Climate Change, Supply Chain Management and Enterprise Adaptation: Implications of Global Warming on the Economy

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Climate Change, Supply Chain Management and Enterprise Adaptation:

Implications of Global Warming on the Economy Costas P. Pappis University of Piraeus, Greece

InformatIon ScIence reference Hershey • New York

Director of Editorial Content: Director of Book Publications: Acquisitions Editor: Development Editor: Publishing Assistant: Typesetter: Production Editor: Cover Design:

Kristin Klinger Julia Mosemann Lindsay Johnston Julia Mosemann Casey Conapitski Casey Conapitski Jamie Snavely Lisa Tosheff

Published in the United States of America by Information Science Reference (an imprint of IGI Global) 701 E. Chocolate Avenue, Hershey PA 17033 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: [email protected] Web site: http://www.igi-global.com Copyright © 2011 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this set are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI Global of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Pappis, Costas P., 1945- Climate change, supply chain management and enterprise adaptation : implications of global warming on the economy / by Costas P. Pappis. p. cm. Includes bibliographical references and index. Summary: “This book provides an interdisciplinary treatment of issues raised by climate change in connection with its implications for society, environment and economy, particularly at the company and the supply chain levels”-- Provided by publisher. ISBN 978-1-61692-800-1 (hardcover) -- ISBN 978-1-61692-802-5 (ebook) 1. Business enterprises--Environmental aspects. 2. Business logistics-- Environmental aspects. 3. Climatic changes--Social aspects. I. Title. HD30.255.P36 2010 658.4’083--dc22 2010016496

British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. All work contributed to this book is new, previously-unpublished material. The views expressed in this book are those of the authors, but not necessarily of the publisher.

Table of Contents

Foreword ............................................................................................................ viii Preface ................................................................................................................... x Acknowledgment ................................................................................................ xv Chapter 1 The Enterprise in the 21st Century .................................................................... 1 Introduction ............................................................................................................ 1 The Extended Enterprise ........................................................................................ 6 Corporate Social Responsibility ............................................................................ 9 What Does the 21st Century Bring Forward? ..................................................... 17 Discussion and Conclusion .................................................................................. 22 References ............................................................................................................ 25 Chapter 2 Global Warming: Basic Facts ........................................................................... 30 Introduction .......................................................................................................... 30 The Greenhouse Effect ......................................................................................... 32 The IPCC’s Reports.............................................................................................. 34 Changes in Atmospheric Constituents and in Radiative Forcing ................... 36 Surface and Atmospheric Climate Change ..................................................... 39 Changes in Snow, Ice, and Frozen Ground ..................................................... 46 Oceanic Climate Change and Sea Level ......................................................... 49 Climate Change Evolution, Climate Models and the SRES Scenarios ................ 51

Palaeoclimate ...................................................................................................... 58 Discussion and Conclusion .................................................................................. 59 References ............................................................................................................ 62 Chapter 3 Global Impacts of Climate Change .................................................................. 66 Introduction .......................................................................................................... 66 Reviews of Climate Change Impacts.................................................................... 68 Implications for People around the World ...................................................... 70 Implications for Developing Countries........................................................... 74 Implications for Developed Countries ............................................................ 76 Monetary Costs of Climate Change ..................................................................... 78 Discussion and Conclusion .................................................................................. 85 References ............................................................................................................ 89 Chapter 4 Climate Change and Supply Chain Operations .............................................. 93 Introduction .......................................................................................................... 93 Supply Chain Operations and Their Management .............................................. 96 Climate Change and Firms: The Carbon Disclosure Project............................ 104 The Manufacturing Sector ................................................................................. 108 The Transportation Sector ..................................................................................111 Warehousing and Storage ...................................................................................114 Trading ................................................................................................................116 Consumption and Customer Service ...................................................................117 The Role of Information Technology ...................................................................119 Discussion and Conclusion ................................................................................ 121 References .......................................................................................................... 124 Chapter 5 Climate Change Adaptation Policies .............................................................. 127 Introduction ........................................................................................................ 127 Key Climate Adaptation Concepts ..................................................................... 129 Climate Adaptation in the Developed World ..................................................... 132 Climate Adaptation in Developing Countries .................................................... 138 Company Climate Adaptation ........................................................................... 143 Discussion and Conclusion ................................................................................ 147 References .......................................................................................................... 148

Chapter 6 Climate Change Mitigation Policies ............................................................... 152 Introduction ........................................................................................................ 152 Drivers of Global Emissions’ Increase .............................................................. 153 Stabilization of Greenhouse Gas Concentrations .............................................. 156 Instruments of Mitigation................................................................................... 159 The Kyoto Protocol ....................................................................................... 159 Carbon Trading............................................................................................. 163 The Clean Development Mechanism ............................................................ 167 Joint Implementation .................................................................................... 168 Technology Policies ........................................................................................... 169 Shifting to New or Improved Technologies ................................................... 169 Technological Options .................................................................................. 171 Power Generation Technologies ................................................................... 173 Technological Developments in Other Areas ................................................ 175 The Case of Biofuels ..................................................................................... 178 Change of Preferences and Behavior................................................................. 180 Discussion and Conclusion ................................................................................ 182 References .......................................................................................................... 185 Chapter 7 Business Responses to Climate Change ......................................................... 190 Introduction ........................................................................................................ 190 The Carbon Disclosure Project.......................................................................... 192 A Boardroom Agenda .................................................................................... 192 The Carbon Disclosure Project Methodology .............................................. 194 The CDP6 Findings ...................................................................................... 197 The CERES Report............................................................................................. 209 The 100 Companies’ Profiles ....................................................................... 209 The Report Findings ......................................................................................211 EPA Climate Leaders ......................................................................................... 217 Other Greenhouse Gas Programs and Company Examples .............................. 218 Sectors Moving Ahead and New Opportunities ................................................. 220 Examples of Sectors Moving Ahead .............................................................. 220 New Opportunities ........................................................................................ 224 Sectors Lagging Behind ..................................................................................... 225 Company Examples............................................................................................ 227 The Case of Small and Medium Enterprises ...................................................... 231 Discussion and Conclusion ................................................................................ 234 References .......................................................................................................... 238

Chapter 8 Coping with Risk and Uncertainty ................................................................. 241 Introduction ........................................................................................................ 241 Handling Uncertainty and Risk ......................................................................... 248 Decision Framework Approaches to Uncertainty and Risk ............................... 252 The UNEP Framework.................................................................................. 253 The UK Climate Impacts Programme Framework ....................................... 254 The Australian Greenhouse Office Framework ............................................ 256 The Ministry for Environment of New Zealand Framework ......................... 257 Uncertainty, Risk, and Insurance ....................................................................... 258 Discussion and Conclusion ................................................................................ 263 References .......................................................................................................... 266 Chapter 9 Frameworks of Policy Making Under Climate Change ............................... 271 Introduction ........................................................................................................ 271 The UNEP Framework....................................................................................... 273 Scope and Structure ...................................................................................... 273 Generic Issues ............................................................................................... 274 Socio-Economic Scenarios............................................................................ 275 Climate Change Scenarios............................................................................ 277 Integration..................................................................................................... 278 Adaptation to Climate Change: Theory and Assessment .............................. 280 Sectoral Chapters.......................................................................................... 283 The UK Climate Impacts Programme Framework ............................................ 283 Scope and Structure ...................................................................................... 283 The Eight Stages for Decision Making ......................................................... 284 Tools and Techniques .................................................................................... 288 The Australian Greenhouse Office Framework ................................................. 289 Scope and Structure ..................................................................................... 289 Conducting an Initial Assessment ................................................................. 291 The Generic Principles ................................................................................. 294 Other Considerations .................................................................................... 296 The New Zealand Climate Change Office Framework ...................................... 298 Scope and Structure ...................................................................................... 298 How to Assess Climate Change .................................................................... 299 How to Identify What Will be Materially Affected ........................................ 300 Developing Scenarios ................................................................................... 301 Risk Assessment ............................................................................................ 303

Integrating Climate Change Risk Assessment into Council Decisions ......... 304 Discussion and Conclusion ................................................................................ 305 References .......................................................................................................... 306 Epilogue ............................................................................................................ 309 Appendix ........................................................................................................... 317 About the Author ............................................................................................. 332 Index .................................................................................................................. 333

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Foreword

This book on Climate Change, Supply Chain Management and Enterprise Adaptation is very timely. Its topic is of critical importance as it deals with issues that are taking centre stage on the agenda of international politics, business, the media and society at large. Climate Change is without doubt the largest threat to our planet. This book is also important to Supply Chain Management since the latter has great potential to mitigate Climate Change effects. The business world needs to adapt to the challenge of climate change and fulfil its corporate social responsibility role. Increasingly, big companies are announcing climate change mitigation actions in their CSR reports. The author provides a detailed explanation of the climate change phenomenon and its impacts on the economy and environment, based on reliable sources like the IPCC Reports and the Stern Review, which he summarizes well. The book contains appropriate and up-to-date background information and literature review. Many short case studies and references can be found throughout the text. Writing this book was a challenging task. It required coming to terms with heterogeneous issues like Climate Change, Supply Chain Management and Enterprise Adaptation. These issues required adequate handling and their interrelationships had to be analyzed. I believe the final result is great in that the issues and trends are given a proper and balanced treatment. The book can therefore be recommended as a high-quality resource to the interested reader. The target audience includes business people, regulatory authorities as well as academia, i.e., researchers, teachers and students from related disciplines like business and environmental management. However, skipping the more technical parts, the general public may also find this book useful and informative. Luk N. Van Wassenhove INSEAD Social Innovation Centre, France

ix Luc Van Wassenhove (Foreword). Professor Van Wassenhove’s research and teaching are concerned with operational excellence, supply chain management, quality, continual improvement and learning. His recent research focus is on closed-loop supply chains (product take-back and end-of-life issues) and on disaster management (humanitarian logistics). He is senior editor for Manufacturing and Service Operations Management and departmental editor for Production and Operations Management. He publishes regularly in Management Science, Production and Operations Management, and many other academic as well as management journals (like Harvard Business Review and California Management Review). He is the author of several award-winning teaching cases and regularly consults for major international corporations. In 2006, Professor Van Wassenhove was the recipient of the EURO Gold Medal for outstanding academic achievement. Before joining INSEAD he was on the faculty at Erasmus University Rotterdam and Katholieke Universiteit Leuven. At INSEAD he holds the Henry Ford Chair of Manufacturing. He is also the academic director of the INSEAD Social Innovation Centre.

