One of the most depressing and puzzling features of the current election campaign is the lack of emphasis on the costs that environmental risks pose to industry and business. Australian politicians appear deliberately or wilfully ignorant of a spate of recent authoritative reports that translate such costs into terms that are meaningful to business and industry.
Climate change impacts are evident in economic scenarios that indicate companies, which are reliant on fossil fuels, face major issues of long-term risk management. And the 2010 Stern Review showed that the benefits of radically restructuring our energy use and energy sources far outweigh the economic cost.
New research from Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment at London School of Economics, published as Unburnable carbon 2013: Wasted capital and stranded assets, has also revealed that fossil fuel reserves already far exceed the carbon budget to avoid global warming of two degrees Celsius.
Yet “US$674 billion was spent last year to find and stgelop new potentially stranded assets”. The report calls for regulators, governments and investors to re-evaluate energy business models against carbon budgets, “to prevent a US$6 trillion carbon bubble in the next decade”.
However, this point is ignored in a Labor platform that basically supports ongoing coal and gas exploitation at the expense of renewables.
And there has been little explanation of how Mr Abbott’s Green Army of 15,000 young people will be equipped to counter such challenges through local initiatives. Certainly, there seems to be a lack of systematic consideration of how the Army, in combination with the Liberal’s Direct Action Plan, could possibly address the huge costs of environmental degradation to business big and small.
Even the Greens have not attempted to utilise, in any accessible way, the 2013 report prepared by Trucost for The Economics of Ecosystems and Biodiversity in Business and Enterprise Coalition (the business application of G8 and United Nations Environment Program). The report, Natural Capital at risk: the top 100 externalities of business could have helped justify their policies and convince Australians to look to a sustainable future.
The report offers a highly authoritative analysis of the world’s biggest natural capital risks for business, investors and government. It makes the key finding that “100 biggest risks are costing US$4.7 trillion per year in terms of the environmental and social costs of lost ecosystems services and pollution”. The conclusion that “coal power generation, rice and wheat farming, cattle ranching and water supply are among the most impactful sectors globally” is obviously telling for the sustainability of countries such as Australia.
Of course, the picture is more complex than these bare figures reveal. There are sectoral and regional differences that must be considered, as well as hidden impacts in industry supply chains. But the sheer scale of the environmental damage’s true cost to key Australian industry sectors is worthy of greater attention than it has received.
Neither leading party has utilised such costings to support a new path for Australian business, which would provide jobs for a skilled workforce in the long term.
The lack of emphasis in any campaign is striking, given interest in the topic by influential publications such as Harvard Business Review, whose audience is not just academic. For example, the 2013 summer edition of Harvard Business Review OnPoint Magazine analyses the 2013 World Economic Forum report on a recent survey of experts and business leaders.
This report identified rising greenhouse gas emissions and water shortage as one of the top five global risks in terms of likelihood, while water supply crises, food shortage and energy price volatility were listed among the top-five global risks in terms of impact.
While the Greens do at least reference the “new geopolitics of food scarcity” in policy documents, there is little attempt to draw out the implications for business.
It appears that each of the parties operate on a jaundiced view of business leaders, which research suggests is very much out of touch.
In their 2012 annual worldwide survey of business managers’ attitudes to sustainability, MIT Sloan Management Review and the Boston Consulting Group reported that 70% said sustainability was permanently on their management agenda and 33% thought that it contributed to profitability.
In 2013 they found that nearly 50% of companies changed their business model as a result of sustainability opportunities – a 20% jump from 2012. Sixty per cent of those that had changed their business model say they have added profit from sustainability.
The report also suggests that worldwide, Australian and New Zealand companies are those most likely to profit from a change of business model towards sustainability.
The concern is where our politicians get their information on major trends affecting Australian business. Are their views guided solely by ideology, lobby groups or sections of the press? A voice for either the aesthetic or use value of the environment seems to have been lost in confused short-term policies.
Our politicians and their policies show little evidence of rational planning for industry or business, which might offer a more secure Australia in the long run.
The authors do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations.