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Why you should care about the Stern Review

The Stern Review into climate change could force major policy reviews for IT departments and the wider business
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Written by David Meyer on

Sir Nicholas Stern, former World Bank chief economist, lobbed a bombshell into the heart of the climate change debate on Monday. His report, compiled at the behest of the Chancellor, laid out in stark terms the measures needed to stop global warming. Its conclusions are not pretty, and have major implications for businesses and IT professionals.

What did the Stern Review discover?
The report suggests that it is already too late to stop a certain amount of warming over the next two or three decades, but action is needed immediately to mitigate that change and stop further decline beyond that period.

If no action is taken to reduce emissions, by 2035 the world could have heated up by 2°. Again, if nothing is done now, we will probably see a rise of 5° in the longer term, which is the same temperature difference as that between now and the last ice age.

One key difference between this report and earlier warnings about global warming is its focus on cost. The core of Stern's argument is that, yes, we need to spend a huge amount as of now to stop the slide, but doing nothing would mean certain global economic disaster. And then of course there is the moral imperative of considering the human cost of massive social upheaval caused by climate change, and the environmental legacy for future generations.

What role does business have to play in this?
Stern maintains that "leadership by the public sector, business, investors, communities and individuals can provide reassurance not only that action is possible, but also that it often has wider financial and other benefits".

Such benefits can be found in increasing the energy efficiency of business operations — energy is not going to get any cheaper — or even "entering fast-growing environmental technology markets". From a management point of view, investors increasingly want to know what the carbon footprint of their investment is, and Stern points to initiatives such as the Carbon Disclosure Project to show how keen many businesses already are to prove their environmental credentials.

What does this have to do with IT?
Stern's message to the IT community is that the decision to buy energy-efficient products may mean higher up-front cost, but lower expenditure over time.

"Unexploited energy efficiency potential offers the single largest opportunity for emissions reductions, with major potential across all major end uses and in all economies," the report says, while acknowledging that the primary driver of much investment in energy-using technologies is the "balance of financial costs and benefits facing an individual or firm".

Obviously a lot of this is tied up with non-IT-related functions such as heating and travel, but it is not much of a logical leap to see how choosing the right IT equipment can have a major impact. Just last week, another report warned that the cost of powering a UK data centre will double over the next five years.

It also seems likely that a system of carbon trading will be instituted in the near future. This will involve individuals and, presumably, companies being assigned a certain number of carbon credits, to be debited in any activity that requires the emission of greenhouse gases. Once your allocation is used up, you will have to purchase more from someone else who boasts a surplus.

Some technology leaders have already welcomed the report, such as Trudy Norris-Gray, Sun UK's managing director. Norris-Gray claimed it "reinforces the position Sun has adopted with regard to climate change, in that it is both a threat and real opportunity for organisations, no matter what their size, to contribute to take an active role in the environment".

Norris-Gray also pointed to Sun's "significant R&D budget in producing low carbon technologies and virtual ways of working" as an example of how "investments made to date will undoubtedly make a very real difference".

How do we know what to buy?
The lack of transparency when it comes to a product's energy efficiency is a major obstacle, according to the report, with office equipment identified as one of the key areas for improvement.

However, Stern also points out that new Energy Star specifications for information and communication technologies (ICT) are currently being thrashed out by the US and the EU, and will come into force in the summer of next year. He predicts that the high level of industry involvement in these negotiations will lead to widespread compliance with "minimal impact on the price of new equipment".

Paying attention to your company's energy expenditure is crucial, and businesses of all sizes can already contact the Carbon Trust for advice on how to evaluate and reduce this. The government-funded Trust also offers interest-free loans to small and medium-sized UK firms to help them buy more energy-efficient equipment.

How long do we have to get to grips with this?
If you haven't already started thinking seriously about your future purchasing strategies in terms of emissions — and soaring energy costs are a strong indicator of what is to come — then start now. Although the Stern Review is not law, the Government has already indicated that the upcoming Queen's speech will include a climate change bill requiring the UK's emissions to be cut by 60 percent (Stern recommended something closer to 90 percent) by 2050.

Until we know the details of this bill, it is hard to say what the immediate impact will be, but it is fair to say that it will require a major adjustment in the behaviour of everyone — businesses and IT departments included.

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