Pasta and Potato Chips for Climate Change
MUMBAI, July 30, 2009 - With the UN Climate Change Conference in Copenhagen looming in December 2009, the efforts of various nations to reduce emissions are of global importance. On many fronts there are encouraging developments. Japan, for instance, has already reduced emissions by eight percent, and pledges to reduce emissions by another 25 percent in the next ten years. These efforts must entail not only pollution control but must also transform industry as it exists today and catalyze a new wave of innovation in technology.
These were some of the points made by Steve Howard, CEO of the Climate Group, and Meera Sanyal, Country Head RBS, in an evening presentation organized by the Asia Society India Centre and the British Council. discussed the inextricable link between innovation in business and action on climate change.
The industry landscape has already begun to change rapidly. In the US, for example, the wind industry employed more people than the coal industry in 2008 (a first). Howard discussed some of the small but effective innovations happening in business, citing the example of the American brand Hamburger Helper, who decided to flatten their noodles so that they could reduce 30 percent of the packaging needed to make each box. As an offshoot result, sales went up because more boxes could fit on the shelves. Howard also discussed the example of Walkers Crisps, owned by Pepsico. The company found that the potato farmers were selling potatoes on weight, making potatoes as wet as possible, humidifying huge warehouses which cost the farmers a fortune. Then more money was spent by Walkers to dry the potatoes. So instead, Walkers renegotiated to buy the potatoes by volume, which saved both the company and the potato farmer money, which reducing energy emissions and water use.
The panelists emphasized that these changes must be reflected across the globe. One percent of India's land could provide all of India's energy needs by 2030. India can have a premium on renewable energy. There must be a "sun rush," like a gold rush, in which India takes advantage of the solar energy potential.
Sanyal went on to discuss the how banks can bring this down to a practical, applicable level. How can banks influence businesses and drive investments in such a way that green investments are encouraged? Financiers must reject projects that do not meet a certain standard of responsibility. Often when a bank explains the conditions of rejection, the clients will take the time to sit down and see what they can change about the project to make it a more viable candidate for financing. The final result is a healthier project.
The panelists concluded by cautioning that however much as we might want it to, the switch to renewable energy will not happen overnight. Rather, it must be a series of decisive steps in the right direction. The challenge for financial institutions is to stay ahead of the market.