Climate change presents enormous challenges for the world, and for organizations that are accustomed to doing business in an environment on the verge of radical transformation. The United States' decision to withdraw from the Paris Agreement has added a new complication. Global Network Perspectives asked experts across the Global Network for Advanced Management about impact of climate change—and the U.S. withdrawal—in their regions.
What are the long-term risks—both for business and the environment—in your region from climate change?
In terms of facing climate change, the long-term risk that the private sector in Latin America will face is increasing uncertainty in the business environment. This uncertainty relates mainly to the availability of natural resources and volatile price swings, as well as the pending threats to the security of key industries. In light of this, business activity will need to become seriously redefined and rescaled to fit into a finite planet, governed by limits and scarcity. Governments will be more concerned with issues of adaptation to the shifting conditions and proper allocation of the existing resources, which will in turn will be translated into increased regulation, scrutiny, and costs for the private sector. Furthermore, economic activity in the region will also be affected by shifts in the global political and economic centers. As power continues to move from industrialized nations towards emerging economies like China and India, trade structures and the demands placed by the new global buyers will also impose new burdens on local companies that want to participate in global markets.
How much are employees and consumers holding companies accountable for their business's stance on climate-related issues?
Currently, employees and customers are increasingly demanding that businesses move away from a “doing more with less” approach and more toward a reconceptualization of the products and services that they offer in order to reduce their environmental and social footprint. Consumer awareness in Latin America, as well as consumer or employee mobilization, is a relatively new phenomenon that is in its infancy compared to the situation in Europe or USA. Here, consumers are only beginning to understand how they can exercise their power through mass mobilization through social media and purchase choice. The idea of holding businesses accountable for their actions is also quite new in the region, and it has been mostly the work of international and national NGOs that has led some groups to become organized and demand that the private sector reduce emissions or take climate-related action.
Coordination between national governments and civil society has been key to make global emission reduction goals into company targets. The challenge ahead is pushing for increased private sector commitment, while helping companies to define voluntary actions that align with the global emissions targets, and that are properly established, measured, reported and verified. Last but not least, such transition will need to be supported by the development of appropriate financing schemes, technology, and capacities both within and outside the private sector.
What impact, if any, could the United States leaving the Paris Agreement have on your country or region?
The United States leaving the Paris Agreement could impact the development and transfer of new clean energy technologies across the region, as well as the development of regional markets for renewable energies and the transition to low carbon economy. In the particular case of Mexico, these effects could be greater as it could bring a halt to an agreement already established between Canada, Mexico and the U.S. to share key information in areas such as low- carbon electricity, carbon capture and use, clean energy technologies, energy efficiency, climate change adaptation and emissions reduction in the oil and gas sector. In order to advance these and other objectives, frontrunner organizations will need to move ahead of government-led efforts and continue to push efforts geared towards climate change mitigation and adaptation. In this sense, collaboration between academic institutions in different countries, as well as coordination through international NGOs, will be key in advancing the current global agenda. One example is the Renewable Energy Buyers Alliance (REBA): a collaborative platform created by non-profits World Wildlife Fund (WWF), Rocky Mountain Institute, World Resources Institute, and Business for Social Responsibility (BSR) that is helping grow corporate demand for renewable power and helping utilities and others meet it. Initiatives like REBA exist to make the energy transition easier by helping companies understand the benefits of moving to renewables, connecting corporate demand to renewable energy supply, and thus creating a market that is able to meet the needs of corporations and is in line with the reduction targets set globally.