More industries incorporate climate into strategies, speakers say

Oct. 26, 2015
Industries increasingly are trying to incorporate planning for climate risks into their long-term business strategies, speakers agreed during a natural resources symposium at Georgetown University.

Industries increasingly are trying to incorporate planning for climate risks into their long-term business strategies, speakers agreed during a natural resources symposium at Georgetown University.

"Something very important is going on in the private sector," World Resources Institute Pres. Andrew Steer said in his Oct. 14 keynote address during the 2-day conference's opening session. "Businesses understand they don't need to sacrifice growth for climate progress."

Human ingenuity has kept energy and other resources' prices relatively inexpensive, Steer said during the symposium, which was co-sponsored by Washington-based Ad-Hoc Industry Natural Resource Group and GU's Environmental Initiative. He added that this has increased carbon emissions dramatically and made water increasingly scarce.

Steer said industrial businesses, including Royal Dutch Shell PLC, Total SA, Statoil ASA, and other oil and gas companies, have joined the World Bank's Carbon Pricing Leadership Coalition.

"More companies are making so much progress that they're moving from doing better toward doing enough," Steer said. "That's causing financial markets to change because they see a need to recognize climate, as well as financial, risk."

The resource scarcity threat has driven technology and innovation because its risks and opportunities can make or break a company, said Keith H. Cole, vice-president of government relations and environment, health, and safety at W.R. Grace & Co. It also has raised important social and political questions, he indicated.

An energy-water link

Jerry Miller, science and technology for sustainability director at the National Academies of Science, Engineering, and Medicine's Policy and Global Affairs Division, said, "In the past 50 years, the world's per capita use of energy has gone up 50%. Water withdrawals have risen 104% during the same period."

The National Academies take a long-term sustainability view by focusing on social and economic, as well as environmental, issues, he told the audience. Sustainability research that originally concentrated on energy now incorporates water and food, Miller said.

"We need to be more mindful of how we use our water resources if we intend to make the world economy grow," he said. "The biophysical, market, policy, and social-cultural worlds need to be considered."

When it comes to the oil and gas industry, "I think we're looking at ways to balance all these issues," said Erik Milito, upstream and industry operations group director at the American Petroleum Institute.

Milito noted that API's upstream standards and practices include the same Safety and Environmental Management Systems that the federal government adopted as a requirement following the 2010 Macondo deepwater well blowout and crude oil spill.

"Our industry looks at what the energy portfolio will look like in another 40 years," Milito said. "It's a true all-of-the-above concept. I expect more renewables to be brought into the picture. Liquids fuels are expected to flatten despite growing demand because of increased efficiency." Regulations at state and other levels already are beginning to address sustainability needs, he said.

States working already

Vicki A. Arroyo, executive director of GU's Climate Center, confirmed that state air resources boards are actively involved in climate impact discussions already. "Several states have adopted sustainable energy targets, building on their own programs," she said. "This involves not just policies to reduce carbon emissions, but also to prepare for storms, saltwater intrusion, droughts, and fires."

Abundant US oil and gas resources improve security, she said. "But others, including the Obama administration, have seen and identified climate change risks which should be addressed," Arroyo said. Now, nine out of 10 companies in Standard & Poor's Global Index incorporate climate risk into their strategic plans, she added.

James H. Lambert, a University of Virginia engineering and society research professor and Society for Risk Analysis president-elect, warned that infrastructure corridors destroyed by Hurricane Katrina in 2005 and Super-Storm Sandy 7 years later are being rebuilt much as they were constructed originally. "I would encourage us to be more imaginative and try to learn from what happened," he said.

Values are starting to change as more stakeholders learn about evolving economic and environmental risks, Lambert said. Three main questions are what risks are within an organization's bounds, what resources will need to be expended, and how what is learned can be integrated into operations, he said.

"It's also important to recognize that innovation itself can be a risk because it can strand investments as conditions change," he said.

Miller said, "We want to be innovative, but we need markets to create demand around the world. Reaching a point where an innovation becomes commercial can be a valley of death for some companies. We also should remember that an innovation may become commercial not immediately, but eventually."