and little more than a loose commitment to step up activity, which by and large, never materialised. Paris is our latest attempt to find a sustainable solution.

What can business do to help? I think there are four simple things.

The first is to stay away. The desire to get involved is understandable, but the event has turned into a jamboree. An estimated 45,000 people turned up in Copenhagen; 50,000, are expected in Paris. That is no setting for serious diplomacy. It is hard enough to reach an accord between almost 200 nations.

The second thing business can do is to support their governments. In the run-up, each country or regional bloc will lay out the emissions cuts they are willing to commit to. These commitments will undoubtedly impact the way we do business, and we should have a debate about how the burden falls on specific sectors. But there should be no doubt from business about the need for change and leadership.

Make no mistake, I am a passionate capitalist. I believe that businesses have been a primary driver of social progress. Without them, and in particular the energy businesses that have revolutionised the capacity of our economies to provide products, services and standards of living unimaginable to earlier generations, this planet would be a poorer place.

But business must also recognise that the by-product of this growth has been to create unsustainable levels of carbon pollution, and that those emissions must now be cut. At National Grid, we support the EU’s commitment for Paris to reduce the region’s emissions by 40pc by 2030. We are committed to helping the UK achieve this goal.

Third, take the lead in innovation. Politicians set policy but it is businesses that deliver. They are society’s problem-solving machine and we need more of them to turn their attention to the new opportunities presented by such a focus.

In my business, we have changed behaviour by factoring a “shadow” carbon price into all of our investment decisions. This not only has helped us reduce the company’s emissions but has prudently protected our shareholders from us making the wrong long-term bets. From a 1990 baseline we have reduced company emissions by 63pc, while continuing to invest, make good returns for shareholders and keeping costs down for customers.

To some people, the interventionism of government in promoting lower emissions rankles. It has led this government to rethink its energy policies. But to my mind these policies have been a necessary and fundamental part of the solution. Now it appears that yet again, short-termism might de-emphasise this direction. Governments must think long-term. In not doing so, investors will lose confidence.

Personally, I continue to believe that the time will soon come where we can reduce the intervention of government by setting a robust carbon pricing mechanism, preferably built on the emissions trading system which we are already invested in with our EU partners. This will then leave the scientists, engineers and business to find the optimal solutions.

The fourth way that businesses can support the goals of Paris is to be the inspiration for change. I have found that people respond to the values and commitments of their employer. Enabling employees to play a part – in volunteering time to support charities and initiatives, say – makes people happier and more confident at work.

We need to motivate behavioural change on energy consumption, recycling and finding new ways to reduce our carbon footprints. One way National Grid is looking to do that is to a 2030 carbon pledge of our own.

Some might say that is just another target. But targets drive progress. In the 1960s JFK told America that he would put a man on the Moon before the end of the decade. He said the programme “will serve to organise and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win”.

His words stirred a generation of scientists and engineers to achieve the impossible. Today, a new group of visionary academics and business leaders have likened the challenge of cutting greenhouse gas emissions to being this century’s equivalent of the Apollo mission. With businesses at the forefront and with brave leadership, I hope we can bring the same level of passion, inspiration and optimism to solving the world’s climate challenge.

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