Smooth shift to low carbon use

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More focus on alternative energy technologies
More focus on alternative energy technologies

The success of a low-carbon strategy depends on how strongly leadership facilitates the implementation of change management initiatives.

Sudipta Das

Ajeya Bandyopadhyay

The global economic slowdown has led to a new debate in governments and the private sector, with many arguing that the transition to a low carbon economy is too expensive or of less importance now. However, during the recovery from recession, our economic models must evolve to overcome unprecedented turmoil in global markets and simultaneously make provisions for climate-friendly sustainable growth.

Leaders around the world are absorbing the scale and scope of the economic, environmental and social challenges and recognising the need for bold and swift action to address climate change issues at a strategic level.

A CEO's vision is a vital component to make a paradigm shift in management's thinking on how to achieve a meaningful transformation to low carbon economy. The vision of leadership takes various dimensions.

An in-depth understanding of ‘opportunities' and ‘threats' posed by climate change: A CEO must take a long-term view of the potential physical impacts of climate change on business sustainability. He must visualise the evolution of market and industry under low carbon drivers and how these will influence growth, open up new market opportunities, stimulate technology innovations, reshape consumer preference and alter competitive landscape.

Develop Options

As climate change assumes strategic importance in boardroom discussions leadership should indeed re-think on the fundamental assumptions and challenge the basic paradigm in which business should operate in a carbon constrained future.

Develop strategic choice: An intense ideation among top level functionaries at various levels is required to develop portfolio of options (technology, process and product choice, markets) that will navigate transition to low carbon path. Collaborate and co-create solutions with stakeholders: The sheer scale of challenge and opportunities presented by climate change demands new form of alliances. Businesses working standalone can only hope to make incremental contributions to this challenge. This calls for the combined energy and skill of organisations and governments working together in a grand alliance.

Collaboration can reduce the burden of individual risk and help leaders make an early move with confidence and agility. Finally, leaders should recognise that collaboration creates leverage – in terms of resources, bargaining power and intellectual critical mass to spur technological innovation on a massive scale. Such leverage meaningfully engages the leaders in positively influencing Government's future policies and regulations.

Crafting vision: CEOs have the bigger role to create an ambition for the organisation to follow low carbon, sustainable growth. This entails continuously communicating the corporate objective to internal and external stakeholders, inspiring employees to take proactive actions and make them indispensable partners of the transformation process.

Success of low carbon strategy depends on how strongly the leadership creates enablers to cascade implementation of these change management initiatives. Some key enablers are the formation of a climate change steering committee, designating champions, capacity building, sharing of best practices and multi-level communication across business units and geographies to create shared vision.

According to a survey conducted by Ernst & Young, “Action amidst uncertainty: the business response to climate change,” global executives firmly believe that the climate change agenda will significantly impact business performance and strategy over the next few years.

Prime agenda

The survey — conducted with 300 global corporate executives from 16 countries, covering 18 industry sectors — reveals that more than 90 per cent of executives indicate climate change governance should be one of the prime agenda for C-suite or board members.

Respondents also feel that complexity of climate change problem demands strong governance as well as corporate leadership. Continued dialogue at the global, national and local levels is critical to moving forward on strategies to accelerate the journey towards low carbon economy. Policy that is tailored to the specific characteristics of different regions will augment the overall participation in a global effort to fight climate change. But customised policy does not preclude the need for a holistic approach.

(The authors are Partner and Manager, respectively, at Ernst & Young.)

(This article was published in the Business Line print edition dated January 3, 2011)
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