ICF International started working in the area of energy and climate change management much before it became politically or environmentally correct. With more than 3,500 employees in 60 offices worldwide, the firm earned gross revenue of $ 674 million in 2009. The firm does not only consult, but also walks the talk. Its the worlds first professional service consultancy to become carbon neutral. ICFs global chairman & CEO Sudhakar Kesavan and India managing director Nitin Zamre spoke to FE’s Rajiv Tikoo about how Indian companies can balance their short-term interests with long-term growth in a carbon constrained world. Excerpts:
What should be the business strategy post-Cancun?
Sudhakar Kesavan: Businesses always want certainty. Uncertainty is not good for any business. On their own businesses have been coming together and undertaking low-carbon initiatives, which are low-risk and no-regrets. For example, many utilities in the US are undertaking initiatives to improve energy efficiency and harness renewable energy sources. Such steps would repay regardless of what the climate change agreement is going to be. If you can do anything on energy efficiency and even if your return on investment in a certain case is not as high as you would like it to be, you should still do it. There would be no downside. In most cases returns are quite good. There is no reason for businesses to wait.
Global manufacturers and retailers are passing on their emission reduction targets to their supply chains in developing countries. How can supply chains strike a balance between adhering to global business requirements and maintaining their competitive cost advantage?
Sudhakar Kesavan: When a global retailer like Walmart decides to reduce its emissions by a certain percentage, then they have to green their supply chains because they are the cause of a significant percentage of their emissions. It would have a salutary effect on all supply chains because Walmart is such a large buyer that it can influence the practices across large swathes of geographies. And in any case all Walmart suppliers are affected in a similar way. Since suppliers to Walmart all over the world have to follow the same standards, then the impact on all suppliers is similar and they are not at a disadvantage vis-a-vis one another.
But there is a cost to it, which the smaller suppliers are finding difficult to bear?
Sudhakar Kesavan: There is a cost factor the first time. All these measures are difficult to undertake the first time, but businesses are innovative enough to find their way out. I am sure people would come up with good solutions.
You have done some pioneering work on replacing ozone depleting substances. And now use of some of these very replacements has become contentious for their contribution to global warming. How do you see the play out between the attempts to check ozone depletion and global warming at the same time?
Sudhakar Kesavan: I did a lot of work on ozone depleting substances in the eighties and nineties. When the transition took place, certain HFCs had a lower global warming potential than the in-use CFCs. Subsequently, it has been found out that the global warming potential of some HCFCs is very high. They need to be changed. It will happen in due course. The industry will continue to innovate and come up with other substitutes that have a lesser global warming potential. We do have to get rid of all these substances, which have a high global warming potential. I think once the industry gets its act together, it would get done.
What about the controversy surrounding HCFC-22 credits from India and China, which might not be acceptable due to allegations about gaming the Clean Development Mechanism (CDM) market?
Nitin Zamre: In that case, its buyers and sellers negotiating a commodity and if the commodity is not matching up to the buyers expectation, the seller would have to forego the opportunity or change. You really have to improve the quality of the credits. I look at it in purely trading terms.
Going by the current discourse, the future of the CDM market under the Kyoto Protocol is under a cloud. How should Indian companies, which are big beneficiaries, prepare for the uncertain future?
Nitin Zamre: If you look at the CDM market, carbon credit buyers are still willing to take a call beyond 2012. So these guys have an implicit faith that the market would continue in one form or the other beyond 2012 even if the Kyoto Protocol does not have a successor beyond 2012. And a lot of people are willing to put their money on it. Besides, many more opportunities could arise. For example, Japan is talking about a bilateral trading scheme. There are other countries too that are talking about bilateral trading schemes. Thats something that could be looked at. You might get finances from these countries to develop clean projects. You might also be able to trade these credits.
Source: The Financial Express
Published on 18 December 2010