Approach to Climate Change Makes British Columbia a Gold Medal Contender

Winter Olympic Games in British Columbia focused the attention of the world recently on Canada’s Pacific Coast province. The gold, silver and bronze medals earned by athletes from around the world celebrated achievement in demanding individual and team competitions and showcased the province’s world class communities and sporting event venues.

British Columbia also stands out in ways not related to the Olympic Games. It is a North American leader in its commitment to addressing climate change. Through acts of parliament and regulation, British Columbia has directed the provincial government and public sector organizations to reduce greenhouse gas emissions, directed consideration of environmentally sustainable planning and development at the local level, begun preparations to adapt to climate change, and implemented mandatory greenhouse gas (GHG) reporting for regulated industry.

As a member of the Western Climate Initiative, British Columbia, along with the provinces of Ontario, Quebec, and Manitoba and six western US states, is preparing to implement a regional cap-and-trade program to reduce GHG emissions. Cap-and-trade will take effect in British Columbia (BC) on January 1, 2012, the same date that market-based mechanisms are scheduled to start in California and the other WCI member states.

Legislation passed in 2007 set ambitious goals for reducing BC’s greenhouse gas emissions: 33% fewer in 2020 compared to 2007 levels, and a target of 80% reductions by 2050. The law also requires that public sector organizations in British Columbia be “carbon neutral” for the 2010 calendar year and for each subsequent year thereafter. The law specifically targets GHG emissions related to public officials traveling on public business. Carbon neutrality under the law can be met both by GHG emission reductions and by application of emission offsets.

In 2008, British Columbia enacted a “Green Communities” statute. This law strengthened the ability of local governments and Regional Districts to reduce GHG emissions through Community Action Plans and other mechanisms. New and existing authorities allow municipal governments to achieve GHG emission reductions from energy efficiency, more sustainable use of water (moving water requires the use of energy), restrictions on development, promotion of alternative forms of transportation, zoning and building code changes, economic incentives for construction of small residential units, and consideration of land-use planning and environmental impacts when approving development.

Recognizing that the effects of climate change will be felt for decades, even as emission reduction actions are implemented within the province now and for years to come, British Columbia has identified a number of climate change impacts that require adaptation strategies. The impacts include more long-term warming, more extreme weather, changes to precipitation patterns, and rising sea levels. Ministry of Environment public information cites adverse impacts that have already been felt, such as the mountain pine beetle infestation, triggered by warmer winters, seasonal droughts of above-average magnitude in 2003 and 2009, and intense wildfire seasons in the same years. Strategies to prepare for climate change impacts include development of improved knowledge and tools to address climate change, makinge adaptation a part of BC’s planning and decision-making processes, and assessing risks and implementing priority actions in key climate sensitive sectors.

The strategies identified by British Columbia to address climate change are more akin to Olympic team events than to feats of individual performance. The objective is transformational in scope and collaborative in nature. Through its public actions, BC is showing that responding to climate change is a challenge that promises dividends to generations of current and future residents for decades to come.

© 2010, Futurepast: Inc.

Taking the Measure of Organizations’ Supply Chain Climate Risks and Opportunities: Reporting Upstream and Downstream Greenhouse Gas Emissions

An emerging focus of managing climate change risks centers on greening the supply chain. Organizations do this for a variety of reasons. They want to ensure the dependability of the raw or intermediate materials they source, and materials produced and transported in an environmentally sound manner have lower risk profiles. They take an interest in the readiness of their supply chain partners to meet new greenhouse gas regulatory requirements and to absorb potentially higher or more volatile energy costs. And they seek to protect their corporate reputations by dealing with supply chain partners that conduct their businesses sustainably and in compliance with legal requirements and ethical principles.

Greenhouse gas emissions from supply chain partners increasingly are analyzed to detect missed opportunities to increase energy efficiency and reduce emissions. This scrutiny may begin when an organization inventories its “Other Indirect” greenhouse gas emissions, also known as “scope 3” emissions. Other Indirect emissions are those that are influenced by a reporting organization, rather than emitted directly as combustion, process or fugitive emissions. Other Indirect emissions are also distinguished from “Energy Indirect” emissions, which result from the consumption of purchased electricity, steam or cooling. Other Indirect emissions from the production and transportation of raw or intermediate materials that occur outside the organizational boundary of the reporting organization are known as “upstream emissions.” Other Indirect emissions resulting from wholesale and retail distribution of products, and during the use and disposal phases of a product’s life cycle, may be called “downstream emissions.”

