Climate change: Market responses

Although the Nepalese market is small with small industrial activity, failure to address climate change and environmental degradation now on their part is like denying global warming, causing greater damage in the long run

Scientists first argued in the late 19th century that an increase of greenhouse gases (GHGs) into the atmosphere could alter the climate of the earth.

The scientific findings in the last quarter of the 20th century increasingly favoured the warming effect of the greenhouse gas emissions—currently caused by human activity as claimed by the reports of Intergovernmental Panel on Climate Change (IPCC).

GHGs are the by-products of economic activities in the markets. Human civilization to the current prominence is a virtual culmination of innovations and discoveries coupled with the use of fossil fuels for energy production.

For the last two decades climate change has also been one of the market issues because of its potential and strategic impact on the companies’ overall business and its sustainability.

Meanwhile, several economists insist that climate change is an outcome of market failure both at domestic and international levels.

Climate change is a business concern worldwide since the Kyoto Protocol was adopted in 1997 that is linked to United Nations Framework Convention on Climate Change (UNFCCC) 1992.

Further, despite a huge opposition from the multinational companies, Kyoto protocol spurred many governments in the developed world to make regulations thereby obliging the industries and business entities to take appropriate actions to address global warming.

As the climate change issue began to mature over time with strong scientific evidences and its impact on the regional climate systems, corporate measures to reduce emission came in chains of initiatives through products and process improvements, exploring the options such as carbon trading and clean development mechanisms, and forging cooperation with companies, government agencies and NGOs to exchange technologies and expertise.

For example, British Petroleum (BP) made its position on climate change public in 1997 with a detailed action plan with the four approaches to address it—conservation of energy, exploring new energy technology such as investing more on solar business, joint implementation involving technology cooperation between countries, and international processes promoting climate change policy dialogue.

Similarly, several other business corporations believe that it is their direct responsibilities as well to address the causes of global warming and climate change.

They have their strategies and operation plan to address the climate change and environmental degradation.

In Nepal analysis of the hydrological and meteorological information between 1975 and 2014 show that rising temperature, and change in precipitation and distribution patterns, including retreating glaciers, are some of the key indicators to reveal the fact that climate change is happening in Nepal.

Nepal’s contribution to the global GHG emission scenario is merely 0.027%. However, the trend of emitting GHGs is on the rise.

Nepal is not an industrial country; therefore the GHG emission from the industrial process comes to be very small vis-a-vis emissions from agriculture, transport and energy production sectors within the country.

However, there are a few industries that are important from the GHG emission point of view such as mineral, cement, food and beverage, and paper industries. The total GHG per year emission from these industries was fluctuating in the past.

But, the trend is rising in recent years.

For example, cement production emitted 220 Gg CO2 in 2006/7 while the amount decreased with 171 Gg CO2 in 2007/8, and again on the rising trend since then; food and beverage industries had an increase in emission of CO2 from 1.01 Gg in 2003/4 to 1.04 Gg in 2008/9, and this trend is going up steadily.

Though Low Carbon Economic Development Strategy (LCEDS) is underway in Nepal which promotes the use of renewable energy and looks into the cross-sectoral approaches of the economy where GHG emissions can be reduced, the markets and industries in Nepal seem to be indifferent towards the cause of global warming.

Moreover, when consulted with the Nepalese companies and manufacturers it was found that there is no individual action plan on the part of the industries to offset the emission they have made over the years, except for some nominal environmental interventions through Corporate Social Responsibilities.

It is argued that every business entity whether it is small, medium or big must consider their business from environment and climate change perspectives in order to be neutral with their carbon footprint.

They should have a plan and make every effort to improve their products and products delivery for environment and climate sustainability.

They must have their carbon offsetting plan to their capacity and resources; or they can jointly make offset plans and implement them together creating synergy for overall effectiveness.

To sum up, free market and industries are some of the important stakeholders for environment and climate safety.

Although the Nepalese market is small with small industrial activity, failure to address climate change and environmental degradation now on their part is like denying global warming—ultimately contributing to making the case more damaging in the long run.

The writers work as experts on climate change