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Preface

This book aims to provide one among many diverse responses to a growing sense of urgency fed by climate change and felt at all levels of social life, including international institutions, governments, local authorities, and enterprises. It is set up as an interdisciplinary treatment of issues raised by climate change in connection with its implications for the society, environment and economy, particularly at the company and the supply chain levels, and as an aid to decision makers, being they government officials or business analysts, in their endeavor to meet the economic, social and environmental challenges posed by global warming. It is a synthesis of facts, arguments and research results found in the literature aiming to contribute to the work made in various related fields and disciplines, and shape a better understanding regarding the serious impacts of climate change on enterprises, supply chains and global economics, the implications for management, and the decision making tools and scientific background available for formulating adaptation and/or mitigation policies. Its target audience includes business people, management staff, regulatory authority staff, teachers, researchers and students in Business Management Departments and, finally, any reader interested in the major challenges that society and economy, and actually the whole planet, is faced with. Mounting scientific evidence shows that Earth’s climate is dramatically changing due to the greenhouse emissions caused by human activities, notably by burning fossil fuels for energy production and transport and other uses. The economic growth that followed the Industrial Revolution and the progress of Supply Chain Management that resulted as a necessity from trade explosion and globalization led to global warming. Climate change, a result of global warming, is bringing severe phenomena along with it, causing, among others, extreme weather events, disruption of supply chain operations, dislocation of industrial, agricultural, recreational and commercial activities, increase of living costs and loss of consumer power, desertification of lands, dramatic decrease in biodiversity, sea level rise, and damage to natural habitats

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and ecosystems. Some of these impacts can be observed already, while others will be visible soon. In general, the major impacts of climate change are long-term and, to mitigate its effects, governments have to take (and are actually taking) action right now. However, the long-term nature of the problem must not draw attention away from the fact that different sectors are facing its effects even now. While our world is increasingly becoming uncertain and risky, climate change is proven to be one of the major contributors to current instability. Decision making under climate change has to consider some new risks, albeit accompanied with some conditional opportunities. Supply chains and enterprises, in particular, are increasingly proven to be extensively vulnerable to climate change, posing to management new questions demanding urgent answers. Indeed, climate change has very significant consequences regarding the performance of supply chains and enterprises, many of which are faced with the danger of serious damage, even collapse, for several reasons, including big changes in the structure of markets, the uncertainty of availability of raw materials and components, higher transportation risks and costs, flooding, higher insurance and energy costs, etc. How to accommodate risks, set strategies for future development, and properly address climate change at the company level? In fact, not all companies are faced with the present and prospective risks, depending on what are the types of their assets and where they are located, what they produce, what types and amounts of energy they use, etc. Furthermore, there are leaders in the business world that have developed corporate practices which take climate change risks and opportunities into account and take respective action; they recognize the threats posed and opportunities opened by global warming at board of directors level, they consider them as a near-term priority, they develop relevant strategies, they participate in collective initiatives, and they adopt formal reporting systems that show their preparedness to undertake action, including efficient production processes and supply chain operations and effective use of energy. Climate Leaders, an industry-government partnership in the USA created by the Environmental Protection Agency that works with companies to develop comprehensive climate change strategies, is a characteristic example. In Climate Leaders’ site (http://www.epa.gov/stateply/casestudies/index. html), where several case studies from different industries are reported, it is well supported that environmental friendly company, and more generally, supply chain management may be practical and effective (consider, for example, the relation between improved energy efficiency and reduction of greenhouse gas emissions). Thus, there are several success examples, but what is important is that there are tools and techniques available from operations research and management science, which may be helpful for the above tasks. One of the main tasks of the book will be to outline relevant frameworks of decision analysis.

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The subject to be treated in this book is the implications of global warming for world economy, focusing on supply chain management and enterprise adaptation. The tools and frameworks available for setting strategies and making decisions under uncertainty, as well as the risks implied by climate change, are in the core of the presentation. Starting with a reference to the present situation and trends regarding the enterprise in the beginning of the 21st century, particularly in an “extended enterprise” framework, the social responsibility of enterprises, particularly its contribution to sustainability, are discussed. The basic facts about climate change are outlined, its impacts on the economy and society are presented, and issues of climate change adaptation and mitigation are discussed. Reference is made to stories from the world of enterprises referring to adaptation strategies and practices undertaken to cope with climate change. Frameworks for decision making regarding issues of business design and operation under risk and uncertainty implied by climate change are also presented. The amount of literature covering the different disciplines, from which this book has borrowed wisdom and knowledge, is immense. Therefore, only a very limited subset of sources used have been cited, in particular those that have been considered as most helpful to the author’s task to narrate the thrilling story of the book’s subject. The book is structured as follows: Chapter 1 explores some of the features of today’s enterprise considered to be most important, particularly in view of the main topics of this book. Extended enterprise and corporate social responsibility, two of the most fundamental topics for the business world that emerged during the late 20th century and are shaping a modern enterprise, are discussed. Also, new risks and challenges that arise from the environment of the 21st century enterprise, several of which are directly or indirectly related with climate change, are presented. Chapter 2 introduces the basic facts regarding global warming, based almost exclusively on the latest scientific findings as reported in February 2007 by the Intergovernmental Panel on Climate Change’s Fourth Assessment Report, particularly the Report of the Working Group I on the Physical Science Basis of Climate Change. The facts concern observed changes in atmospheric constituents and in radiative forcing, surface and atmospheric climate changes as well as changes in snow, ice, frozen ground and oceans. In Chapter 3 the issue of the global impacts of climate change is treated. The discussion is based on findings of the Stern Review on the Economics of Climate Change, considered to be the largest, most widely known and discussed and most influential of the reports assessing the impacts of climate change on economy and society so far. A broader reference to the discussions raised by the Review’s proponents and opponents is also made.

xiii

In Chapter 4 the subject of the cause-effect relationships between climate change and supply chain operations is treated. The contribution of specific operations along the supply chain (related to production, transportation, warehousing and storage, trading, consumption and customer service) to global warming is discussed. Correspondingly, it is shown how the environment impacts on such operations. The effect of Technology, particularly Information Technology, on the relation between climate change and supply chain operations is also explored. Key climate adaptation concepts are introduced and the issues of climate adaptation in the developed world as well as in developing countries are discussed in Chapter 5. The subject of the particular position of the company in reference to climate change is subsequently treated and the range of incentives or barriers that could encourage or prevent climate adaptation is explored. The economic framework for climate adaptation is also elaborated. Chapter 6 introduces the issue of climate change mitigation policies. Drivers of global greenhouse gases emissions’ increase are presented and the problem of stabilization of greenhouse gas concentrations is discussed. Instruments of mitigation, including the Kyoto Protocol, carbon trading, the Clean Development Mechanism and Joint Implementation, as well as related technology policies, are presented. Shifting to new or improved technologies, technological options, power generation technologies, technological developments in other areas and the case of biofuels are discussed. The chapter also makes reference to the issue of change of preferences and behaviour. Chapter 7 focuses on business responses to climate change. Some well-known paradigms and collective initiatives will serve as reference of where the business world is moving on. Specific reference to the Carbon Disclosure Project, the CERES Report and other important greenhouse gases programs and initiatives is made. Several company examples are presented, together with examples of sectors moving ahead and domains of new opportunities among sectors emerging from climate change. In Chapter 8, approaches to coping with risk and uncertainty in policy making, particularly in a climate change context, are presented. The presentation includes four decision analysis frameworks, namely, the UNEP, the UK Climate Impacts Programme, the Australian Greenhouse Office and the Ministry for the Environment of New Zealand frameworks. Uncertainty and risk are particularly related with the insurance industry, a sector increasingly affected by the impacts of climate change in terms of accelerating trend of liabilities, costs and losses. As relevant developments in all other sectors of the economy are reflected on this sector, it was thought meaningful to make specific reference to the insurance industry.

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Finally, Chapter 9 presents an overview of the above four decision analysis frameworks, which were selected with the major criterion being to serve the main purposes of this book, and more specifically, to be of the widest applicability, with proper adjustment, not only by government officials but also by decision analysts at company level. Issues such as frameworks’ scope and structure, generic issues, stages for decision-making, tools and techniques are also discussed. Summarizing the above, it is evident that climate change has become the topmost environmental issue, with extremely serious economic and social implications, that societies, governments and businesses are faced with. As the emissions continue to grow despite efforts made and commitments undertaken, their impacts on climate change felt so far, and, even more, the ones anticipated, leave no space for doubt that strong concerted action is urgently needed at all levels, from corporation to city, as well as national and international institutions, to address the challenges and reverse current trends. Companies, in particular, should know how to identify and assess the risks arising from climate change and develop action plans for adaptation covering all aspects of the challenges their supply chains will encounter. Nevertheless, the author shares the conviction of many others that, in view of the unprecedented challenges posed to mankind by current global warming, complicated as they are by other socio-economic problems of the planet, a new world paradigm is urgently needed for a sustainable planet, based on different patterns of social organization, production and consumption, where a different value system is endorsed, which pays due attention to environment and life on Earth. The solution approaches presented in this book promise to accommodate somehow, in the near or distant future, some of the current problems, and avoid a total collapse. However, under the currently prevailing values and models of life, and despite whatever sacrifices may be accepted by human society while these values continue to prevail, it is difficult, if not impossible, to see how Earth may sustain life, full of the treasures of biodiversity and of opportunities for every human being to live in harmony with nature and society. Therefore, to the author’s view, a radical departure from the current predominating values and models of life, towards sustainability, seems to be imperative.

xv

Acknowledgment

Over the years, a very large number of individual scientists, research groups, public national and international organizations and institutions, as well as companies and company associations, have contributed to the building of knowledge and understanding of the facts, ideas and laws governing the issues discussed in this book. From the plethora of scientists and other contributors to this treasure of knowledge and wisdom, for whom a list of acknowledgements would be infeasible to draw up, I gained invaluable insights and understanding and a motivation to write this book on the implications of global warming for the enterprise, supply chains and economy. To all of them I confer my gratitude for their assistance in writing the book. My special acknowledgement goes to the members of the International Panel on Climate Change and all the distinguished scientists who have contributed to its reports. These reports have been among the major sources used in order to document the basic facts about climate change, which is the subject of Chapter II. This holds also for the contributors to the famous Stern Review on the Economics of Climate Change, and its inspirator, Sir Nicolas Stern, whose report has been extensively used in this book in order to document particular impacts of climate change on the economy and society, which are treated in several parts of the book. These extremely valuable documents, fundamental for the knowledge we have about climate change and its impacts on society and economy, have been given worldwide publicity and are freely accessed on the Internet. In this book, they have been the source of many, sometimes lengthy, quotations used to substantiate diverse facts and arguments elaborated in most chapters. A special note of appreciation and thanks goes also to a number of friends, and ex- or present Ph.D. students of mine, distinguished scientists and close collaborators, who were willing to go through and comment on parts of the book. I would like specifically to mention Prof. Nikos I. Karacapilidis for his invaluable advice. Mr. Thomas Dasaklis, M.Sc., Ph.D. student, has provided me with his valuable support

