Global Electric Utilities Climate Change Adaptation Acclimatise Report
1. Carbon Disclosure Project
Report – Global Electric Utilities
Building business resilience
to inevitable climate change
The Adaptation Challenge
2. Agenda
Welcome address Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
CDP context James Howard,
Project Director, The Carbon Disclosure Project
Introduction to the report Michael Valocchi,
Partner, Global Energy & Utilities Industry Leader, IBM
Building business resilience John Firth,
Chief Executive Officer, Acclimatise
IBM viewpoint Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
Q & A panel discussion Hosted by Peter Richardson
Energy and Environment Marketing Manager, IBM
Close
3. Agenda
Welcome address Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
CDP context James Howard,
Project Director, The Carbon Disclosure Project
Introduction to the report Michael Valocchi,
Partner, Global Energy & Utilities Industry Leader, IBM
Building business resilience John Firth,
Chief Executive Officer, Acclimatise
IBM viewpoint Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
Q & A panel discussion Hosted by Peter Richardson
Energy and Environment Marketing Manager, IBM
Close
4. Introduction to the Carbon Disclosure Project (CDP)
“To collect and distribute high quality information that motivates investors,
corporations and governments to take action to prevent dangerous climate
change.”
475
• Global non-profit organisation,
established in 2000 385
• Secretariat to 475 Signatory 284
315
Investors with $55 trillion assets
under management
155
• Largest climate change database 95
in the world: 35
– More than 2,500 companies
reporting in 2008, and even more 2003 2004 2005 2006 2007 2008 2009
in 2009
Number of Signatory Investors to CDP
– Process supported by many global
figures
4
6. CDP’s Global Reach in 2009
New Expansions in 2009:
Russia – Central & Eastern
Europe – Portugal – Ireland
6
7. CDP’s Perspective
CDP provides a Global Intersection between Government,
Investors and Companies
475
INSTITUTIONAL
INVESTORS 3,700 OF THE
WORLD’S
COMBINED LARGEST
ASSETS OF US CORPORATIONS
$55 TRILLION
DATA MADE PUBLICLY AVAILABLE VIA
CDP
8. CDP – The Future
Expand number of disclosers
Improve quality and depth of disclosures
Work with and supplement the emerging and varied
disclosure landscape of mandatory reporting and
registries
8
9. Agenda
Welcome address Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
CDP context James Howard,
Project Director, The Carbon Disclosure Project
Introduction to the report Michael Valocchi,
Partner, Global Energy & Utilities Industry Leader, IBM
Building business resilience John Firth,
Chief Executive Officer, Acclimatise
IBM viewpoint Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
Q & A panel discussion Hosted by Peter Richardson
Energy and Environment Marketing Manager, IBM
Close
10. Agenda
Welcome address Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
CDP context James Howard,
Project Director, The Carbon Disclosure Project
Introduction to the report Michael Valocchi,
Partner, Global Energy & Utilities Industry Leader, IBM
Building business resilience John Firth,
Chief Executive Officer, Acclimatise
IBM viewpoint Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
Q & A panel discussion Hosted by Peter Richardson
Energy and Environment Marketing Manager, IBM
Close
11. Adapting to inevitable climate change.
Observed and modelled changes in temperature in Europe
Climate change is underway.
– Whatever steps we take to limit GHG
concentrations we are now faced with decades
of increasing temperatures and possibly
centuries of sea-level rise.
– Limiting global average temperature rise to 2oC
is looking increasingly challenging. If we fail the
adaptation challenge becomes even greater.
Significant impacts of extreme events
and incremental changes in climate are
already evident.
Carbon neutrality does not create
business resilience.
Businesses face two climate
challenges, not one. They must:
– Reduce emissions to avoid the unmanageable
– Adapt to manage the unavoidable
12. Climate change: the business context
We have to act without delay to reduce emissions AND we need to
adapt to manage the unavoidable – there is no choice.
– Business as usual in the face of a changing climate is not an option.
Building business resilience:
– Climate change is not just an ‘environmental’ issue.
– Adapting to the impacts of inevitable climate
change is a mainstream business risk and should
be ‘internalised’ within business models and value
chains.
Corporate drivers for action on climate
change:
– Changes in their relative importance over time.
– Meeting the challenges of the energy revolution.
13. Our approach
Review responses from global electricity companies to the 2008
Carbon Disclosure Project.
Analysis using our proprietary Acclimatisation Index – a quantitative
approach creating a relative score for companies in the electricity
sector.
Allows the resilience of companies to inevitable climate change to be
assessed.
– The risks and opportunities they face.
– How they plan to adapt.
– Their position in the resilience landscape
14. Headline results
Adaptation: an unexplored corporate issue.
– 93% of companies acknowledge exposure, but only 27% indicate a ‘quantified’
analysis has been undertaken.
Companies are generally more aware of the risks than the
opportunities.
– 59% identified potential business opportunities.
