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Climate change and the emergence of the carbon sector – what are the broader opportunities for environmental management?

Erwin H. J. Budde1 and Jacob A. Thomson2

. 102/63-65 Johnston Street, Wagga Wagga, NSW 2650, Australia.
. nghenvironmental. 206/410 Elizabeth Street, Sydney, NSW 2010, Australia.


Climate change, unlike any other single environmental issue, has been responsible for the most dramatic change in Australia’s attitude towards the environment. September 2006 marks the date when, at a political, business and community level, environmental debate in Australia evolved from a mostly secondary issue to one set to shape the country’s economic future. The importance of this paradigm shift to the evolution and maturation of environmental management cannot be underestimated. Environmental management stands to change dramatically in a number of crucial ways: the most important of which is a shift away from the environment as a marketing tool to its true valuation within economic production. Equally important is the linking of environmental goals such as biodiversity management and natural resource use to a single tangible economic asset, and the promotion and development of energy and pollution-reduction technologies. The realisation of these opportunities, and the integration of environmental management into mainstream business principles, is ideally delivered through the existing architecture of Environmental Management Systems.

Key words

Pollution, carbon trading, ISO 1400


In the second half of 2006, the climate change debate reached a major milestone in Australia. As a country we went from sitting on the side lines to taking a proactive approach towards climate change, energy and carbon-pollution and natural resource conservation. Climate change has spurred politicians, businesses and the general public into looking closely at the very way in which we live our lives. The response to climate change has presented wide ranging opportunities for many sectors and is generating new markets. The opportunities for the environmental sector are similarly wide ranging, exciting and challenging. The ability to capture these opportunities broadly, holistically and in an integrate way will be critical to the success of the carbon sector in reducing emissions and the impacts of climate change. Environmental management systems are ideally placed to address these challenges and provide a solution for businesses faced with the daunting challenge of responding to climate change.

What are the opportunities from the response to climate change?

The response to climate change at all levels has presented opportunities to environmental management in a number of ways:

  • A recognition of ‘no economy without the environment’
  • The introduction of a non-regulatory monetary value on environmental impacts
  • The promotion of innovation and development of pollution reduction technologies
  • The establishment of a link between carbon and sustainability, allowing the transfer of incentives across environmental disciplines.

The growing public response to climate change has had a profound impact on the perception of the environment by business. This has occurred in two ways: the first has been a rush to ‘greenwash’, the branding of products and services within the market place as environmentally sound, to which an increasingly aware public has been understandably cynical. The second, and furthest reaching, is a growing acceptance of environmental sustainability as the foundation for economic growth. Through the carbon debate, consumers, business and government are now struggling to find the right tools and structure with which to address critical environmental challenges. This momentum needs to be captured and developed systematically, efficiently and with credibility. The most appropriate mechanism lies within Environmental Management Systems.

Historically, many environmental goods and services have been difficult to value financially, relying on proxy markets and consumer perception. The carbon sector has introduced a relatively free-market monetary valuation of environmental impacts, examples of which can be seen in the emergence of emissions trading schemes and carbon stock exchanges around the world. The growing use of market-based incentives as a tool for environmental management presents an enormous opportunity for the environmental sector and for the maturation of Environmental Management Systems. An example of this can be observed in the recent federal government water buyback scheme where a reverse-auction mechanism was used to determine a market value for water allocations, placing an economic price on an environmental (and social) resource. Another example of market-based incentives being adopted is the practice of property vegetation planning in NSW, whereby farmers are assisted in determining a more market-based environmental value on land clearing and vegetation conservation. Businesses with significant environmental exposure can utilise the established framework of Environmental Management Systems to fully analyse and plan for the financial risk and opportunity of their exposure. Through collaboration and/or integration with other business systems (eg tax, legal), this can give businesses a powerful advantage over competitors without mature environmental systems.

One of the more important opportunities the carbon debate presents for environmental managers is the way in which it has, and will continue, to drive innovation, efficiency, and productivity through technological change. Through a range of regulatory and non-regulatory means, such as mandatory renewable energy targets and emissions trading schemes, these changes are presenting opportunities for businesses and communities. Examples can be seen particularly in the energy sector through efficiency labelling and consumer purchasing power, water saving, recycling and reuse technologies, and the move towards smarter utility networks. In relation to smarter utility networks and energy management, the sudden increase in electricity costs in NSW is an example where businesses can no longer isolate energy use from other aspects of operations. It is now in their vested interests to become far more actively involved in alternative processes (eg renewable energies, sustainable technologies), technological development and innovation in order to ensure long term financial viability. An Environmental Management System can assist in managing this transition.