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for preparing the illustrations and made helpful comments on parts of the manuscript. Dr. Nikos P. Rachaniotis, Dr. Giannis T. Tsoulfas, Dr. Theodor G. Voutsinas, and Mr. Evangelos C. Petrou, M.Sc., Ph.D. student, have reviewed parts of the manuscript and provided me with helpful suggestions. My thanks go to all of them and also to all other friends of mine who have encouraged me in this endeavor. The assistance of the reviewers, who provided me with valuable feedback and suggestions is also acknowledged. Finally, I would like to express my appreciation to the publisher, IGI Global, for its confidence in the project and my work, and for bringing this body of knowledge to a worldwide audience. My special thanks go to Mrs. Julia Mosemann for her valuable assistance throughout the development process of the book, and Mr. Jan Travers, Vice President of Editorial, for the cooperation we had during the set-up of the project. Costas P. Pappis University of Piraeus, Greece

The Enterprise in the 21st Century 1

Chapter 1

The Enterprise in the 21st Century

INTRODUCTION Climate change has emerged lately as one of the main issues of concern, may be the most important, in economy and society. This was not so, even just a few years ago. Climate change used to be considered, even until quite recently, as something not much more than mere scientific hypothesis. But the situation has radically changed. The planet is now almost universally recognized as being in a state of emergency because of global warming and its impacts on the environment, economy and human societies. Enterprises are increasingly faced with the climate change challenge and with having to take measures to adapt. Countries and the whole international community are taking urgent measures to mitigate the causes of climate change and hopefully, in a rather distant future, reverse the catastrophic trend. DOI: 10.4018/978-1-61692-800-1.ch001 Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

2 The Enterprise in the 21st Century

Climate change is of anthropogenic origin. It is caused by global warming, which is in turn the result of particular human activities, namely, burning fossil fuels and change of land use, which followed the Industrial Revolution of the mid18th century. These activities are producing excessive amounts of CO2 and other gases, the so-called greenhouse gases (GHGs), which absorb part of the thermal radiation emitted by the land and ocean and reradiate it back to Earth (the so-called Greenhouse Effect). The result is global warming which has tremendous impacts on Earth’s climate. While global warming basic facts will be summarized in the next chapter, a brief account of the current international situation regarding GHG emissions in different countries, particularly the most pollutant ones, may help put the discussion of this chapter into perspective. Emissions are produced in every inhabited part on Earth, but some countries, notably the industrialized ones as well some of the emerging economies, above all China, have a disproportionate share in the total production of GHGs. More specifically, the total and the per capita emissions of the top ten global CO2 emitters for the year 2006 appear in Figure 1 (EIA, 2008a). It can be seen that China and the U.S., with a yearly 6,018 and 5,903 million metric tons of CO2, respectively, are by far the main contributors of GHGs in terms of total emissions. China, with one-fifth of annual global CO2 emissions, has become the world’s leading source of GHGs, especially CO2, the primary heat-trapping gas, and its emissions are growing rapidly. However, in terms of per capita emissions, while Chinese citizens produce on average 4.6 metric tons of CO2 yearly, approximately equal with the world average, U.S. citizens contribute annually with an amount of 19.8 metric tons of CO2. In the case of China, its single largest source of GHG emissions is the burning of fossil fuels (coal, oil and natural gas) for electricity, heat and transport (EIA, 2008b). Coal is by far China’s most important fossil fuel, and some 80% of its total CO2 emissions from energy sources are related to the use of coal. The other major sources of China’s GHG emissions are agriculture (roughly 15%), industrial processes (9%), and waste (2%). An international comparison of GHG emissions by sector in 2005 appears in Figure 2 (Seligsohn et al., 2009a), where it is shown that nearly three quarters of China’s GHG emissions result from the combustion of fossil fuels for energy. Apparently, a different Chinese energy policy would have a profound impact on China’s contribution to global warming. China’s energy mix is unusually tilted toward industrial uses, and thus improvements in the industrial sector have large overall impacts (Seligsohn et al., 2009b). Figure 3, shows energy consumption by sector in 2007 in China, India, Japan, Russia, EU-27, and the United States. In the case of the second major GHG polluter, the U.S., the country’s energy intensity by industry is depicted in Figure 4 (Seligsohn et al., 2009c). It is shown Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


there that energy expenditures per gross value added are highest in the case of the primary aluminum production followed by lime manufacturing, cement manufacturing, pulp mills, iron and steel mills and ferroalloy manufacturing. As pointed out by the World Resources Institute (http://earthtrendsdelivered.org/us_energy_intensity_by_industry), American manufacturers fear that the imbalances created by aggressive climate policy in the United States could contribute significantly to the pushing of jobs out of the country and relocation of industry to countries with lower standards and production costs. For most U.S. industries, these fears are overstated and limited to industries where energy and fossil fuels are a large portion of their cost structures and where those industries participate in global markets. At the enterprise level, the new reality imposed by global warming is shaping new trends and priorities. It is interesting to note, however, that, apart from this new reality, during the same period, the business world has been met with some other major challenges, notably globalization and, very recently, financial crisis. Thus, while modern enterprises have to cope with a new global threat (and some opportunities as well), namely climate change, at the same time major developments made it necessary for them, among other changes, to re-shape their activities and organization and go global. The enterprise of the 21st century is not the same as it has been until even two decades ago. Enterprises are strategically motivated and organized taking into account challenges, in the form of opportunities and threats, produced internally or externally by factors that an enterprise does not normally control. To answer the question how today’s enterprise should re-shape its strategies in view of the opportunities and threats created by its environment is equivalent to answering the question which Figure 1. Per Capita Emissions of Top Ten Global CO2 Emitters in 2006. (Source: EIA, 2008)

Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


is their new environment and their new opportunities and threats. These are traditionally considered to stem from changes in the political, economic, social and technological environment, the four components of the well known PEST analysis (from the initials of the macro-environmental factors used in the environmental scanning component of strategic management). Natural environment is considered to be inherent in the quadruple. If not, then natural environment should be added as a fifth component, at least as important as the other four (note that some analysts added Legal and rearranged the mnemonic to SLEPT, while inserting Environmental factors expanded it to PESTEL or PESTLE, which is popular in the UK. The model has recently been further extended to STEEPLE and STEEPLED, adding education and demographic factors (http://en.wikipedia.org/wiki/PEST_analysis). This chapter focuses on exploring some of the important features of today’s enterprise environment, particularly those which are connected with the main topics of this book: climate change and its impacts on economy, supply chains and enterprises. More specifically, two of the most fundamental topics that emerged during the late 20th century will be discussed: Extended Enterprise and Corporate Social Responsibility (CSR). These two issues lie in the core of any approach that has to do with shaping a modern enterprise. While they are described rather vaguely and, sometimes, raise controversy as to what their essential nature and motives are (particularly for the latter), extended enterprise and CSR represent two of the Figure 2. International comparison of GHG emissions by sector in 2005. (Source: Seligsohn et al., 2009a)



most important distinctive features of businesses inherited by the previous century. Of course, this century, particularly its second half, witnessed some other major developments that also marked business’s environment, notably the information revolution, the advances in communication technology, the proliferation of multinational enterprises, globalization and trade explosion, and the wide adoption of the supply chain model in business. While the discussion of these changes goes beyond the scope of this book, extended enterprise and CSR are worthy discussing for one exceptional reason, namely, that they may be the features that, more than all others, are closely connected with the book’s central issue, climate change and its effects on the world economy, enterprises and supply chains. Notably, extended enterprise goes along particularly with globalization and trade explosion, whose extensive impact on climate change will become obvious in the sequel. CSR, on the other hand, is closely connected, among other issues, with the core subject of the sustainability movement, which is (and will be for many years to come) climate change.

Figure 3. Energy consumption by sector in 2007 in China, India, Japan, Russia, EU-27, and the United States. (Source: Seligsohn et al., 2009b)



This chapter will be concluded with a presentation of evidence regarding new risks and challenges that arise from the environment of the 21st century enterprise. Some of these are directly or indirectly related with climate change. These, together with the features mentioned above, may be regarded as forming the enterprise’s background for the new century.

THE EXTENDED ENTERPRISE During most part of the 20th century, up to the 80’s, enterprises, particularly the large ones, used to be organized based on self-reliance. Services such as procurement, transportation, warehousing, distribution etc were self-provided, along with the main productive activities of the enterprise. According to this model, the company consisted of an “internal” environment made up of its own resources and operations, as opposed to its “external” environment, made up of third parties (e.g. financial institutions, business partners, suppliers, customers), with whom the company operated transactions The external environment included also some other important parties, e.g. governments, NGOs etc. The boundaries between the “internal” and the “external” environment were clear cut. The industrial developments during the 1980’s and 1990’s have changed the market conditions for industrial activities. The firms are blurring their traditional boundaries and entering into close collaboration with other firms and parties (Szegheo & Andersen, 2001). Due to developments, such as company specialization on particular

