Climate change and the corporate onion

By K.C. Somaratna

Understanding climate change

Most corporates worldwide have been ignoring the impact of climate change on their activities and profit and loss situations in spite of the fact that triple bottom line Planet-People-Profit had been in the corporate thought processes for a few years now. One significant reason behind this has been the ignorance of most corporate leaders about the relationship between the many disasters faced by their customers, employees, suppliers and shareholders and climate change. 

Climate change is, most corporate leaders believe, only an increase in temperature or global warming. This itself has brought about havoc in our partners in South Asia – India and Pakistan, where the most recent wave of high temperatures has killed more than 4,000 people. Now the Gujarat province in India has lost nearly 100 people due to the recent floods and Bangladesh a similar number; but people hesitate to think that both these not only the first, could be the ill effects of climate change.

In fact, climate change is basically the change that is taking place in the three key parameters of the climate system – temperature, precipitation and wind. Of course, the annual document ‘State of the Climate’ identifies and reports annually on nearly 40 parameters which includes moisture contents, temperature, winds and precipitation at a multitude of different locations distributed around the globe at different elevations. As such any perturbation in one of these characteristics could be due to climate change.

Fossil fuel combustion in any of the sectors – say energy generation, transportation, etc., – would generate not only CO2 which is known by everybody as a greenhouse gas; but also H2O vapour which is a worse greenhouse gas than CO2 and also waste heat. These two also contribute to climate change – both influencing atmospheric temperatures while H2O vapour could influence both precipitation and wind as well. As such, many of the disasters we experience today from the landslides, earth slips in Sri Lanka to floods in Gujarat, cyclones in Visakhapatnam and hurricane Sandy in New York could all be due to climate change arising from this incessant combustion of fossil fuels.

 

Impact on corporates

If this were the case, all stakeholders of corporate entities worldwide would suffer from any increase in climate change effects on humanity. The moment this is grasped, the corporate leaders will have to agree that they cannot ignore climate change. All our corporate leaders know how global businesses suffered from floods in Thailand, tsunamis in Japan and hurricane Sandy in USA. If they accept that these disasters could be due to climate change arising from combustion of fossil fuels then these leaders need to learn from these disasters and do something about mitigation of climate change. Business management is nothing more than learning from others’ successes and failures and there is no other area where learning from others problems could be more greatly appreciated.

There is one other reason why corporate leaders do not think and do much about climate change. It is not only corporate leaders, but even some country leaders share this thought process. They think that whatever they do is insignificant and would have no bearing on global climate change. 

Say the Sri Lankan leaders might think that whatever we generate in way of CO2 and H2O vapour will get mixed up in the enormity of the atmosphere above us and will not lead to any effect on climate change within the Sri Lankan domain. It is true that when the vehicle you are driving or the boiler/generator in your factory is operating emits CO2 and H2O vapour, these gases don’t remain there. H2O vapour does not precipitate then and there. 

They accumulate over time and space; but this accumulation is basically in the same longitudinal strip spanning about 100 in the latitudinal space and the two gases diffuse vertically above moving from one elevation to a higher elevation. It is for this reason that research work conducted on variation of CO2 and H2O vapour over time is always plotted for a given longitudinal strip of about 100 width. 

When it comes to water vapour it may be that it would remain in a vertical silo above the Sri Lankan land space. This is backed by the three facts that (i) Sri Lanka is an island surrounded by the ocean, (ii) ocean mass sends more water vapour into the atmosphere (434Tt) than it receives from the atmosphere (398Tt) and this excess comes over to land where it precipitates, and (iii) it is this water which is taken back to the ocean by the rivers.

So if we agree that enhanced climate change is due to our own activities, then it is but natural that we, including the corporate leaders need to do something to protect themselves including their employees, customers, suppliers from travails of climate change.

 

Proposed corporate approach 

Having been in the management consultancy field for the last 20 years and having done significant research on climate change and possible mitigation steps, we started looking at how we could help the corporate sector to face these challenges and the sketch depicted below was the outcome of that initiative. We take great pride in the fact that this is probably the first time in the world a consultancy firm has come out with a possible approach for the corporates to tackle climate change. 

