The green economic consensus: it's stronger than you think

The growing consensus is that the consensus has shattered. Speak to green-minded executives, politicians and campaigners and there is palpable concern that the political and corporate consensus on the urgent need for decarbonisation that helped push the green economy up the agenda in recent years is now in vertiginous decline.

There are reams of evidence to support this consensus. In the UK, the rise of UKIP and its policy-free climate scepticism, the Tories' open hostility to wind farms, Labour's failure to (yet) put the green economy explicitly at the heart of its industrial strategy, and the anti-green diatribes of many within the media all point to the erosion of the political consensus on climate change that characterised the run up to the 2010 election. Globally, backsliding on green commitments from the likes of Japan, Australia and Canada, coupled with the continued scientific illiteracy of Congressional Republicans, similarly suggests that the consensus that underpins UN climate talks is more fragile than ever. Meanwhile, in board rooms around the world impressive commitments to develop greener business models are constantly offset by fossil fuel companies' rapacious desires to develop new reserves and the failure of the majority of business leaders to prioritise decarbonisation.

Faced with these realities and the slowdown in clean energy investment that resulted last year, it is easy to see how proponents of the green economy could get dispirited in the run up to the crucial UN climate summit in Paris next year.

However, tempting as it may be to wallow in this depressing narrative, there is a counter-argument which suggests that it is far too early to consign the political and corporate consensus on climate action to the history books. In fact, there are plenty of signs that it is enjoying a renaissance - you just need to know where to look.

This week has seen two contrasting examples of the continuing strength of this consensus from the political and business communities.

First up, the G7 meeting of energy ministers to discuss energy security issues thrown into sharp aspect by the security crisis in Ukraine evidently morphed into a wider discussion of climate security and the urgent need for decarbonisation. The G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US publicly and unequivocally agreed that "reducing our greenhouse gas emissions, and accelerating the transition to a low carbon economy" would provide "a key contribution to enduring energy security". Consequently, they all committed to enhancing energy efficiency measures, diversifying energy supplies, and "promoting deployment of clean and sustainable energy technologies and continued investment in research and innovation".

It is worth reflecting on that commitment for a moment. When energy security risks are highlighted, Canada, which has long been regarded as a petro-state opponent of ambitious climate action, Japan, which recently watered down its emissions targets, the US, which is repeatedly criticised for blocking progress at international climate talks, and European powers, which according to some in the media are increasingly ambivalent towards decarbonisation efforts, all agree to make energy efficiency and low carbon domestic energy a top priority. They do so because the benefits of decarbonisation from both an energy security and climate change perspective are unanswerable and firmly embedded within mainstream political thinking. This is the new normal.

You can see why UN Secretary General Ban Ki-moon is quietly optimistic at the prospects for his crucial climate change meeting in New York this September. As he wrote this week: "An increasing number of government leaders, policymakers, businesses, investors and concerned citizens are beginning to comprehend the costs of climate change. More crucially, they are also learning that affordable solutions exist or are in the pipeline to reduce greenhouse gas emissions and support resilience... Change is in the air - I can sense it at all levels of society. Solutions exist. The race is on. My challenge to all political and business leaders, all concerned citizens and voters is simple: be at the head of the race."

Secondly, today sees the launch of a new business-led campaign from the Aldersgate Group entitled An Economy That Works, which aims to highlight how there is "no credible alternative" to developing a new green economy that is "smart, low carbon and resource efficient". There have obviously been plenty of previous attempts by business groups and environmental campaigners to highlight the myriad economic benefits associated with a green economy. But this latest initiative is particularly impressive in the breadth of its support and the manner in which it addresses the systemic benefits a more sustainable economy will deliver through improved employment, competitiveness, innovation, investment, well-being and health, not to mention environmental gains.