Figure 4. U.S. Energy intensity by industry. (Source: Seligsohn et al., 2009c)



products or services, process standardization, quality management, the advances in information and communication technology and globalization of trade, the model prevailing so far is being increasingly abandoned. Today’s enterprises increasingly adopt the so-called “extended enterprise” model of the late 20th century based on the interconnection of enterprises. A formal definition of extended enterprise given by the Business Dictionary (http://www.businessdictionary.com) describes it as a “wider organization representing all associated entities (customers, employees, suppliers, distributors, etc) who directly or indirectly, formally or informally, collaborate in the design, development, production, and delivery of a product to the end user”. Some, but not all, of these entities are links in a supply chain starting with suppliers and going through production units and distributors up to the final consumers. From an extended enterprise’s perspective, supply chains should be viewed in their “closed loop” form, that is, activities concerning return and reuse of used products and materials should be considered as links in the supply chain consisting of a forward (from supplies through production to the end user) and a reverse (from the end user back to producers or suppliers) branch. According to the extended enterprise model, the enterprise is generally organized as part of a network of interconnected entities (normally other companies and organizations, including end customers). In this network, each entity, whether it operates independently or cooperatively, coordinates its activities with the rest of the network based on full information. It views itself as an organizational entity that extends beyond its location and the boundaries set by its articles of association, being part of a broader organization, which consists of producers that are suppliers to other producers providing products or services. Such products and services may extend from equipment, raw materials, parts, components and other supplies, to recruitment of personnel, advertising, packaging, transporting, warehousing, distributing, wholesaling, retailing, public relations etc. The community of participants involved in the network is thus able to provide final products or services that satisfy end customers in terms of quantity, quality and on-time delivery. This is made possible by developing operations that span company boundaries and a communication network that allows, among others, knowledge of products or services of suppliers as soon as they are available, suppliers’ stocks in real-time, exact customer order status etc. The members of the extended enterprise may be inter-connected according to different types and degrees of connection. For example, a connection may be established by contract, as in the case of partnerships or trade agreements, e.g. outsourcing. Other connections may be looser, as in the case of open market exchange. In this environment, outsourcing is common practice, having replaced the previous practice of procuring in-house most or all of the services and functions required



for the marketing of the company’s products or services. Outsourcing of particular services and functions allows the enterprise to concentrate its resources and limit its activities where it is most competent. A quite functional approach to the extended enterprise model is the one considering the extension of the enterprise in terms of stakeholders, i.e. people (individuals, teams, associations) who have key-roles in, or concerns about, the enterprise. The stakeholders of the extended enterprise may include groups of people such as the ones included in Table 1 (Schekkerman, 2004): Modelling the extended enterprise is an important issue. In (Szegheo & Andersen, 2001), different enterprise modelling approaches, such as process modelling (ARIS), active knowledge modelling, object-oriented and agent based modelling, are compared in order to explore whether these approaches are capable of modelling the extended enterprise, i.e. whether they have the capabilities to model a network of enterprises and not only one individual enterprise. The conclusion is that, since each modelling technique was developed to satisfy some particular needs, the model builder and the user of the model can benefit most from the chosen model if the right tool has been chosen for their purpose. Each tool has its application area where it can be used to its best advantage. Thus, before choosing the modelling approach, the model builder or the modelling team has to define precisely the purpose of the model. The extended enterprise architecture, i.e. the model according to which all of the different elements go to make up the extended enterprise and are inter-related, may refer to issues such as business and technology strategy alignment, parties’ involvement, executive management involvement, etc (Schekkerman, 2006). An extended enterprise may be developed at different “levels of maturity”, from the level of no extended enterprise architecture up to the optimization level (extended enterprise fully developed). Thus, for example, in the case of the highest maturity model, as far as business and technology strategy alignment is concerned, business/ technology cost/benefits validation metrics for end-to-end value chain examination

Table 1. Stakeholders of the extended enterprise. (Source: Schekkerman, 2004) Management

Shareholders

Government

Senior executives

Alliance partners

Trades Associations

Co-workers

Suppliers

The press

Employee groups

Lenders

Interest groups

Customers

Analysts

The public

Prospective customers

Future recruits

The community



are developed. Regarding parties’ involvement, for the same maturity model, a measurement structure is in place to manage the extended enterprise environment, etc. Finally, it should be noticed that environmental aspects, including climate change, and relevant attitudes and practices adopted by the community of participants (or stakeholders) in the extended enterprise, are important issues. Generally, participants are self-motivated to pay proper attention to those aspects. On the other hand, government regulation sets standards and puts specific limits to their activities that they have to respect. Abiding to relevant rules and practices may not be disregarded by prospective participants in the community of an extended enterprise.

CORPORATE SOCIAL RESPONSIBILITY The term “Corporate Social Responsibility” came into common use in the early 1970s. Various definitions have been proposed for this term. Most approaches converge to some fundamental concepts, although some differences between the Continental Europe and the Anglo-Saxons, and even within Europe, have been identified. In the European Commission’s Green Paper under the title “Promoting a European framework for Corporate Social Responsibility” CSR has been defined as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (European Commission, 2001, p. 6). The CSR Network (http://www.csrnetwork.com/csr.asp) gives the following definition of CSR: “CSR is about how businesses align their values and behavior with the expectations and needs of stakeholders - not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR describes a company’s commitment to be accountable to its stakeholders”. In this definition, stakeholders are explicitly referred to. According to the above Network, CSR demands that businesses manage the economic, social and environmental impacts of their operations to maximize the benefits and minimize the downsides. Among the key issues included are governance, environmental management, stakeholder engagement, labor standards, employee and community relations, social equity, responsible sourcing and human rights. Notably, the Network views CSR as a company’s means not only to fulfill a duty to society, but also to bring competitive advantage: companies using an effective CSR program can: • • •

improve access to capital sharpen decision-making and reduce risk enhance brand image



• • •

uncover previously hidden commercial opportunities, including new markets reduce costs attract, retain and motivate employees.

Ideally, a CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure their adherence to law, ethical standards and international norms. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit (a phrase capturing an expanded spectrum of values for measuring organizational success, including economic, ecological and social criteria, which was coined by John Elkington in 1994 that was later expanded and articulated in his book “Cannibals with Forks: the Triple Bottom Line of 21st Century Business”). Τhis line is equivalent to the sustainability triple bottom line: Society- EnvironmentEconomy (Figure 5). Sustainable practices (at the intersections) allow for satisfactory outcomes for humans and the environment, while fulfilling the social and economic needs of current and future generations (Curran, 2009, p. 4). CSR is rooted, among others, in the business ethics movement that developed during the 1980s and 1990s, both within major corporations and within academia. One of the early collective movements towards establishing CSR practices was the foundation in 1995 by senior European business leaders of CSR Europe, a leading European business network for CSR, working across Europe and globally, with around 70 multinational corporations and 25 national partner organizations as members. The organization was founded in response to an appeal by the (then) European Commission President Jacques Delors and is a platform for “connecting companies to share best practice on CSR, innovating new projects between business and stakeholders and shaping the modern day business and political agenda on sustainability and competitiveness”. In the organization’s invitation to enterprises across Europe to join the initiative (CSR Europe, 2009, p. 2), the goals set are the following: 1. 2. 3. 4. 5.

Innovation and entrepreneurship Skills and competence building Equal opportunities and diversity Health and safety Environmental protection. To achieve these goals the following strategies are adopted:

1. 2.

Corporate responsibility in the mainstream of business Stakeholder engagement



3. 4. 5.

Leadership and governance Communication and transparency Business-to-business co-operation and alliances.

A similar appeal, made by the European Council in March 2000 in Lisbon, appeared in a communication addressed to companies’ sense of social responsibility regarding best practices for lifelong learning, work organization, equal opportunities, social inclusion and sustainable development. In the next year, the Green Paper of the European Commission under the title “Promoting a European framework for Corporate Social Responsibility” mentioned above was published, focusing mainly on companies’ responsibilities in the social field. The aims of this document were, firstly, to launch a debate about the concept of CSR and, secondly, to identify how to build a partnership for the development of a European framework for its promotion. In the Green Paper it was noted that “by stating their social responsibility and voluntarily taking on commitments which go beyond common regulatory and conventional requirements, which they would have to respect in any case, companies endeavour to raise the standards of social development, environmental protection and respect of fundamental rights and embrace an open governance, reconciling interests of various stakeholders in an overall approach of quality and sustainability” (European Commission, 2001, p. 3). The term “stakeholders” used in the above note, meaning those impacted by an organization’s activities beyond shareholders, is essential for the CSR movement. It is interesting to note that this term appears also in relation to the extended enterprise concept (see above). Figure 5. The sustainability triple bottom line. (Source: Curran, 2009)



A follow-up to the Green Paper was presented in the next year by the European Commission. In a communication referring to CSR as “a business contribution to Sustainable Development” (European Commission, 2002), an EU strategy to promote CSR is formulated by the Commission. The communication noted that companies are increasingly aware that responsible behavior leads to sustainable business success and that CSR is also about managing change at company level in a socially responsible manner. It made again use of the term “stakeholders”, whose requirements and needs should be set by the company into a balance, which is acceptable to all parties. If companies succeed in managing change in a socially responsible manner, this will have a positive impact at the macro-economic level. CSR can therefore make a contribution to achieving the strategic goal adopted by the Lisbon Summit of March 2000, according to which, the European Union should become by 2010 “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion” (European Commission, 2002, p. 3). CSR can also make a contribution to the European Strategy for Sustainable Development. In the above communication, a large consensus on CSR’s main features was acknowledged, despite the wide spectrum of approaches. The main features include the following (European Commission, 2002, p. 5): • •

•

CSR is behavior by businesses over and above legal requirements, voluntarily adopted because businesses deem it to be in their long-term interest; CSR is intrinsically linked to the concept of sustainable development: businesses need to integrate the economic, social and environmental impact in their operations; CSR is not an optional “add-on” to business core activities - but about the way in which businesses are managed.

The critical importance of CSR for the EU is re-confirmed in a more recent communication of the European Commission to the European Parliament, the Council and the European Economic and Social Committee under the title “Implementing the partnership for growth and jobs: making Europe a pole of excellence on Corporate Social Responsibility” (European Commission, 2006). In this communication the Commission expresses its wish to give greater political visibility to CSR, to acknowledge what European enterprises already do in this field and to encourage them to do more. The Commission notes that “CSR has become an increasingly important concept both globally and within the EU, and is part of the debate about globalization, competitiveness and sustainability. In Europe, the promotion of CSR reflects the need to defend common values and increase the sense of solidarity and cohesion” (European Commission, 2006, p. 2). Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


With the communication the Commission announced its backing to the launching of the European Alliance for CSR, described in the document attached to the communication. The Alliance is a political umbrella for new or existing CSR initiatives by large companies, SMEs and their stakeholders. The Alliance has an open nature and European enterprises of all sizes are invited to voluntarily express their support. In the document attached to the communication, the political significance of CSR for the EU is underlined: “CSR matters because it mirrors the core values of the society in which we wish to live” (European Commission, 2006, p. 10). While Continental Europe has been on the forefront of the CSR movement from the very beginning, similar initiatives have been developed elsewhere in the world. For example, the Government of Canada has issued a valuable tool that may guide businesses to assess the effects of business activities on others, develop and implement a CSR strategy and commitments, and measure, evaluate and report on performance and engage with stakeholders (Government of Canada, 2009). The Guide sets out a six-stage “plan, do, check and improve” implementation framework for a CSR approach and is revised periodically. Several websites on CSR and sustainable Development are mentioned as well as CSR organizations, both Canadian and international. Among the key international CSR instruments is United Nations Global Compact or Principles for Responsible Investment (UN PRI), which is also referenced in the Government of Canada’s Guide. Launched in July 2000, the UN Global Compact is both a policy platform and a practical framework for companies that are committed to sustainability and responsible business practices. It seeks to align business operations and strategies everywhere with the following ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption (UN Global Compact, 2008, p. 6): •

•

Human rights ◦ Principle 1. Businesses should support and respect the protection of internationally proclaimed human rights; and ◦ Principle 2. Make sure that they are not complicit in human rights abuses. Labor ◦ Principle 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; ◦ Principle 4. The elimination of all forms of forced and compulsory labor; ◦ Principle 5. The effective abolition of child labor; and ◦ Principle 6. The elimination of discrimination in respect of employment and occupation.