 

Climate Change and the Corporate Onion

We have not seen a similar approach before. We have called it Climate Change and the Corporate Onion. We took the word onion from the onion model used in handling information security issues.

We consider it our responsibility and the job to ensure that our esteemed customers are advised appropriately as to how they could protect themselves from these effects of climate change. We spent seven years trying to understand climate change in respect of all its ramifications and it is this understanding which gives us the confidence about the results this approach could bring about.

We consider that all the disasters identified in the outermost ring are due to climate change and we can explain clearly the reasoning behind each of them. If we take the hurricanes the reasoning goes as follows. When the US was expected to have around 11 hurricanes in the eastern coast in 2013 instead of the normal six to eight per year, the reasoning given was that (i) there is more warm and moist air coming from the African continent, (ii) warmer ocean water and (iii) lower wind shear. We say that wind shear becomes lower when we generate more water vapour due to greater use of gas in the transport sector in USA. Out of the four predominant gases in atmosphere – N2, O2, H2O, CO2 – it is the water vapour which has the lowest viscosity. In fact to-day, the biggest headache for US coastal States Organisation is coastal flooding.

 

Four-tiered approach

With this understanding and explanation we decided to align our consultancy services to systems which provide adequate protection to our customers against these climate change outcomes. We decided to provide protection at four levels; two levels falling into the prevention/mitigation category and two levels falling into the adaptation category.

The first level of defence we plan is where we propose a mitigation solution for climate change. This apparently is the only technically feasible, globally appropriate, financially viable solution for climate change in the world. We call this solution Highway Solarisation which is defined as ‘A dedicated infrastructure for powering battery electric vehicles using solar energy collected by PV solar panels installed along and above the highways as a solution for climate change’.

If this solution is properly executed and 0.34% of Sri Lanka’s GDP is invested in implementing Highway Solarisation for 40 years Sri Lanka should be able to achieve 80% penetration in respect of road transportation (figures quoted in UNEPA document ‘Green Economy’). If the other countries also adopt this solution – which is an extremely realistic situation in view of the fact that new, longer and wider highways are been built all over the world all the time – then this will lead to an entirely New World Economic Order where energy would be available to the same extent the land is occupied. 

Then Highway Solarisation could easily be the biggest-ever global project in history and climate change could be mitigated to a significant degree as it has the potential of eliminating climate change due to both energy generation (23%) and a part of transportation (17%). We strongly believe that we, Somaratna Consultants of Sri Lanka, have contributed towards climate change mitigation to an extent unparalleled in the world.

Our next protection layer consists of developing a corporate culture focussed towards reducing the contribution of a company’s processes on climate change. First we adopt a generic approach where all processes which impact any of the environmental components – land, air, water – are identified, then highlight those which make a significant impact and set action plans in motion to reduce these significant impacts. When one set of significant aspects are addressed successfully and impacts brought down, a newer set would emerge as significant, addressed appropriately, brought down and it could go on and on. The system we propose and introduce will be as per ISO 14001 international standard and will be audited by certified environmental auditors to ensure that system actually bring about these specified improvements.

Then we look at the set of processes which would make the biggest contribution towards climate change – namely energy related processes. We adopt a process similar to what we do in respect of the Environmental Management System; namely we identify all modes of energy usage and identify the most significant ones based on a suitable set of criteria. Then we establish objectives to reduce the impact of energy consumption in respect of these significant energy usage areas on the environment and keep on doing this year after year. Again the system will be aligned to ISO 50001 international standard which is specifically designed for energy management.

Then we look at the most crucial aspect of generation of greenhouse gases due to the activities of the company and the approach adopted will look at activities carried out by the company at the company premises itself as well as activities carried out on company’s behalf at outside locations by outside entities.

The initiative need to be guided by quantitative measures obtained within a suitable Greenhouse Gas Information Quality Management System. Greenhouse gas emissions due to (i) any fossil fuel usage in the company, (ii) emissions by the power producer in supplying that quantity of power used by the company, (iii) emissions due to transportation of company products, personnel by (a) road, (b) ship and (c) air, (iv) emissions due to water treatment, solid waste disposal as well as (v) emissions due to refilling of air conditioners are all captured quantitatively in this process. 

