Responsible Business Forum: Decarbonization and Planet

Written by Sterling Content
October 9, 2020

Written by Sterling Content
October 9, 2020

The British Chamber of Commerce in Japan (BCCJ) kicked off the first of its two-part Responsible Business Forum on September 17, with an online session titled Decarbonization and Planet.

The event featured remarks on the UK government’s approach to decarbonization, followed by a panel discussion and small-group discussions exploring challenges related to tackling climate change and how they might be overcome. In welcoming attendees, Tove Kinooka, director of sustainability integration consultancy Global Perspectives, said the session’s interactivity reflected the collaborative approach needed to achieve a greener future.

 

UK government activity 

Sue Kinoshita, minister counsellor for economic diplomacy at The British Embassy Tokyo, expressed the scale and urgency of climate change; in order to meet the goals of the Paris Agreement signed in 2016, the global transition to clean power needs to happen four times faster than it is now. Governments are key in helping deliver those goals, she added, noting that “the principle role of government is to set direction, set ambition and set targets, to be clear on where we should be going domestically and internationally.”

As host of the 26th UN Climate Change Conference of the Parties (COP26)—which has been postponed to 2021 due to the pandemic—the UK intends to set an example for others to follow.

“We aim to ramp up ambitions right across the world towards a climate-resilient, zero-carbon economy … We want as many as countries are possible to sign up to reaching net-zero emissions as soon as possible,” said Kinoshita, adding that the UK was the first major economy to legislate for becoming net zero by 2050.

In the past few years, the UK has reduced greenhouse gas emissions by 28%; increased renewable energy generation fivefold, thereby creating hundreds of thousands of low-carbon jobs; and achieved a record 67 consecutive days without any coal power generation.

Kinoshita recognised the green commitments of many BCCJ members and called on attendees to join the Race to Zero, a global campaign for zero-carbon societies that was launched in June as part of the lead-up to COP26. Sign-ups to date represent more than half of global GDP and cover nearly a quarter of collective CO2 emissions, she said.

The global recovery from Covid-19, she added, presents both challenges and opportunities, as economies can choose to find greener, more sustainable options.

Panel discussions

Moderator Heather McLeish, a director with EY Japan, opened the discussion by asking the panellists to consider the top priorities in decarbonization.

At Rio Tinto, climate priorities are fourfold: to produce the materials essential to a low-carbon future, such as aluminium and copper for electric vehicles; to reduce the firm’s own carbon footprint; to partner with others to reduce emissions through the value chain and to enhance the firm’s resilience to physical climate risk at its mines and processing facilities, said Jennifer Sakaguchi, the firm’s general manager for corporate relations. For example, in its journey towards carbonization, Rio Tinto divested from all fossil fuel extraction two years ago and 76% of power used at its managed operations today comes from renewable sources.

As a firm that is both impacted by climate change and impacting climate change, climate strategy is “at the heart” of Rio Tinto’s business, said Sakaguchi. “It is overseen by our head of strategy as we can’t have a discussion on business development or strategy without talking about environmental impacts.”

Tadashi Tago, Japan country head of FTSE Russell, agreed that it is “important for companies to have a clear strategy on how to handle changes related to climate.”

The inclusion of climate change in company strategies and board oversight of climate change are therefore key areas in more than 40 climate change indicators that are aggregated by FTSE Russell into environmental, social and governance (ESG) scores. Other indicators include the firm’s greenhouse gas emissions data and reduction targets, as well as climate scenario planning. The ESG scores are then used by investors to better understand the risks and opportunities of investing in the firm.

Furthermore, FTSE Russell continues to innovate. Its Green Revenues 2.0 data model measures criteria like usage of new energy or more efficient use of energy, said Tago, who is also head of Information Services for Japan, London Stock Exchange Group. The comprehensive, granular and tiered system will identify the “many shades of greenness” in the market, allowing investors “to understand a broader future,” he said.

As president of Renewable Japan, Katsuhiko Manabe, acknowledged three risk factors affecting decarbonization efforts in Japan.

First, Japan is prone to natural disasters, which have the potential to damage the operation and maintenance of power plants. Second, although the current investment environment is favourable because of the historically low interest rate, the risk of a rate hike can never be ignored. Third, expanding the renewable energy business depends on government policies. Feed-in tariffs, for example, have been decreasing, putting “negative pressure” on the market. When feed-in tariffs were introduced in 2012, the expected return for solar projects was above 5%, said Manabe, adding that it is now only around 3%. Still, the Japanese government continues to promote the uptick of renewable energy in Japan, including via a new energy law.

Despite the far-reaching impacts of the pandemic, the panellists noted no visible change towards the sustainability agenda within their industries. Firms remain committed to green change.

Asked how small businesses can contribute to sustainability, McLeish said they should “understand very deeply their risk factors and areas of influence,” before engaging with stakeholders to uncover how they view the business and what the issues are from their perspective. “There is no project too small; every activity moves us forward,” she said.

Sakaguchi added that small businesses need to look at where they can make the most impact and consider working with partners, to help address shared issues, such as supply chains.

 

Small-group sessions

In break-out rooms, attendees gave their thoughts on how to achieve decarbonization. They noted the need to balance economic growth and sustainability, particularly as the world recovers from COVID-19. The priorities of each organisation and country may prove different and therefore challenging to align. However, a taxonomy approach of assessing these varying shades of green could be used to encourage everyone to be as green as possible given their own circumstances.

Attendees said more awareness-raising is needed in Japan, including on recycling, separating plastic from burnable rubbish and avoiding the use of plastic bags. They suggested using “phased” green changes to help stimulate behavioural change in the long term and reduce the likelihood of incompliance. Education on climate change should span the ages, from grassroots lessons for younger children to university courses. Attendees added that broadcasters need to offer more programmes about climate change while national and local governments need to do more promotional activities.

Communication and engagement are also vital. As changing mindsets and behaviours is difficult, attendees suggested giving people motivation and incentives. Metrics, for example, could be better expressed, so people understand the impact of their actions and how to make greener choices. Alternatives should be relatable, achievable and easy to understand in order for people to develop a sense of personal responsibility. Targets can appear too abstract and far away, said attendees, who noted that people need to feel they can make a difference.

In business, firms that make green changes, such as reducing packaging, could more effectively communicate their reasons for making those changes, focusing on the benefits to the planet. Greater uptake and innovation of recycling might be possible. Attendees said that Japan needs to explore the use of more renewable energy types, particularly those that are under-used. Biomass, for example, could be tapped further if there were a larger forest management industry to provide the volume of wood chips required.

Finally, attendees called for collaboration across society. Politically, cross-party support and strong political leadership both nationally and locally could help deliver effective “top-down” messages. And “bottom-up” initiatives that have community buy-in, involvement and leadership could stimulate long-term behavioural change and provide best practice examples.

In closing, BCCJ President David Bickle said being mindful of the risks of climate change and the need for sustainability is a key aspect of developing a resilient business and a better post-pandemic world.

“COVID has made us realise how vulnerable we are in terms of [health] and greater environmental changes,” he said. “The way we’re going to recover from COVID and thrive is to reimagine what our business could look like” in a more sustainable future.