•

•

Environment ◦ Principle 7. Businesses are asked to support a precautionary approach to ◦ environmental challenges; ◦ Principle 8. Undertake initiatives to promote greater environmental responsibility; and ◦ Principle 9. Encourage the development and diffusion of environmentally friend technologies. Anti-corruption ◦ Principle 10. Businesses should work against corruption in all its forms, including bextortion and bribery.

Through a wide spectrum of specialized work streams, management tools, resources, and topical programs, the UN Global Compact aims to advance two complementary objectives: a) mainstream the ten principles in business activities around the world and b) catalyze actions in support of broader UN goals, including the Millennium Development Goals. Other CSR instruments also referenced in the Government of Canada’s guide include the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises, the International Labour Organization Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (www.ilo.org/multi), the Millennium Development Goals mentioned above (www. developmentgoals.org), etc. The fact that international organizations such as those mentioned above have been engaged in shaping CSR related guidelines and policies shows that CSR has gained global recognition as an emerging approach for Strategic Management. Finally, several non-governmental CSR-related codes and standards, which are also cited in the Government of Canada’s guide, include the AccountAbility AA1000 Series (http://www.accountability21.net), the Social Accountability International standard (SA8000) (http://www.sa8000.org), the Australian standard on compliance programs, the Global Reporting Initiative, the ISO 14001 and ISO 9001 series, etc. Social accounting, auditing and reporting is an important issue for CSR. Among the guidelines developed for this purpose, Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines have gained wide acceptance. GRI fulfills the requirements for a globally shared framework of concepts, consistent language, and metrics, by providing a trusted and credible framework for sustainability reporting that can be used by organizations of any size, sector, or location. The GRI Framework is intended to provide a generally accepted framework for reporting on an organization’s economic, environmental, and social performance. The Framework consists of the Sustainability Reporting Guidelines, the Indicator Protocols, Technical Protocols, and the Sector Supplements. A “Third Generation” (the so-called 3G) of the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


GRI’s Sustainability Reporting Guidelines, launched in October 2006, is available (as the GRI seeks to continually improve the Guidelines, these are evolving built on previous releases). As expected, GRI provides guidelines and metrics also for sustainability and its environmental dimension. This dimension concerns an organization’s impacts on living and non-living natural systems, including ecosystems, land, air, and water. Environmental Indicators cover performance related to inputs (e.g. material, energy, water) and outputs (e.g. emissions, effluents, waste). In addition, they cover performance related to biodiversity, environmental compliance and other relevant information such as environmental expenditure and the impacts of products and services (Global Reporting Initiative, 2006). Apart from GRI, businesses may find guidance elsewhere, including the United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (UN ISAR, 2009) that provides voluntary technical guidance on eco-efficiency indicators, corporate responsibility reporting and corporate governance disclosure. The ISO 14001 environmental management standard, as well as the corresponding European standard EMAS, should also be mentioned for their extensive use in corporate management as far as the environment is concerned. Further to the above, the International Organization for Standardization (ISO) has launched the development of an International Management Standard on CSR. The guidance standard (ISO 26000) is expected to be published in 2010 and will not be a certification standard (http://www.iso.org/sr). The practice of CSR has raised much debate. Proponents underline the various benefits, which are not restricted on ethical grounds alone, that corporations, along with human society and the planet, get by operating with a perspective broader than their short term profit. Note, however, that in general these benefits are difficult to quantify. On the other hand, critics question the motives behind CSR, accusing businesses for corporate hypocrisy and insincerity. They argue, among other things, that CSR is nothing more than a mere marketing “gadget”; that some businesses adopt CSR practices for the commercial benefit they enjoy by raising their reputation with the public or with government; and that CSR is often used in order to distract the public from ethical questions posed by their core operations. They also invoke the nature of business arguing that CSR distracts corporations from their role in the society, which is economic, namely, to create profits. As put by the Nobel prize winner Milton Friedman, who argues that the social responsibility of business is to increase profits, “when I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system,” I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are or would be if they or anyone else took them seriously preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades” (Friedman, 1970). Despite arguments and critiques such as the above, however, CSR in practice is increasingly accepted by modern enterprises arguing that they prefer to act as “citizens of the world” that have to share the planet’s problems and contribute actively to their solution along with ordinary individual citizens than ignore these problems, which are also their problems. Thus today most major corporate websites emphasize companies’ commitment to promoting social values and publish regularly reports on related activities. Such activities include launching community-based development projects, developing robust mechanisms to safeguard human health and safety and avoid human or environmental accidents, building a reputation for integrity and best practice, supporting financially local organizations or communities in developing countries, giving charities and donations to national foundations, sponsoring cultural activities, offering grants to students, establishing educational facilities, etc. By doing so, corporations respond to various motivations, including self-motivation and conforming to employees and other stakeholders’ priorities and expectations, public pressure and regulation. Government regulation is important in providing motivation to companies regarding CSR. An example is Denmark. On December 16, 2008, the Danish parliament adopted a bill making it mandatory for the largest Danish companies, investors and state owned companies to include information on CSR in their annual financial reports (http://www.csrgov.dk/sw51190.asp). The aim is to inspire businesses to take an active position on social responsibility and communicate this. The statutory requirement is part of the Government’s action plan for CSR and is intended to help improve the international competitiveness of Danish trade and industry. Danish businesses are free to choose whether or not they wish to work on CSR. However, there is a statutory requirement from 2009 that large businesses in Denmark must take a position on CSR in their annual reports. Businesses covered by the statutory requirement must report on: 1. 2.

The business’s social responsibility policies, including any standards, guidelines or principles for social responsibility the business employs. How the business translates its social responsibility policies into action, including any systems or procedures used.



3.

The business’s evaluation of what has been achieved through social responsibility initiatives during the financial year, and any expectations it has regarding future initiatives.

If the business has not formulated any social responsibility policies, this must be reported.

WHAT DOES THE 21ST CENTURY BRING FORWARD? As said in the Introduction, enterprises are strategically motivated and organized by challenges that come from their environment. The answer to the question regarding the new features of enterprises in this century may be inferred from the answer to the question regarding the challenges, i.e. new opportunities and threats, coming from their environment, and the corresponding strategies adopted by them. Of course, not all enterprises are affected by their environment in the same way. What is a threat for an enterprise may be an opportunity for another. As an example, climate change, while posing threats to companies in the tourist industry in the south of Europe, at the same time creates opportunities in northern European counties. The same is true in the case of agriculture. Moreover, compliance with a risk may lead to the creation of new business opportunities. Which are the new opportunities and threats that modern enterprises have to consider in building their strategies? A hint to answering this question may be sourced from the insurance industry. Its activities have a direct reference to the activities of all other industries, and trends characterizing this sector reflect, at least some of them (the less sector-specific ones), trends characterizing the whole business world. Insuring is about anticipating uncertainties and risks (and related costs) in doing business. A recent report entitled “Strategic Business Risks 2008 - Insurance” identified a set of strategic threats, i.e. threats in the long run, for the insurance industry. The report was prepared by Ernst & Young, a global leader in assurance, tax, transaction and advisory service, in collaboration with Oxford Analytica, an international consulting firm (Ernst & Young, 2008a). More specifically, a pool of sector experts were asked, among others, to list and rate on a scale 1-10, with 1 having the most impact, the ten threats regarded as the most significant risks and challenges that the insurance industry will face over the next 3 to 5 years, and to provide commentary on why these are important to their industry. Threats are grouped in three categories: (1) macro-threats, i.e. threats that emerge from the general geopolitical and macroeconomic environment, (2) sector threats that emerge from trends or uncertainties that are reshaping the industry and (3) operational threats that have become so intense Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


that may impact the strategic performance of leading companies. Climate change was rated as the top strategic risk of the industry, followed by demographic shifts in core markets (second top risk) and catastrophic events (third top risk). These three top strategic risks are characterized in the report as far-reaching social and environmental trends and they are all “macro-threats”. It is interesting to note that some of the 10 top strategic risks for the insurance industry, other than climate change, identified in the above report are also partly related to it. Thus, number 3 strategic risk, catastrophic events, includes changing weather patterns (which is directly related to climate change), as explicitly stated in the report. Also included in the catastrophic events risk is pandemics, which is aggravated by climate change. Number 5 strategic risk, regulatory intervention, may be also regarded as partly linked with climate change. Indeed, politically driven interventions such as regulation are standard practice for governments pursuing control over business practices that aims at environmental protection and, more specifically, mitigation of climate change. Finally, number 9 and 10 strategic risks identified in the report, namely legal risk and geopolitical or macroeconomic shocks, may be considered to be also partly connected with climate change. Legal risk involves legal uncertainties over liabilities, which are affected by climate change, as in the case of liabilities caused by extreme weather events. On the other hand, geopolitical or macroeconomic shocks may be originated from large scale catastrophes caused by climate change, which may dramatically change the political or economic status of whole regions or countries. The above list, however, has been drastically changed in the latest Ernst & Young report available (Ernst & Young, 2009a), along with the recent dramatic developments, namely, the financial crisis and the global economic downturn. Financial market crisis is now the industry’s top strategic risk. It is followed by model risk (related to the shortcomings of models, such as their inability to incorporate correlations across different risks and operations, and the failure to recognize and to adequately capture the nature of underlying risks) and regulatory intervention. Geopolitical shocks appear now as number 5 among the industry’s top strategic risks, and legal risk appears as number 9. Important risk, but last of all in the list, at number 10, is climate change, forming now a group with catastrophic events. Probably this deterioration of climate change’s importance as a top issue of concern for the insurance industry will be coupled with a temporary shift in the global concern about climate change and its impacts on economy and society, at least as long as the financial crisis continues to shatter the world’s economy. The dramatic shift regarding strategic risks of the insurance industry noticed in the reports of Ernst & Young for the years 2008 and 2009 is identified also in the so called “Insurance Banana Skins survey” reports for the years 2007 and 2009. The surveys were conducted by the Centre for the Study of Financial Innovation (CSFI), Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


