Climate change: Businesses must innovate for sustainability of our planet

Today, our costing and pricing systems ignore the negative externalities that actions by human society impose on the environment and the state of our natural resources. We do not find the right market-based logic to take action that should be based on an inclusion of externalities, both positive and negative, that our actions impose on the environment and natural resources.

Any change would only come from knowledge and an understanding of how our actions are actually affecting the climate of this planet and its implications for society. It is only then that innovative policies and technological change will be devised.

The Intergovernmental Panel on Climate Change (IPCC), which I have the privilege of chairing, has brought out four assessment reports and several special reports. Recently, the IPCC's Fifth Assessment Report (AR5) has been published.

The AR5 deals with the physical science basis of climate change. It provides an assessment of the nature and extent of climate change that has taken place so far and future projections. If human society is to deal with the challenge, then an understanding of the science behind climate change is a prerequisite.

Fortunately, knowledge in this area is spreading rapidly, and changes in attitudes around the world. A colleague of mine in Yale University carries out path-breaking surveys of public opinion on climate change, and the most recent one relates to the state of Ohio in the US.

Ohio is an industrial area, and, therefore, what the public believes would probably coincide with what corporate organisations located in Ohio would also believe.

Significantly, 70% of the people in Ohio believe global warming is happening while only 16% believe it is not. Half of the people believe that if global warming is happening, it is mostly due to human activities, and among those who believe global warming is happening, 90% believe this has an influence on the severity of heat waves, 88% linked it with droughts and 80% with flooding of rivers or lakes in Ohio.

If such a set of perceptions was global, perhaps we would see innovations to deal with climate change worldwide.

India is particularly vulnerable to the impacts of climate change, which will not leave corporate organisations untouched. Climate change would impact the operations of businesses and affect the lives of those associated with business activities. Two sets of extreme events have been found by the IPCC to be increasing in frequency and intensity, and these are extreme precipitation events as well as heat waves.

The problem of sea-level rise is particularly relevant to business facilities and infrastructure located in coastal areas, because not only will storm surges and coastal flooding be relevant to some locations, but the intrusion of saline water due to sea-level rise would affect the quality of groundwater further onshore than has been the case so far.

The other aspect to consider is the range of benefits from mitigating emission of greenhouse gases through higher efficiency of energy use, greater use of renewable energy technologies and even lifestyle changes.

All of these carry substantial associated benefits such as higher energy security, low levels of air pollution and, therefore, health benefits resulting from some mitigation activities.

It is absolutely relevant for the business sector in India to develop an understanding of climate change and the opportunities and risks associated with it, so that business decision-making can take full account of these for the benefit of any corporate organisation itself and that of society at large. Such knowledge will then inevitably foster innovation quite rapidly.