Implications for governance.
– Only 6% provided evidence of integrating inevitable climate change into their
internal corporate governance procedures.
Building business resilience to the impacts of climate change
remains a new issue for most electricity companies.
15. The challenge of inevitable climate change to business models
An ‘energy revolution’ is required to meet the challenges of:
– Continuing urbanisation and intense competition for natural resources, driven by
population growth and economic development.
– National energy security concerns and supply reliability.
– Reducing emissions and shifting the focus to renewable sources of energy, low
carbon generation and more dynamic balancing of supply and demand requiring
significant levels of investment to transform the industry.
This has to be achieved within the context of a changing climate and
the impacts on social, economic and environmental systems:
– Causing significant changes in the demand for electricity against a backdrop of
supply challenges, ageing assets, impacts on asset performance and efficiency,
and prescriptive regulation
Maintaining a global perspective on climate change impacts on
social, economic and environmental systems.
16. How should businesses respond?
Avoid entirely ‘predictable surprises’.
– Need to foresee the implications and take appropriate steps.
Understanding impacts:
– Extreme events (acute) and incremental change (chronic).
– Direct and indirect impacts working through all elements of business models and
value chains.
– The ‘pinball machine’ effect.
Understanding opportunities:
– Companies are focussing on risks, immature landscape on opportunities.
– Building resilience creates a competitive advantage.
– New markets, products and services in response to the energy revolution.
– Financial crisis presents an opportunity for companies to revisit their business
models and build resilience.
17. How should businesses respond?
Learning lessons from the current financial crisis.
Short-termism, risk management and control, disclosure of potential
risks all have to be addressed.
Business risk ‘signals’ driven by climate change are already visible.
Uncertainties should act as a catalyst for companies to quantify the
risks, monitor the impacts and respond by changes to their business
models.
– Dealing with uncertainty is the measure of a well managed business.
An integrated approach to the challenges through:
– Optimisation of existing infrastructure assets, systems and information.
– Growth of existing capabilities.
– Acceleration of emerging technologies to a commercial scale.
18. A call for action by senior executives
Revisit fiduciary responsibilities.
Ensure corporate governance meets the challenge.
• Embed climate risk management into decision making.
• Develop a risk assessment process using the best available science.
Learn from others, engage with policy makers.
Improve internal expertise and capabilities, ensure knowledge
management systems are fit for purpose.
Disclose material risks.
Prepare-Adapt: 10 questions for senior executives
– To aid senior executives and help companies take the right steps towards
building business resilience by exploring risks, opportunities and responses.
19. Agenda
Welcome address Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
CDP context James Howard,
Project Director, The Carbon Disclosure Project
Introduction to the report Michael Valocchi,
Partner, Global Energy & Utilities Industry Leader, IBM
Building business resilience John Firth,
Chief Executive Officer, Acclimatise
IBM viewpoint Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
Q & A panel discussion Hosted by Peter Richardson
Energy and Environment Marketing Manager, IBM
Close
20. IBM Viewpoint: Adaptation will be crucial to business success
Electric utilities have taken positive steps to mitigate the impact of climate
change
Electricity industry is at a critical point
– Increase generation - 36.8 % growth in energy demand by 2030
– Reduce emissions - responsible for 25% emissions
2 options
– Generate ‘cleaner’ electricity
– Drive down energy people are using
• 170 billion KW hours wasted each year by consumers – lack of power usage information
Climate change brings additional pressures
– Changes in
• demand - population migration, new demands (e.g. electric vehicles)
• supply chain - vulnerable assets
• availability of natural resources - competition for scarce resources
21. IBM Viewpoint: Adaptation will be crucial to business success
Electricity is a complex system of systems.
Balance will change and we need to redesign the way the industry works:
– more dynamic control of
• power flows
• information
• money
– new sources of supply
• Consumers to be part of the electricity management and efficiency story
3 practical steps
1. Optimise– existing assets to be more efficient and more robust to adapt
to climate change
2. Grow – existing commercialised capability through smarter design and
operation
3. Accelerate – new and emerging capabilities to commercial scale
Change is needed now to enable prosperity in a much different future
22. Agenda
Welcome address Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
CDP context James Howard,
Project Director, The Carbon Disclosure Project
Introduction to the report Michael Valocchi,
Partner, Global Energy & Utilities Industry Leader, IBM
Building business resilience John Firth,
Chief Executive Officer, Acclimatise
IBM viewpoint Graham Butler,
Executive Partner, Energy & Utilities Industry Leader, IBM
Q & A panel discussion Hosted by Peter Richardson
Energy and Environment Marketing Manager, IBM
Close
23. To access the full report
For softcopy please go to:
– ON24 registration website
– www.ibm.com/uk/green
– www.acclimatise.uk.com
you can order paper copies of the documents from
– www.ibm.com/uk/green
– enquiries@acclimatise.uk.com