Time for climate business

Meidyatama Suryodiningrat, Washington DC

Much is at stake at the current UN Climate Change Conference in Bali. The commitments that can be hashed out will serve as a springboard for more affirmative global action and a policy bridge prior to the end of the first phase of the Kyoto Protocol in 2012.

While much of the focus of official delegates is understandably on negotiating the technicalities of the carbon trading scheme, the onus of environmental protection, in particular deforestation and emissions reduction, cannot be left simply to government initiatives or policies hashed out in negotiated settlements by diplomats.

The prevailing regime of natural resource exploitation within the extraction industry is largely one defined by the government, through a series of laws and regulations, and (generally) adhered to by concession-holding local and foreign industries.

While some have implemented stringent guidelines in their practices, most companies have generally sought to comply just within the minimum bounds demanded by legislation in their extraction activity.

Business attitudes are changing, but unfortunately not enough. Profit will always be the primary motive. Nevertheless if we are to succeed in efforts to reduce deforestation, profit cannot be the sole consideration.

For most companies, the adoption of more "environmentally friendly" strategies is somewhat cosmetic in response to public pressure or in anticipation of changing laws.

Indonesian business leaders, particularly those working in the extraction industries, must set a new standard by being proactive and instilling a pervading code of conduct for environmental management, rather than simply being adherents to laws.

A code -- not unlike the Press Code of Ethics religiously adhered to by mainstream newspapers -- should be ingrained in executives to proactively exceed legal compliance standards.

On the other hand governments, particularly those in developing countries, must also recognize that despite the banner results which can be achieved in Bali, if there is not enough awareness or recognition from the business side the implementation will be superficial. And governments know that they cannot carry the burden of emission reduction efforts.

Gerhard Dieterle, forests adviser for the World Bank, during a meeting in Washington DC last month, spoke at length about proposals for a carbon trading mechanism. However he concluded by saying that in the end the "private sector is key".

"The private sector wants upside to reflect risk of moving into REDD (Reducing Emissions from Deforestation and Degradation)," he said during the meeting organized by Global Nexus Institute.

The Indonesian government is currently in the throes of promoting the REDD scheme. Such leadership is welcome, but how anxious are local forestry companies in carrying it out? Such a project cannot succeed if the private sector does not facilitate development of REDD projects and provide the supporting technical help for land management.

Too few Indonesian companies have been self-starters in this respect. Asia Pacific Resources International Holdings Ltd. is calling itself one of those that has set in motion REDD-like initiatives -- partly to boost its own environmental credentials and partly out of growing recognition of sustainable management.

As Asia Pacific Resources sustainability director Neil Franklin pointed out, without intervention, 73 percent of the company's concession area in Kampar, Riau, will be logged out or flooded within 25 years.

"The idea is to evolve from an extraction industry to a sustainable one," he said in Washington.

According to Franklin, among the key challenges to a national REDD program is to establish pioneering pilot projects that can test proposed national, regional and project-based carbon initiatives.

He also noted that business "needs an enabling environment from government, with a national baseline framework offering a conducive context for project implementation".

Franklin did not elaborate on the "enabling" environment, but it is clear from his remarks that government must truly understand how policy translates into business decisions and identify the elements that are most likely to accelerate investment in "green management".

One of the most important outcomes that business is likely to look at post-Bali is to see whether there is a radical change to the parameters set by the Kyoto Protocol.

Any significant shift would set back business' enthusiasm since it would signal long-term uncertainty and the potential for contradictory regulations at the international, national and local levels.

The author, a staff writer with The Jakarta Post, is currently a research fellow at Harvard University's Weatherhead Center for International Affairs.
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