Of great importance is the link offered by the climate change response to other environmental sectors and disciplines. Climate change is intrinsically linked with biodiversity, land degradation, waste management, agricultural production and natural resource use. The opportunities for these disciplines to be part of the response to climate change, such as through monetary valuations, technological change, and improved awareness and integration into everyday life, are profound. For example, the utilisation of reforestation offsets to maintain and improve biodiversity outcomes presents an opportunity for conserving flora and fauna. In NSW, we can see these opportunities becoming part of biobanking and property vegetation planning schemes. Another example is the opportunity to capture waste management in carbon planning, particularly through the workings of whole-of-operation environmental management systems which can identify and bring together waste data from within operationally or geographically separated parts of an organisation. Recycling and reuse, which are sometimes seen as high-cost and low-benefit compared with disposal, may in some cases become more economical if the carbon-cost of disposal is also taken into account.

The emergency of the carbon sector and the response to climate change presents a wide range of opportunities for broader environmental management, many of which have not been present before. It can also be seen that integration both within environmental disciplines and between environmental and other business systems is critical to capturing these opportunities. Environmental Management Systems are ideal for capturing these opportunities and driving carbon savings and addressing climate change.

Why are environmental management systems the best approach to maximising these opportunities?

A range of approaches can be used by business and government to address climate change and build upon the opportunities presented by the carbon sector, including:

  • New legislation and mandatory reporting requirements;
  • Financial accountability – the true cost of energy and environmental impacts;
  • Persuasive voluntary approaches that have market appeal such as Greenhouse Friendly; and
  • Public provision measures such as grants, government support programs.
  • Whilst all of these responses are capable of addressing climate change, and undoubtedly will be used to respond to climate change, Environmental Management Systems can both integrate these responses as well as fully capture the opportunities being presented by the carbon sector. This is because:
  • They provide a holistic view of environmental management and are ideal for avoiding fragmentation and isolation of the carbon response
  • They form part of existing and well understood business systems and are a proven tool for driving organisational change
  • They exist within an international accreditation and certification framework, important for credibility (ISO 14000 series standards),

The success of efficient and effective carbon emissions reduction lies in the ability for a business to generate carbon savings across the whole organisation. Environmental management systems are designed to capture, analyse and deal with multiple disciplines within both compact and geographically/operationally fragmented organisations and drive innovation and change. Innovation and change are amongst the key opportunities of the emergence of the carbon sector. The opportunity to drive change in other environmental disciplines is another. Environmental Management Systems are present best-practice to avoid the dangers of a fragmented response to climate change as they can identify carbon savings through a holistic analysis of environmental impacts. For example, an organisation with a large carbon exposure can utilise the tools of Environmental Management Systems, such as aspect and impact analysis and the structured identification of organisational objectives and operational targets, to identify carbon savings within the organisation from energy use, waste generation, input and output resources, upstream emissions and whole-of-life cycle analysis. It can also use EMS tools such as auditing and contractor management to analyse carbon savings outside the organisation such as from suppliers, distributors and end-users. This can then generate either direct cost savings or indirect savings from carbon trading schemes. Another example is the influence of peak oil on business economics and its relationship with the carbon and renewable energies sector. Businesses will need to face the reality of increased input costs and a holistic approach as provided by Environmental Management Systems will be needed to address these cost issues across an organisation.

One of the key features of Environmental Management Systems is their position within the broader business system framework, and the ability to integrate with other systems. For example, an Environmental Management System can be integrated into quality and production systems, IT systems and management decision-making systems. This aspect of Environmental Management Systems is critically important to driving innovation and change through consideration of environmental impact. To instigate environmental change effectively, environmental considerations need to be at the core of a business’ operation. The ability to integrate an Environmental Management System into everyday business systems will be crucial to addressing climate change. The core principle of continuous improvement, combined with the tools of management review and auditing, can work to capitalise on the opportunities raised from the carbon sector throughout an entire organisation.

Credibility will be key in current and future carbon savings programs for two significant reasons. Firstly, at a regulatory level, a critical component of any formal carbon emissions reduction scheme will be the verification and auditing process. A business with a mature, integrated and well documented environmental management system will be able to capture reporting requirements within their existing systems readily for all operations. As undoubtedly such reporting requirements will be through e-systems, an e-based Environmental Management System will place a business at a distinct administrative advantage. Secondly, credibility will be important for clients and customers and it is very likely that accredited systems will become a requirement for doing business in many sectors. Again, Environmental Management Systems already operate within an international accreditation and certification system), providing credibility and quality assurance. Capturing the carbon response measures of an organisation within such an Environmental Management System will place an organisation in an advantageous position when generating credibility in the market place.


The emergence of a carbon sector in response to climate change provides a wide range of opportunities to environmental management. It is important that these opportunities are fully captured through a credible, integrated and holistic system. Environmental management systems provide the ideal solution for businesses to identify, analyse and respond to their carbon exposure, or capitalise on new market being generated by the carbon sector. Environmental Management Systems must become an integral component of business economics to assist in developing integrated, holistic responses to climate change and fully capitalise on the opportunities raised by the carbon sector.

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