a non-profit think-tank, established in 1993 to look at future developments in the international financial field, particularly from the point of view of practitioners. Regulatory overkill, followed by natural catastrophes, management quality and climate change, were identified as the greatest risks facing the insurance industry by the CSFI’s Banana Skins survey (in association with PricewaterhouseCoopers LLP) in the year 2007 (PricewaterhouseCoopers, 2007). This result was based on a survey of 100 insurance industry representatives from 21 countries. However, year 2009’s survey is dominated by investment performance, equities and capital availability related risks. Indeed, these three strategic risks for the insurance industry are now ranking on top of all others in the list of risks, while too much regulation, natural catastrophes and climate change appear at numbers 5, 22 and 28, respectively (Lascelles, 2009). As noted in the report, “the only obvious reason for the sharp decline of what respondents last time described as the hot topic is that green issues have been downgraded by the recession” (Lascelles, 2009, p. 29). However, a come-back seems quite probable by some respondents to the survey, who point out that climate change is a long term issue, and will be very volatile in occurrence and impact. Indeed, some saw it not merely in terms of storms and floods but also in terms of consequences, such as the spread of tropical diseases. One respondent noticed that the combination of rising weather events and increased population concentrations in vulnerable areas would force insurers “up the learning curve” for new construction methods. However, there are still doubts in the industry as to whether climate change is a genuine issue, or merely one “got up” by the green lobby. As noted above, risks and challenges connected with the insurance industry may help identify the general trends characterizing the business world as a whole. Ernst &Young, in collaboration with Oxford Analytica, have conducted a series of studies, the so-called “radars”, concerning strategic risks for the world’s most important sectors. More specifically, reports have been publicized for 12 such sectors: asset management, automotive, banking and capital markets, biotechnology, consumer products, insurance, media and entertainment, oil and gas, pharmaceuticals, real estate, telecommunications and utilities. Sector-specific findings appear in these reports, regarding the strategic risks that each sector is facing. For example, the list of the top ten strategic risks for the automotive industry (Ernst &Young, 2008b) is topped by consolidation, restructuring and poor execution of mergers and acquisitions, followed by emerging markets, and cost controls and cash flow pressures. Note that none of these three top strategic risks belongs to the “macro-risk” category. Instead they belong to the sector or operational risks. The environmental concern is, however, present in the list: Environmental pressures, a typical macro-risk, appear as number 6 among the industry’s top strategic risks. It is noted that the auto industry, not unexpectedly, is under an increasing strain of Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


environmental pressures such as new regulations and consumers “going green”. Last in the list, at number 10, appear compliance risks due to globalization. This sector’s major risk includes divergent safety standards and environmental regulations. Another example is the asset management sector. The list of the top ten strategic risks for this sector is topped by the global financial shocks (Ernst &Young, 2008c). Notably, none of the ten top strategic risks is connected, at least directly, with environmental concerns, including climate change. The same is true for the consumer products sector (Ernst &Young, 2008d). However, although this sector appears to be facing only sector and operational risks, this does not mean that it is not exposed to shifts in the macro environment, as noted in the relevant report. The example of corn being channelled away from the food industry towards the energy industry for the production of biofuels shows that the sector is exposed to environmental and climate concerns, which typically belong to the macro business environment. More generally, strategic risks like product development and innovation, consumer demand shifts, pricing pressures and input price risks (cf. the corn example) and supply chain risks, among others, are all implicitly related with the demand to “go green”, i.e. with the environmental issue, including climate change. In addition to the above studies concerning strategic risks for a set of selected sectors among the world’s most important ones, Ernst &Young, in collaboration with Oxford Analytica, have issued studies concerning global business, based on interviews conducted with more than 70 analysts from around the world and from over 20 disciplines that shape the business environment. The aim of these interviews was to identify the emerging trends and uncertainties that will impact on businesses over the next five years. Thus, in a report released in 2008 (Ernst &Young, 2008e), the top 10 strategic risks for global organizations identified are the following: • • • • • • • • • •

Regulatory and compliance risk Global financial shocks Aging consumers and workforce The inability to capitalize on emerging markets Industry consolidation/transition Energy shocks Execution of strategic transactions Cost inflation Radical greening Consumer demand shifts.

Some of these top strategic risks are directly or indirectly related to the environment, including climate change. Thus, radical greening is directly applied to the increasing environmental concerns, which, as pointed out in the report, could be the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


result of a wide range of pressures, from the voluntary world of CSR to hard regulatory and economic necessity. Two more top strategic risks are directly or indirectly related to the environment, including climate change: regulatory and compliance risk and energy shocks. As it is noted in the above report, the climate change debate has made the environment the biggest single issue in the public’s mind and the world is moving closer to zero tolerance for environmental accidents. It is argued that “the issue of climate change extends beyond just managing regulatory risk. Climate change and the regulatory and consumer response must be seen as a fundamental strategic challenge. We can expect a future of carbon labelling on products, carbon trading world-wide, and tight regulation and heavy taxes on carbon. Companies must make a fundamental decision about where they want to be in the new carbon economy”. The report concludes by noting that “change is constant in the market, so risks will change over time; so do our perceptions. If we had done this exercise 10 years ago, it is fair to question whether climate change would have featured so significantly. The climate was already changing, but our awareness of the fact and our perception of its importance was much different”. Change is constant in the market, indeed, and this took only a very short time to re-confirm. The top 10 risks identified in the next year’s Ernst & Young report (Ernst & Young, 2009b) that could have a significant impact on the business world over the next three to five years are the following (2008 rankings in parentheses): 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

The credit crunch (2) Regulation and compliance (1) Deepening recession (New) Radical greening (9) Non-traditional entrants (16) Cost cutting (8) Managing talent (11) Executing alliance and transactions (7) Business model redundancy (New) Reputation risks (22).

Thus, regulation and compliance is displaced from the top spot and comes now second to the credit crunch aftershocks and the deepening global recession, which is identified as the most important business risks for 2009. However, radical greening has now emerged at number 4 (having climbed from number 9), while regulatory and compliance risk (also related to environment) remains in the list, ranking very high (at number 2), and a new comer, reputation risks (well known



from other reports already mentioned as a strategic risk), has emerged in the list as strategic risk number 10.

DISCUSSION AND CONCLUSION Some of the most important features of the modern enterprise’s environment, particularly those that are connected with climate change and its impacts on economy, supply chains and enterprises, have been discussed in this chapter. Undoubtedly, quality and sustainability have been core issues that have marked late 20th century’s business environment. Indeed, the last decades of the past century were marked by spectacular developments that changed drastically this environment. Enterprises had to adapt to these developments by adopting new paradigms based on the above concepts, quality and sustainability, and focusing on processes as value creators. Regarding quality, several definitions and approaches appeared during this period, including the Six Sigma approach (number of defects per million), the ISO 9000 series approach (viewing quality as the degree to which a set of inherent characteristics fulfill requirements), Juran’s definition (“fitness for use”, where fitness is defined by the customer), Tagushi’s definition (“uniformity around a target value”), Drucker’s definition (“quality is what the customer gets out and is willing to pay for”), etc. Correspondingly, several systems, methods and techniques for quality management were developed, including Six Sigma, Kaizen, Quality Circles, ISO 9000 series, QFD, Zero Defect Program, Total Quality Management (TQM), Business Process Re-engineering, etc. Irrespective of the particular system, method or technique applied, the quality movement continues to shape the landscape of management and company practices and is main-stream in the world of business more than ever. On the other hand, the sustainability movement gained great momentum during the same period. Sustainable development, defined by the World Commission on Environment and Development (known as the Brundtland Commission) as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (http://www.worldbank.org/depweb/ english/sd.html), has never stopped being an issue of major concern as it has serious environmental, economic, social and cultural dimensions. Sustainability’s implications affect fields as diverse as science and engineering, environment and ecology, economics and business, sociology and philosophy, and many others. Addressing sustainability requires consideration of resource use (materials and energy), economic and social development, health, environmental stewardship, engineering methods and design, and architecture, as well as an understanding of how people interact and relate in addressing these factors (Rosen, 2009).



More specifically, at supply chains’ level several models for environmental performance analysis, design and operation have been proposed, e.g. (Tsoulfas & Pappis, 2006, 2008), while at company’s level, and as far as climate change is concerned, companies have developed different strategies to deal with climate change over the years, as noted by (Kolk & Pinkse, 2007). Initially these strategies were more political (non-market) in nature. Currently, however, they are also marketoriented. Companies’ political positions have gradually changed since 1995. Instead of opposing climate measures, companies are adopting a more proactive approach or at least a ‘‘wait-and-see’’ attitude, and many have started to take market steps to be prepared to deal with regulation, or to go beyond that, considering risks and opportunities. Some companies apparently rely on the course set by their national governments following the adoption of the Kyoto protocol, and wait until the actual implementation of climate policy is effected before they take action. Others, however, have decided to launch initiatives for emission reduction to anticipate future policy, societal or competitive developments, thus facilitating compliance or the development of green resources and capabilities (Kolk & Pinkse, 2004, 2005). Quality and sustainability may be traced at the core of what have been regarded in this book as the probably most fundamental topics for enterprises that emerged during the late 20th century: extended enterprise and CSR. These two issues may be considered as the two most important distinctive features of businesses inherited by the previous to the new, 21st, century and have been presented in this chapter. It should be noticed that very important issues, notably information and communication technology, globalization and trade explosion, that have marked the last part of the 20th century and will certainly continue to impact on enterprises, have not been discussed. It was felt, however, that this discussion would be much less relevant to the main theme of this book, climate change, and would go beyond its scope, compared with the discussion about extended enterprise and CSR. The new organization model, extended enterprise, according to which enterprises transcend their traditional boundaries to form a web of collaborating enterprises and other entities (e.g. customers), is based on the commitment of the web participants to work closely in order to coordinate order generation, order taking, and order fulfilment. Extended enterprise is the end result of developments that took place particularly during the 1980’s and 1990’s which changed the market conditions, including company specialization, process standardization, quality management, the advances in information and communication technology and globalization of trade. Variations do exist in real life applications of this concept. Fundamental differences also characterize the approaches used in different models that have been developed (e.g. process modelling, object-oriented modelling, and the Multi Agent System). Each of these models satisfies some particular needs and has its own application



area where it can be used to its best advantage (Szegheo & Andersen, 2001). Despite differences either in the way the system is configured or actually realized, the extended enterprise is the dominant organizational paradigm inherited by the 20th century to the enterprises of the modern world. CSR is the second imperative inherited by the previous to the new century. Companies should be managed with the objective to optimize their economic, social and environmental performance in view of the expectations and needs of stakeholders, but also to bring competitive advantage. Therefore central to CSR is the concept of stakeholders, who may be defined broadly as those groups or individuals: (a) that can reasonably be expected to be significantly affected by the organization’s activities, products, and/or services; or (b) whose actions can reasonably be expected to affect the ability of the organization to successfully implement its strategies and achieve its objectives (Global Reporting Initiative, 2006). Companies may engage in CSR activities for different reasons: build customer loyalty and enhance reputation, respond to industry codes of conduct, prevent regulatory or legal sanction, manage risks, meet requirements posed by partners, respond to NGO requests etc. Furthermore, they may align with the current trends in management and act being motivated by their organizational culture. Weber (2008) identifies five main areas of CSR business benefits: 1. 2. 3. 4. 5.

