The Stern Report on the economics of climate change received massive coverage, not just in the UK but around the world. Climate change has stopped being an environmental policy for environment ministers. Climate change threatens greater economic damage than the two world wars and the Great Depression put together. That makes climate change a central matter of economic policy. The migration resulting from climate change could be a massive source of conflict and insecurity. That makes climate change a security and social issue. And climate change upends many assumptions about how we create electricity, heat and fuel for transport – that makes it an energy and transport policy too.

Just as the definition of ‘environmental policy’ is changing, so too should the definition of ‘environmental industry’. In the future, every industry should be an environmental industry – just as environmental issues are moving out of the confines of environmental ministries, so too should environmental principles permeate beyond traditional environmental sectors. In a world where energy and carbon emissions are constrained, every business must take resource productivity seriously as a source of competitive advantage. As the Chancellor (Gordon Brown) has said, we have an opportunity to build a low-carbon economy that is pro-environment and pro-growth...

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The future of environmental policy... (333kb)

Climate change is happening now and we all need to play our part in limiting further damage. There is little doubt that the risk of extreme weather is now greater than in the past. We need to adapt to the effects of climate change that we see now, and understand and respond to future changes. As Al Gore says in his Oscar-winning film, An Inconvenient Truth, we don't have to sacrifice the economy to protect the environment. There are a lot of business opportunities that come out of protecting and enhancing the environment.

The Economics of Climate Change The Stern Review, published last October, looked at the impacts and risks arising from uncontrolled climate change and at the costs and opportunities associated with action to tackle it. It suggested that climate change could shrink the global economy by a fifth, at a cost of up to £3.68 trillion, unless drastic action is taken immediately. Stern’s message is that responding to climate change will cost just one per cent of world GDP. There are two important approaches that are relevant to the work of EIC members. Part of the answer lies in being much more resource efficient in everything we do. Secondly, we need to focus on ‘adaptation’, that means doing practical things, now, to protect society.

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An environmental challenge... (242kb)