Other Indirect emissions can be more difficult for organizations to quantify and report than either Direct or Energy Indirect emissions. Often, the data needed to inventory these emissions reside outside the reporting organization in its supply chain, and are difficult to access. Complicating matters further are questions of allocation, which arise when a supplier furnishes a diverse set of products for multiple customers and then is asked to account for only the emissions associated with a subset of those. Practical questions include “how much to count,” and “how far upstream and downstream” the supply chain accounting should go.

Requests for business-to-business greenhouse gas emission information are becoming more common, and are likely only to increase. Business customers, particularly those with well-known brand names to protect, want assurance that suppliers are managing their risks, including those related to climate change. The concern does not stop with emissions accounting, as a broad examination of climate risks include physical risks from climate change, regulatory risks, and shifting consumer preferences. The first category of risks includes increased frequency of extreme weather conditions, flooding and sea level rise, and changing temperature and rainfall patterns. Resource scarcity is a corollary impact from climate change, which may be triggered by decreasing biodiversity, higher rates of disease, or an increase in desertification. Regulatory risks include the potential imposition of cap-and-trade programs, carbon taxes, or requirements for installation of Best Available Control Technology (BACT). Changes in consumer preferences can impact organizations by shifting consumption from one product category to another, enhancing or harming reputations, and creating markets for new products and services.

Business drivers for taking action now are gaining board room attention. According to PriceWaterhouseCoopers analysts who interviewed more than one thousand CEOs from the world’s leading companies for the Carbon Disclosure Project, “48% of CEOs were already making changes in their supply chain in response to climate change or would start in the next 12 months. 66% of these CEOs were already making a return on this investment or expected to do so within the next 12 months. We have seen a number of examples delivering real cost reductions as a result of using carbon as the value driver within the supply chain. For example, one major clothing retailer recently reduced their supply chain operating costs by 17% and saved over 4,500 tonnes of carbon by redesigning their distribution and logistics chain.” (CDP Supply Chain Report 2009, p. 7, accessed on 2010-01-10 at www.cdproject.net/reports.asp.)

For companies whose primary customers are other businesses, meeting the demand for information concerning their greenhouse gas emissions and other climate risk management strategies can be challenging. Many corporate staffs find it difficult to respond, with in-house expertise thinned and overextended. What’s more, the desired response from customers seeking climate change related information is not satisfied with the provision of a copy of the supplier’s environmental policy or ISO 14001 registration certificate. Real data are demanded that meet data quality standards and adequately characterize uncertainty.

Help is available from specialized consultancy firms like Futurepast. And new international standards and consensus-based protocols are under development. One of the first documents specifically to address supply chain reporting of greenhouse gas emissions is the Scope 3 Accounting and Reporting Standard, to be published as a Supplement to the GHG Protocol Corporate Accounting and Reporting Protocol. This document is available in draft form (November 2009) from the Greenhouse Gas Protocol Initiative, at www.ghgprotocol.org/standards/product-and-supply-chain-standard (accessed on 2010-01-10).

The International Organization for Standardization (ISO) also has begun to develop a document. ISO Technical Report 14069, Greenhouse gases – Quantification and reporting of GHG emissions for organizations (carbon footprint of organizations) – Guidance for the application of ISO 14064-1, is intended to complement the ISO 14064 Part 1 standard published in 2006. Publication of the ISO technical report is not likely before the end of 2012. Futurepast’s president, John Shideler, serves as a US Expert on the ISO working group developing this document.

The main purpose for counting Other Indirect emissions is, of course, to manage them better. Once quantified, organizations in all parts of the supply chain can focus on initiatives to design more sustainable products, improve energy efficiency in manufacture, optimize transportation and logistics resources, and promote end-of-life recycling. Some observers will see connections to other business planning tools such as Six Sigma and Lean Manufacturing which now will be applied to help meet the goals of reducing carbon emissions and managing climate risks.