Positive effects on company image and reputation Positive effects on employee motivation, retention, and recruitment Cost savings Revenue increases from higher sales and market share CSR-related risk reduction or management.

In addition, it is pointed out that these benefits, which can influence a company’s competitiveness and economic success, may be monetary as well as non-monetary. Moreover, the benefits of CSR engagement go beyond the boundaries of a single company and involve societies in general. That is why effective CSR vision is inextricable with cooperation among all the stakeholders and partners. Certainly though, the position of companies in the value chain may be determinant with respect to CSR engagement, since ‘close to markets’ companies may be more concerned on such activities compared to ‘business-to-business’ companies (Haddock-Fraser & Fraser, 2007). Environmental, together with economic and social, performance may be monitored though sustainability reporting, that is, the practice of measuring, disclosing, and being accountable for organizational performance while working towards the goal of sustainable development. In a sustainability report, a balanced and reasonable representation of the sustainability performance of the reporting organization is Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


provided, including both positive and negative contributions. Among several others, GRI provides a sustainability report framework, where all reporting components are developed using a global, multi-stakeholder consensus seeking approach. While one may assume that the concepts of extended enterprise and CSR, and related practices, are deeply rooted in business and will continue to shape companies’ organization during the next decades, new challenges and trends may be traced during the first years of the new century. It is impressive how fast the business environment is changing, re-arranging priorities and imposing new requirements that companies have to respect in order to survive. At the same time, challenges change location, where they manifest themselves. They change character, too. And they are changing as time goes by. Reports by sector show the new trends and challenges facing companies in each sector, while hints regarding the most significant strategic risks and challenges for the business world may be inferred from reports referring to the insurance industry. Such macro-threats, i.e. threats that emerge from the general geopolitical and macroeconomic environment, include climate change, which has been recently rated as the top strategic risk of the insurance industry, and also some of the other top strategic risks for this industry that are partly related to climate change, like catastrophic events etc. However, the importance of different strategic challenges that are characteristic of some time period may change drastically in subsequent periods due to extreme events of ecumenical or peripheral significance. This has been proven dramatically during the financial crisis and the economic downturn that hit the globe recently. Thus, in the 2009 report for the insurance industry, financial market crisis emerged as the industry’s top strategic risk while climate change fell at number 10 of the risks list, forming a group with catastrophic events. It may be safely argued, though, that this new image, will be temporary and last only as long as the financial crisis continues. Climate change will continue to be considered by the global community, including enterprises, as a critical challenge for many years to come, as will be shown in the sequel.

REFERENCES Curran, M. A. (2009). Wrapping Our Brains around Sustainability. Sustainability, 1, 5–13..doi:10.3390/su1010005 EIA. (2008a). Per Capita Emissions of Top Ten Global CO2 Emitters in 2006. ChinaFAQs: The Network for Climate and Energy Information. Convened by the World Resources Institute. Retrieved on December 15, 2009, from http://www.chinafaqs.org



EIA. (2008b). Comparing China and U.S. GHG Emissions in 2005. ChinaFAQs: The Network for Climate and Energy Information. Convened by the World Resources Institute. Retrieved on December 15, 2009, from http://www.chinafaqs.org Ernst & Young. (2008a). Strategic Business Risk: Insurance. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www.ey.com/Publication/ vwLUAssets/Industry_Insurance_StrategicBusinessRisk_2008/$FILE/Industry_Insurance_StrategicBusinessRisk_2008.pdf Ernst & Young. (2008b). Strategic Business Risk: Automotive 2008. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www.ey.com/Publication/vwLUAssets/Industry_Automotive_Strategic_Business_Risk_2008/$FILE/ Industry_Automotive_Strategic_Business_Risk_2008.pdf Ernst & Young. (2008c). Strategic Business Risk: Assets Management 2008. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www. ey.com/Publication/vwLUAssets/Industry_AM_SBR/$File/Industry_AM_SBR.pdf Ernst & Young. (2008d). Strategic Business Risk: Consumer products 2008. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www.ey.com/ Publication/vwLUAssets/Industry_CP_Strategic_Business_Risk_2008/$FILE/ StrategicBusinessRisk_CP_March08.pdf Ernst & Young. (2008e). Strategic Business Risk 2008. The 10 top risks for business. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www. ey.com/Publication/vwLUAssets/2009_business_risk_report/$FILE/2009_business_risk_report.pdf Ernst & Young. (2009a). Second annual business risk report – Insurance 2009. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www. ey.com/Publication/vwLUAssets/Second_annual_business_risk_report/$FILE/ Industry_Insurance_Second_annual_business_risk_report_2009.pdf Ernst & Young. (2009b). Global megatrends 2009. In collaboration with Oxford Analytica. Retrieved June 29, 2009, from http://www.ey.com/Publication/vwLUAssets/Global_megatrends_2009/$file/Global_megatrends_2009.pdf Europe, C. S. R. (2009). A European roadmap for businesses - Towards a Sustainable and Competitive Enterprise. Retrieved July 16, 2009, from http://www.csreurope. org/pages/en/roadmap.html European Commission. (2001). Promoting a European framework for Corporate Social Responsibility. COM (2001) 366. Retrieved July 16, 2009, from http://eurlex.europa.eu/LexUriServ/site/en/com/2001/com2001_0366en01.pdf Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


European Commission. (2002). Corporate Social Responsibility: a business contribution to Sustainable Development. COM (2002) 347 final. Retrieved July 16, 2009, from http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri=COM:2002:0347:FIN:EN:pdf European Commission. (2006). Implementing the partnership for growth and jobs: making Europe a pole of excellence on corporate social responsibility. COM (2006) 136 final. Retrieved July 16, 2009, from http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2006:0136:FIN:EN:PDF Friedman, M. (1970). The social responsibility of business is to increase profits. Retrieved July 16, 2009, from http://www.colorado.edu/studentgroups/libertarians/ issues/friedman-soc-resp-business.html Global Compact, U. N. (2008). Corporate Citizenship in the World Economy. Retrieved July 16, 2009, from http://www.unglobalcompact.org/docs/news_events/8.1/ GC_brochure_FINAL.pdf Global Reporting Initiative. (2006). Sustainability Reporting Guidelines. Retrieved July 16, 2009, from http://www.globalreporting.org/NR/rdonlyres/ED9E9B36AB54-4DE1-BFF2-5F735235CA44/0/G3_GuidelinesENU.pdf Government of Canada. (2009). Corporate Social Responsibility – An Implementation Guide for Canadian Business. Retrieved July 16, 2009, from http://www. strategis.ic.gc.ca/csr Haddock-Fraser, J., & Fraser, I. (2007). Assessing Corporate Environmental Reporting Motivations: Differences Between ‘Close-to-Market’ and ‘Business-to-Business’ Companies. Corporate Social Responsibility and Environmental Management, 15, 140–155. doi:10.1002/csr.147 Kolk, A., & Pinkse, J. (2004). Market strategies for climate change. European Management Journal, 22(3), 304–314. doi:10.1016/j.emj.2004.04.011 Kolk, A., & Pinkse, J. (2005). Business responses to climate change: identifying emergent strategies. California Management Review, 47(3), 6–20. Kolk, A., & Pinkse, J. (2007). Towards strategic stakeholder management? Integrating perspectives on sustainability challenges such as corporate responses to climate change. Corporate Governance, 7(4), 370–378. doi:10.1108/14720700710820452 Lascelles, D. (2009). Insurance Banana Skins 2009. The CSFI survey of the risks facing insurers. New York: Centre for the Study of Financial Innovation (in association with PricewaterhouseCoopers LPP). Retrieved June 20, 2009, from http:// sup.kathimerini.gr/xtra/media/files/meletes/klad/asfal110309.pdf Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.


PricewaterhouseCoopers. (2007). Too much regulation’ tops insurance risks. Centre for the Study of Financial Innovation [Press release]. Retrieved June 29, 2009, from http://www.pwc.com/Extweb/pwcpublications.nsf/docid/24EE97F5BC33970D852 572E9006A8021/$File/skins_press_release.pdf Rosen, M. A. (2009). Sustainability: A Crucial Quest for Humanity. Sustainability, 1, 1–4..doi:10.3390/su1010001 Schekkerman, J. (2004). Another View at Extended Enterprise Architecture Viewpoints. Institute for Enterprise Architecture Developments. Retrieved July 10, 2009, from http://www.via-nova-architectura.org/files/LAC2004/Schekkerman.pdf Schekkerman, J. (2006). Extended Enterprise Architecture Maturity Model Support Guide. Institute for Enterprise Architecture Developments. Retrieved July 10, 2009, from http://www.enterprise-architecture.info/Images/E2AF/Extended%20 Enterprise%20Architecture%20Maturity%20Model%20Guide%20v2.pdf Seligsohn, D., Heilmayr, R., Tan, X., & Weischer, L. (2009a). International Comparison of GHG Emissions by Sector in 2005. In China, the United States, and the Climate Change Challenge. Washington, DC: World Resources Institute. Retrieved on December 15, 2009, from http://www.wri.org/publication/china-united-statesclimate-change-challenge Seligsohn, D., Heilmayr, R., Tan, X., & Weischer, L. (2009b). Energy consumption by sector in 2007 in China, India, Japan, Russia, EU-27, and the United States. In China, the United States, and the Climate Change Challenge. Washington, DC: World Resources Institute. Retrieved on December 15, 2009, from http://www.wri. org/publication/china-united-states-climate-change-challenge Seligsohn, D., Heilmayr, R., Tan, X., & Weischer, L. (2009c). U.S. Energy Intensity by Industry. In China, the United States, and the Climate Change Challenge. Washington, DC: World Resources Institute. Retrieved on December 15, 2009, from http://www.wri.org/publication/china-united-states-climate-change-challenge Szegheo, O., & Andersen, B. (2001). Modeling the Extended Enterprise: A Comparison of Different Modeling Approaches. Retrieved July 14, 2009, from http:// www.prestasjonsledelse.net/publikasjoner/Modelling%20the%20extended%20 enterprise-IEMC.pdf Tsoulfas, G. T., & Pappis, C. P. (2006). Environmental principles applicable to supply chains design and operation. Journal of Cleaner Production, 14(18), 1593–1602. doi:10.1016/j.jclepro.2005.05.021



