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Big companies have a responsibility to demonstrate corporate and public leadership on climate change.
BHP Billiton’s climate change policy, released this week, has the giant mining and resources company making a very modest commitment to tackling the most pressing issue of our generation.
It is important that this major international business has adopted a policy, but its policy is weak.
The company has failed to set any targets for gross reductions to its greenhouse emissions. Globally, BHP Billiton produces 50 million tonnes of greenhouse pollution annually, equivalent to about 10 per cent of Australia’s emissions.
The absence of a reduction target puts BHP Billiton behind many international companies that have committed to absolute cuts by 2010. BP will cut emissions by 10 per cent , Alcoa by 25 per cent and Dupont by 65 per cent – all by 2010. Duke Energy has committed to reduce its emissions to five per cent below 2000 levels for the period 2010 to 2012.
Instead of setting a target to reduce emissions BHP Billiton has set a target to reduce ‘energy intensity’ by 13 per cent by 2010. This would allow the company’s emissions to continue to increase, so long as the company continues to grow. The energy intensity target of 13 per cent by 2010 is weaker than the Chinese Government’s target to reduce energy intensity by 20 per cent by 2010.
On the positive side, BHP’s energy intensity target means the company aims to run it’s operations more efficiently, which is a start.
Many companies, of course, are genuinely trying to lessen their impact on the planet. Virgin Blue offers to fly customers ‘carbon free’ for a small surcharge, the AFL has committed to offset its greenhouse emissions through efficiency measures and investment in renewable energy and Rupert Murdoch recently pledged to make News Corporation carbon neutral by 2010.
None of these initiatives are perfect, but the fact major businesses are addressing the issue is encouraging. There remains a problem with a lack of widely accepted standards and accounting by which to judge the effectiveness of ‘carbon neutral’ programs. Companies and the public need to know the schemes are fair dinkum.
Aside from making genuine and significant cuts to greenhouse emissions, corporate Australia has another crucial role in all this: furthering the development of climate change policy in this country.
The Australian Business Roundtable on Climate Change companies – BP, IAG, Origin, Swiss Re, Visy and Westpac – made a valuable contribution to the policy debate at a time when it was pretty lonely out there. In May 2006 the Roundtable report, The Business Case for Early Action, showed Australia could cut emissions by 60 per cent by 2050 with a strongly growing economy. The companies called for emissions trading and for 2050 and legally binding 2020 reduction targets.
BHP Billiton also knows there are benefits in Australia joining the global move towards a low-carbon economy. The company’s submission to the Prime Minister’s emissions trading task group said of an Australian scheme: “ideally this would include participation in the CDM [the Kyoto Protocol’s Clean Development Mechanism] market”.
The only way for Australia to participate in the lucrative CDM emissions trading market is for Australia to ratify the Kyoto Protocol. BHP Billiton should be publicly calling for bi-partisan support for Kyoto ratification, helping take the politics out of a crucial issue.
Shareholders and the public expect corporate Australia to play a lead role in tackling climate change.
First, companies should make genuine and substantial cuts to their greenhouse emissions – in absolute terms. Business is a crucial part of the solution.
Second, business has a pivotal leadership role in educating employees and the wider community.
Third, it is essential business urges bi-partisan support for science-based 2050 and 2020 targets to cut emissions, targets for renewable energy and energy efficiency and Australian participation in the CDM.
Don Henry is executive director of the Australian Conservation Foundation