Few could doubt that many of the world's largest corporations have begun to respond to climate change concerns. Where they have, public disclosure of their emissions has been central to the task. Disclosure underpins accountability. But it also helps identify potential carbon efficiencies and mitigate investor risk with reassuring evidence of sustainable business models.
But of the world's largest economies, only 13 are corporations and 34, cities. That is why cities are now being invited to join the private sector's lead in emissions disclosure.
Urbanisation and climate change
Cities may make up only 2 percent of the world's surface area, but they consume 75 percent of its resources and produce up to 80 percent of its greenhouse gases. No wonder that urbanisation is often regarded as the cause of climate change. However, we should also look at cities as potential victims of climate change and as sources of its solutions.
Over 600 million people now live in low-lying coastal areas at risk of rising sea levels, including London, Shanghai, New York, Dhaka, Mumbai and Jakarta. Cities with high pollution or environmental challenges can suffer from poor health and vulnerable infrastructure.
But more than that, they will fail to attract the investment, the talent and the financial support they need to compete. Measurement and disclosure are therefore central to their economic survival, as well as to their ability to respond to the worst effects of global warming.
Cities also have the capacity to instigate massive positive change, given their concentration of skills, knowledge and capital. There is gathering motivation to act, as evident in the European Union's (EU's) Covenant of Mayors, which involves over 1,500 local authorities, and the US Mayor's Climate Protection Agreement.
Different strokes
Until now, however, cities have measured their emissions performance in their own way. London, New York and Chicago use entirely different approaches, each with its own costs and complexities. The case for a common standard for city carbon disclosure is clear.
Unless metropolitan authorities measure the source of their emissions, they cannot identify or cost the solutions needed to reduce them. Unless they track the potential impact of climate change, they cannot placate insurers that will otherwise charge ever higher premiums. If they are unable to benchmark their performance with other urban centres, they won't be well-positioned to compete.
Cities must also be transparent with citizens about the nature of their carbon challenge if they wish to justify the higher taxes for low carbon investments that are not likely to deliver short-term benefits. And with 460 billion US dollars of green fiscal stimulus monies being allocated around the world, transparent and comparable carbon performance will be the first step to secure funding.
Towards a business model
Since 2008, several city governments have looked at the way businesses have measured and reported their emissions through the Carbon Disclosure Project (CDP), a not-for-profit organisation that has established the de facto global carbon reporting platform for business. In 2009, 2,500 corporations reported to CDP, including 400 of the world's largest 500 companies.
A pilot programme extended to 18 US cities has demonstrated the benefits. In one example, Las Vegas reported that unless water consumption was drastically reduced, nearby Lake Mead would dry up by 2021, leaving citizens without water and the tourist industry short of 1 billion US dollars in annual revenues.
It is welcome, therefore, that members of the C40 group of the world's largest emitting cities are now being invited to officially disclose their carbon performance via CDP. The initiative also enables them to automatically report their emissions inventory to the World Bank.
We cannot act on what we do not know. Measurement and reporting are crucial. But it must be undertaken in a common and comparable way to galvanise broad participation. Businesses have shown that competition and rivalry can then play a constructive role in reducing emissions. Cities must now follow suit.
This article is accompanies the Accenture report, "The Case for City Disclosure, written for Carbon Disclosure Project (CDP)"
BY: Lay Lim Teo, Accenture APAC Sustainability Lead