These data get audited by an ISO 14064-1 lead auditor before the Auditing Registrar Company issues verification statement at a particular level of confidence. Apparently there are only two companies in Sri Lanka which can boast of having got their greenhouse gas emissions measured and verified by an accredited registrar body as per this standard and we, Somaratna Consultants, take pride in saying that we provided consultancy services to both these companies in this respect.

Then there are many instances in Sri Lanka where companies, which boast of having measured their greenhouse gas emissions either of the total operation or one specific process and then purchasing that amount of carbon credit to say that either the total operation or one specific process is carbon neutral. The particular operation may refer to an annual report, a credit card or even the manufacture of an exclusive intimate apparel product. One should not get fooled by these efforts as also been at the same level of effectiveness in contributing towards a greener world. 

While companies pursuing the ISO 14064-1 approach would have quantitative data in respect of specific operations to plan out strategies to become less carbon positive and each initiative in this direction results in significant cost reductions contributing to the triple bottom line improvements, the other set of companies with customers willing to pay for the purchased carbon credit keep on emitting the greenhouse gases as they used to. 

The significance of having these emissions audited against a standard like ISO 14064-1 becomes apparent when one considers the fact that a well-known company in Sri Lanka known for its technically-savvy approaches published a sustainability report certified as accurate by an international certification body – not an ISO accredited registrar body – with a greenhouse gas emission figure which was much higher than what it should be and the main electricity usage was much lower than what is should be.

It is in a context like this we promote these management system approaches so that the corporate world could make a truly significant contribution towards reducing greenhouse gas emissions and really make their substantial investments to add value to their triple bottom line, customers and definitely to the future generations.

It may be that new management system approaches may be introduced in the future and then we will further strengthen our onion.

 

Recovering from a disaster

Then we look at a situation where in spite of all these preventive measures, climate change gets initiated or other disasters do take place and impacts our corporate customers. We prepare them to face this eventuality through the Business Continuity Planning and Occupation Health & Safety Management System. 

Business Continuity Planning – the way we practice it, of course guided by Disaster Recovery Institute International guidelines, will identify how a range of threats including all the disasters associated with climate change as well as other natural and manmade, would exploit vulnerabilities in organisations and inflict damage to the whole or a part of the organisation and the composite of the probability of the threat, vulnerability of the organisation or a part of and the ensuing impact collectively called the risk is calculated. 

After the business impact of these risks on different key functional areas are evaluated, appropriate business continuity strategies are identified and specific continuity plans are developed, explained, exercised to ensure ability to implement them when a disaster strikes a part or the whole of the organisation so that the corporate entity could start functioning before irreparable damage to the entity is inflicted.

To recover from such a disaster, a key requirement is the availability of employees of the organisation and we help organisations to ensure this by establishing Occupational Health & Safety Management Systems. This system which has a collection of Emergency Response Plans as well will prepare the employees to look after themselves as well as fellow workers in case of a crisis situation. These Emergency Response Plans will be provided within the Business Continuity Plan System as well; but the risk to employee health and safety due to routine operations will be captured only within the OHSAS system.

 

Conclusion

As such, we believe we have done our duty by our most esteemed customers who provided for our existence during the last 20 years, by attempting to provide them the wherewithal to prepare for more calamitous times in the future armed with this Climate Change and Corporate Onion Model. After all, ever since we formed Somaratna Consultants Ltd. with the logo depicting infinity, we have always been thinking that we see the future, before others do, through the set of binoculars whose frame is similar to our logo.

Our promoting innovations in 2002 by the motto ‘Innovate or Perish’ and promoting business continuity planning in January 2004 before the tsunami through an article in our newsletter ‘Quest for Excellence’ are only two of such examples of seeing the future before others.

The prospect of future wellbeing of a consultancy firm shall not be gauged by the monetary balance sheet of the entity, but only by the faith and respect they have earned in the marketplace and by the endeavours they make in providing support to the global client base in times of duress. We believe we have achieved this through this unique model of ours titled ‘Climate Change and the Corporate Onion’.

(The writer is Managing Director of Somaratna Consultants Ltd.)