Introducing UNEP Climate Competitiveness Index

♠ Posted by Emmanuel in , at 5/25/2010 12:04:00 AM
As if we didn't have enough measures of competitiveness already, here comes yet another one for us to consider. Given the rising prominence of environmental issues, it's only natural that they gained status as one of the emerging arenas for developing metrics for competitiveness. Certainly, this idea is not new. Harvard's legendary management guru Michael Porter identified it as far back as 1991 as the next arena for global contestation. Meanwhile, journalist Thomas Friedman basically ripped off Porter's idea in also identifying green technologies as an area where America can renew itself.

Not one to be left out it the environmental competitiveness craze, the United Nations Environmental Programme (UNEP) has teamed up with environmental consultancy AccountAbility to develop a "climate competitiveness index" or CCI. (I suppose it's inevitable that they came up with another measurement of this sort in mimetic fashion.) Here is how UNEP defines ita as well as how it fits in with the grander scheme of things with the Copenhagen climate talks yielding decidedly mixed results. While we await the full report from UNEP, the executive summary has some interesting stuff. Here is the definition of climate competitiveness:
Climate Competitiveness is the ability of an economy to create enduring economic value through low carbon technology, products and services.

Climate competitiveness strategies have not been stalled by Copenhagen. Despite uncertainty about the international negotiations, businesses, governments and citizens around the world are getting on with the task of seizing opportunities in the emerging low carbon economy. The report identifies significant activity in the first quarter of 2010. India’s new commitments will create 1,200 energy efficiency projects and open up a market worth US$15 billion. Germany has already created 250,000 green jobs and aims to find 400,000 more, while China and the USA are neck and neck in the race to generate renewable energy.

The Climate Competitiveness Index 2010 identifies good practices in countries around the world. From the investment promotion agency in Finland and the Presidential office in Guyana to consumer watchdogs in New Zealand, key institutions are preparing for climate competitiveness. If such good practices are converted into meaningful national strategies, it will accelerate progress towards the low carbon economy.

The low carbon economy will be competitive. While economic value can eventually become widely shared and collaborative, the market in 2010 is fiercely competitive as people strive to achieve first mover advantages. Climate-related businesses could have revenues in excess of US$2 trillion by 2020. Investors are asking the leading companies in all sectors to show how they are winningmarket share. Smaller businesses, entrepreneurs, urban planners, policymakers, business associations, stock exchanges, investment agencies, labour unions and civil society organisations are all building support for climate competitiveness and prosperous, low carbon societies.

The Climate Competitiveness Index 2010 shows which countries and regions are best placed to thrive in the low-carbon economy. The Climate Competitiveness Index (CCI) is a new metric that analyses low carbon leadership, performance and accountability. The underlying model captures the key trends in a sample of 95 countries covering the vast majority of businesses and 97% of global economic activity, as well as 96% of global carbon emissions.

The CCI is a dynamic model assessing both accountability (the climate strategy is clear, ambitious, and supported by all stakeholders) and performance (the country has the track record and capabilities to deliver the strategy).
And here is a graphic explaining how climate competitiveness was determined based on various stakeholder inputs:

Lastly, the Climate Competitiveness Index 2010 has ten key findings...

1) Countries that have strong climate performance generally have higher levels of climate accountability. Lessstrong performers tend to be less accountable. While there are many exceptions to this pattern, and only anecdotal evidence as yet on causality between the two dimensions, prudent climate strategies will focus on
strengthening both dimensions.

2) There has been an increase in climate accountability since the UNFCCC Copenhagen conference in December 2009. Nearly half (46%) of the countries assessed have improved their climate accountability somewhat or significantly, suggesting the Copenhagen Accord has had a positive impact, with improved climate competitiveness registering in 32 countries. Major climbers include Rwanda, Kenya andGhana, and from the OECD, Republic of Korea and Ireland. These developments demonstrate the importance of debate and citizen action in strategy development.

3) There are examples of good practice to be shared in dozens of countries. In most countries, there is still plenty of room for improvement among many of the competitiveness actors. Specifically, much more can be done by business associations, competitiveness and investment agencies, stock exchanges and consumer groups to promote more business action.

4) Each country will have a distinctive competitiveness strategy, but some broad patterns are discernible in different regions and in different economic clusters. For example, Bolivia, Ghana, Vietnam and Bangladesh all demonstrate strong citizen concern coupled with limited business engagement. Emerging economies like Brazil and the Philippines enjoy strong government leadership. In other cases, leadership is evident in the business community, for example in Scandinavia and Singapore. However, climate leadership will increasingly require engagement from most or all stakeholders.

5) Climate accountability is becoming a vote-winner for governments and parliamentarians. Citizens are demanding visible, coherent and tangible climate leadership fromnational leaders. Many politicians are opening dialogues to gauge opinions. Climate accountability is becoming a key differentiator in elections, for example in Brazil, Japan and the UK. In Republic of Korea, the President’s office has engaged with numerous stakeholders to create the ‘Low Carbon Green Growth Strategy’.

6) Climate competitiveness is not dictated by income level, despite strong performance on the Index by many northern European countries. The Philippines is highly accountable and has made green jobs a political priority. Guyana, China, Chile, Mauritius and South Africa are all building distinctive strategies for low carbon competitiveness. There is no evidence for a climate Kuznets Curve or that resource endowments dictate national performance.

7) Consistency is the key to climate competitiveness. Northern European countries, notably Germany, France, the UK and Nordic countries, have the most consistent performance across the eight domains and between accountability and performance. In North America and Australia, there is a telling mismatch between citizen concerns and price signals, and divergent views within the business community and in politics. The BASIC states outperform the rest of the G20 on accountability. Latin American countries are stronger on performance than accountability. In Asia, the Middle East and in Africa, there is high variability in both performance and account-
ability, as indeed there is in the EU27 states.

8) Climate action in the private sector is crucial for climate competitiveness. Strong performance on the CCI by Japan, Republic of Korea, Germany, the Nordics and the USA is manifested by active engagement by the largest firms in reducing their emissions and offering low carbon products and services. The track record on carbon disclosure and management of the five largest companies headquartered in each country is a robust predictor of broader business action within the country. In some countries, action is still lacking even among the biggest firms, let alone the broader business community.

9) Companies and countries are scrambling to win share in new markets. The clean energy sector, estimated to be worth US$200 billion in 2010, has seen rapidly growing investment in recent years, with a moderate setback due to the 2009 downturn. Low carbon street lighting is a good example of fierce competition. Trials of rival LED technologies, running in Hong Kong, New York, Tianjin and Toronto will dictate success for companies in what is expected to be a US$1 billion market in 2010. Countries such as Turkey, Italy, the USA and China have all increased their investments in clean energy by over 100% in the last five years. It is of concern that significant investments are being made in some countries with only moderate levels of climate accountability.

10) The countries most vulnerable to climate change do not yet have the accountability and capacity they will require to adapt and thrive. Proactive adaptation policies are being developed in countries like Bangladesh, Cambodia and the Maldives, but international support will be needed for many countries to build climate resilient growth strategies. This support includes the current offerings of climate models, mitigation menus and strategy advice, but also needs to encompass capacity building for all the key actors in climate competitiveness, including business associations, trades unions, stock exchanges and civil society and consumer groups.