Business and green innovators

The other day I came across a news item in one of the local daily newspapers which reported that representatives of the Federation of Industry had just attended an overseas discussion on energy and climate change. This is a most positive signal indeed, because without a pivotal and proactive role by the private business sector it will be virtually impossible for any country - big or small - to carry out the transformational process of our energy system to a low carbon economy. What we are talking about in this particular instance are significant investments but also more technological innovations and increased energy efficiency.

Although governments should lead by example in this sensitive sector, in a number of countries where governments turn out to be laggards, it is often the case that the corporate sector takes the lead.

The president of the World Business Council for Sustainable Development, Bjorn Stigson recently delivered a couple of important messages that we should all take heed of, whether we operate in the corporate sector or not.

He predicted that the next decades will see a new industrial revolution that will be clean, lean and mean: clean because of climate consequences, water stress and economic impacts; lean characterised by a low-carbon economy and eco efficiency as well as uncertainty to access energy and resources; and mean because "we" will experience transformational change and destructive innovations that will create new winners and losers.

I believe that businesses have a big role to play in this whole process because, while certain governments are inclined to adopt a Jurassic Park approach, these companies, be they global ones or not, should and could serve as the major tools for innovation, investments, resource flows and job creation to implement the actions that are necessary.

Mr Stigson has been repeatedly making the point that positive outcomes for negotiations on the issue in Copenhagen next year will not only impact business but will depend on action by business for their success.

The main thrust of his concept of sustainable business is that industries that have put sustainability issues at the heart of their strategy, offer some valuable lessons for the creaky worldwide financial sector in these turbulent times.

2009, in spite of it's difficulties, should prove to be a soul-searching year resulting in business models that require shifts to new products and services that directly address global challenges and simultaneously focus on delivering value to society.

Sustainable development is important even in business because stakeholders must constantly keep in mind that business cannot succeed in societies that fail. There is no future for a successful business if the societies that surround it are not working.

The major problem these businesses face when they are small and operating in the clean technology sector is that they are often unable to access the funds they need to commercialise their products.

The core issue is that there are just not enough market-based incentives to commercialisation in these areas. One of the problems of many investors is that achieving a return on investment for some clean technologies requires a leap of faith.

There is money available for R & D but without sales there is no return.

In the UK, the CBI recently set up a climate change working group. I personally believe that our corporate sector representative bodies in Malta should do so too.

For the business community, climate change represents an impending market shift, one that will both alter existing markets and create new ones.

For many within the business community the future is a carbon constrained world and the time for action is now.

The debate is thus strategic and not scientific. Companies must realise that, in addressing such issues, they are not practising philanthropy or pure social responsibility but merely providing for their own survival.

Businesses must have the courage to engage the climate change issue as a way to protect their strategic investments and to search for business opportunities in a changing market landscape.

If they take the hint at this stage they will be paving the way for operational improvement, possibly accessing new sources of capital, but they must improve on risk management, elevate corporate reputation and identify new market opportunities.

A happy New Year to the editor and staff members of The Times and to all of its highly-respected readers.

Mr Brincat is a Labour MP.

brincat.leo@gmail.com