The campaign is backed by a raft of blue chip firms, including Asda, Bank of America Merrill Lynch, BT, Cisco, Kingfisher, M&S, Nation Grid, Nestlé, Philips, Sky and Thames Water, as well as a host of NGOs. Yes, many of them could be characterised as the 'usual suspects' who have led green business thinking for much of the past decade, but that consistency of support for the low carbon economy is remarkable in itself. Several blue chip multinationals, many of which generate billions of pounds in revenues, want to see the near complete decarbonisation of the economy over the coming decades and are developing their long-term strategies accordingly.

Moreover, these titans of industry are supporting this campaign not because they have suddenly converted into lentil-munching hippies, but because they understand that it is the best course of action for their business.

As the CBI's John Cridland puts it, there is "a hard-nosed economic argument that moving to a low-carbon economy can drive significant business investment and create many new jobs across the country". Kingfisher's Sir Ian Cheshire is similarly revelatory on the scale of the challenge to economic orthodoxy he is endorsing: "Instead of the goal of maximum linear growth in GDP, we should be thinking of maximum wellbeing for minimum planetary input." Meanwhile, M&S' Marc Bolland is clear that the retail giant's environmental commitments are driven by traditional business concerns. "The commercial imperative for action is clear," he says. "Our research shows that UK businesses have the opportunity to unlock around £100bn a year in value from new innovation opportunities that address social and environmental challenges."

Meanwhile, growing numbers of investors are adapting to this reality and starting to wonder if the emergence of clean technologies and escalating climate risks mean they should hedge their bets against the creation of an unsustainable carbon bubble. As Stanford University's President John Hennessy succinctly put it when explaining this week why the university would no longer invest in coal projects: "The university's review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it."

Similar green business initiatives in all of the world's major markets prove that these leading businesses and investors are not alone. Again, it is worth reflecting on the commitment these corporate giants are making. The likes of Unilever, Nestlé, Asda and Philips, as well as Apple, Tesco, IBM, Virgin and thousands of other successful businesses, want to see the creation of a low carbon global economy and are developing business strategies, directing R&D dollars, and spending political capital accordingly. They do so because they recognise that the low carbon transition will not only mitigate against huge risks to their business but present the biggest economic opportunity of this century. This is the new normal.

Of course, this upbeat assessment of the green economic consensus comes with an oil tanker full of caveats. With a few honourable exceptions, the fossil fuel industry continues to demonstrate a staggering insouciance towards the climate risks we all face. Politicians remain much better at endorsing G7 communiques on the need for climate action than they are at delivering the ambitious policies that will deliver such action. For every business campaigning for decarbonisation, there are many more with their heads in the sand. In many countries, including the UK, the media's unthinking defence of the status quo means it is failing to tell one of the most exciting economic stories of the past 100 years.

But none of these valid concerns is sufficient to shatter the consensus on the urgent need to tackle climate change and build a more sustainable economy. There may be huge disagreement in business and political circles about how to deliver it, but the goal of a greener economy is rarely up for debate in the corridors of power, while polling shows it is an industrial revolution the public wants to see. By talking down the wide-ranging support that still exists for ambitious action on climate change environmentalists are in danger of seeing the block of felled wood, while missing the acres of healthy trees.

We can and should criticise specific failures to deliver sufficiently ambitious low carbon policies and investment, but green businesses, politicians and campaigners need to be wary of fuelling the impression that the green economy is constantly in crisis. The truth, as this week's G7 meeting and the Aldersgate's Group's campaign demonstrate, is that the outlook has never been brighter: clean tech investment is climbing again, clean energy costs are falling, and the big scientific and economic arguments over the necessity and efficacy of a sustainable economy have been won.

And if you are still not convinced ask yourself this: would you rather be a young executive working in a coal industry that is facing increasingly hostile questions from investors, tightening regulations, and intensifying competition from alternative technologies, or would you prefer to work in a clean tech sector that enjoys overwhelming public support, falling cost curves, and policies designed to help you break into the mainstream? I'd suggest that, as with so much else, the consensus will lean towards the greener option.

Further reading

• Energy

G7 calls for clean tech-focused "step change" in energy security

• 07 May 2014

• Policy

Blue chips seek to 'redefine capitalism' with green growth campaign

• 07 May 2014

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