Tsoulfas, G. T., & Pappis, C. P. (2008). A model for supply chains environmental performance analysis and decision making. Journal of Cleaner Production, 16(15), 1647–1657. doi:10.1016/j.jclepro.2008.04.018 UN ISAR. (2009). United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting. Retrieved July 16, 2009, from http://www.unctad.org/Templates/Startpage.asp?intItemID=2531 Weber, M. (2008). The Business Case for Corporate Social Responsibility: A company-level Measurement Approach for CSR. European Management Journal, 26, 247–261. doi:10.1016/j.emj.2008.01.006


30 Global Warming

Chapter 2

Global Warming: Basic Facts

INTRODUCTION As noted in the previous chapter, climate change has emerged in recent years as one of the most critical topics at almost all levels of decision making, both private and public. This constitutes a radical change compared to the common perception only a few years ago. Climate change, a result of global warming, is a reality of universal acceptance, affecting in many ways the life of human societies as well as the environment. Continuing research over the last decades has established concrete knowledge of the basic facts about the results of interactive processes in the Earth system,which determine climate and climate change. It has particularly shown the anthropogenic influences on these processes. There is no doubt that human activities are the critical cause of the changes in the climate that Earth is experiencing since DOI: 10.4018/978-1-61692-800-1.ch002 Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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the Industrial Revolution in the mid-18th century, i.e. since the time that a period of rapid industrial growth with far reaching social and economic consequences begun in Britain and spread to Europe and other countries all over the world. The industrial revolution marked the beginning of a dramatic increase in the use of fossil fuels, which is the main cause of climate change. This chapter, which aims to introduce the basic facts of global warming, is almost exclusively based on the latest UN’s Intergovernmental Panel on Climate Change (IPCC) Report (IPCC, 2007), particularly on Working Group I’s Fourth Assessment Report on the Physical Science Basis of Climate Change (IPCC, 2007a), agreed in February 2007, called the “Report” in the sequel of this chapter. Although the Report, despite its grave conclusions about the future of the Earth’s climate, has been criticized as a rather optimistic treatment of the subject, it has gained widespread acceptance as it is supported by the most recent and reliable scientific evidence available. Indeed, the Report has been based on concrete scientific findings characterized by a certainty equal or greater than 90%, while ignoring less certain but more pessimistic scenarios. The Report, however, has been amended in the IPCC’s synthesis report published in November 2007, which highlights the risk of very large (negative) impacts of the global warming effect on the Earth’s climate. The Report is a detailed account of the latest scientific findings on climate change, and more specifically on the changes, due to global warming, in atmospheric constituents and in radiative forcing (the term is defined in the sequel). It summarizes observations regarding surface and atmospheric climate change, changes in snow, ice and frozen ground and oceanic climate change and sea level. While starting with a historical overview of Climate Change Science, it also covers subjects such as Palaeoclimate, couplings between changes in the Climate System and Biogeochemistry, climate models and their evaluation and global and regional climate projections. Understanding and attributing climate change is also treated in the Report. Additionally, the Report provides a Summary for Policymakers, a Technical Summary and an “Uncertainty Guidance Note”. Several annexes are also included, such as glossary, authors and reviewers annexes. A fundamental contention of the Report is that the cause of climate change is human activities after the Industrial Revolution. The Report points out that, since the IPCC First Assessment Report in 1990, and as climate science and the Earth’s climate have continued to evolve over recent decades, increasing evidence of anthropogenic influences on climate change has been found. Correspondingly, the IPCC has made increasingly more definitive statements in its successive reports about human impacts on climate. Debate has stimulated a wide variety of climate change research. The results of this research have refined but not significantly redirected the main scientific conclusions from the sequence of IPCC assessments.


32 Global Warming

While the above will be analytically presented in this chapter, in order to introduce the subject, a schematic framework representing anthropogenic drivers, impacts of, and responses to climate change, and their linkages is given in Figure 1 (IPCC, 2007, p. 26). The technical terms used throughout this chapter are defined according to the Glossary of the Report, included in its Annex I. Effort has been made in order to restrict the technical terms used to the least possible. It is recommended that the interested reader visit part ar4-wg1-annexes of Working Group I’s Fourth Assessment Report on the Physical Science Basis of Climate Change (IPCC, 2007a).

THE GREENHOUSE EFFECT The Greenhouse Effect, which accounts for climate change, refers to the change in the thermal equilibrium temperature of a planet or moon by the presence of an atmosphere containing gas that absorbs infrared radiation. More specifically, in the case of Earth, it is a physical process, by which a part of the thermal radiation emitted by the land and ocean is absorbed by the atmosphere and is reradiated back to Earth. As it is explained in the Report, the Sun powers Earth’s climate, radiating energy at very short wavelengths, predominantly in the visible or near-visible (e.g. ultraviolet) part of the spectrum. Roughly one-third of the solar energy that reaches the top of Earth’s atmosphere is reflected directly back to space. The remaining two-thirds are absorbed by the surface and, to a lesser extent, by the atmosphere. To balance the absorbed incoming energy, the Earth must, on average, radiate the Figure 1. Schematic framework of anthropogenic climate change drivers, impacts and responses. (Source: IPCC, 2007)


Global Warming 33

same amount of energy back to space. Because the Earth is much colder than the Sun, it radiates at much longer wavelengths, primarily in the infrared part of the spectrum, as shown in Figure 2 (IPCC, 2007b, p. 98). Much of this thermal radiation emitted by the land and ocean is absorbed by the atmosphere, including clouds, and is reradiated back to Earth. This mechanism is fundamentally different from the mechanism of an actual greenhouse, which instead isolates air inside the structure so that heat is not lost by convection and conduction. The reason for using the term “greenhouse” to describe the effect is that glass walls in a greenhouse reduce airflow and increase the temperature of the air inside. Analogously, but through a different physical process, the Earth’s Greenhouse Effect warms the surface of the planet. Without the natural Greenhouse Effect, the average temperature at Earth’s surface would be below the freezing point of water. Thus, Earth’s natural Greenhouse Effect makes life as we know it possible. In the absence of the Greenhouse Effect, the Earth’s average surface temperature of 14 °C would be about -18 °C. However, human activities, primarily the burning of fossil fuels and clearing of forests, have greatly intensified the natural Greenhouse Effect, causing global warming. As pointed out in the Report, the Greenhouse Effect comes from the so-called “greenhouse gases” (GHGs), that is, molecules that are more complex and much less common than the two most abundant gases in the atmosphere, namely nitrogen (comprising 78% of the dry atmosphere) and oxygen (comprising 21%), which exert almost no Greenhouse Effect. Apart from water vapor, GHGs include several gases, such as carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), halocarbons and sulphur hexafluoride (SF6).

Figure 2. An idealized model of the natural Greenhouse Effect. (Source IPCC, 2007a)


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Of all GHGs, water vapor is the most important one. Carbon dioxide is the second-most important GHG, a naturally occurring gas or a by-product of burning fossil fuels from fossil carbon deposits, such as oil, gas and coal, of burning biomass and of land use changes, and of other industrial processes. It is the principal anthropogenic GHG and the reference gas, against which other GHGs are measured. In the humid equatorial regions, where there is so much water vapor in the air that the Greenhouse Effect is very large, adding a small additional amount of CO2 or water vapor has only a small direct impact on downward infrared radiation. However, in the cold and dry polar regions, the effect of a small increase in CO2 or water vapor is much greater. The same is true for the cold, dry upper atmosphere, where a small increase in water vapor has a greater influence on the Greenhouse Effect than the same change in water vapor would have near the surface. Several components of the climate system, notably the oceans and living beings, affect atmospheric concentrations of GHGs. A prime example of this is plants taking CO2 out of the atmosphere and converting it (and water) into carbohydrates via photosynthesis. In the industrial era, human activities have added GHGs to the atmosphere, primarily through the burning of fossil fuels and clearing of forests. Adding more of a GHG, such as CO2, to the atmosphere intensifies the Greenhouse Effect, thus warming Earth’s climate. The amount of warming depends on various feedback mechanisms. For example, as the atmosphere warms due to rising levels of GHGs, its concentration of water vapor increases, further intensifying the Greenhouse Effect. This in turn causes more warming, which causes an additional increase in water vapor, in a self-reinforcing cycle. This water vapor feedback may be strong enough to approximately double the increase in the Greenhouse Effect due to the added CO2 alone. Additional important feedback mechanisms involve clouds. Clouds are effective at absorbing infrared radiation and therefore exert a large Greenhouse Effect, thus warming the Earth. Clouds are also effective at reflecting away incoming solar radiation, thus cooling the Earth. A change in almost any aspect of clouds, such as their type, location, water content, cloud altitude, particle size and shape, or lifetimes, affects the degree, to which clouds warm or cool the Earth. Some changes amplify warming while others diminish it. The Greenhouse Effect is one of several factors which affect the temperature of the Earth. Other positive and negative feedbacks dampen or amplify the Greenhouse Effect.

THE IPCC’S REPORTS Much of the present worldwide awareness of the Greenhouse Effect is due to the reports of IPCC (http://www.ipcc.ch), particularly the Assessment Reports, which Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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influenced decisively the world’s governments directing them towards taking specific adaptation and mitigation actions, i.e. interventions to reduce the sources or enhance the sinks of GHGs, in order to cope with climate change. The IPCC is a scientific intergovernmental body set up in 1988 by the World Meteorological Organization (WMO) and by the United Nations Environment Programme (UNEP). The IPCC was established to provide the decision-makers and others interested in climate change with an objective source of information about climate change. As climate change is a very complex issue, policymakers need such a source of information about its causes, its potential environmental and socio-economic consequences and the adaptation and mitigation options to respond to it. The IPCC does not conduct any research nor does it monitor climate related data or parameters. Its role is to assess on a comprehensive, objective, open and transparent basis the latest scientific, technical and socio-economic literature produced worldwide relevant to the understanding of the risk of human-induced climate change, its observed and projected impacts and options for adaptation and mitigation. Thus the information provided by ICCP with its reports is based on scientific evidence and reflects existing viewpoints within the scientific community. The comprehensiveness of the scientific content is achieved through contributions from experts in all regions of the world and all relevant disciplines including, where appropriately documented, industry literature and traditional practices, and a two-stage review process by experts and governments. Because of its intergovernmental nature, the IPCC is able to provide scientific technical and socio-economic information in a policy-relevant but policy neutral way to decision makers. When governments accept the IPCC reports and approve their Summary for Policymakers, they acknowledge the legitimacy of their scientific content. The IPCC provides at regular intervals its reports, which immediately become standard works of reference, widely used by policymakers, experts and researchers. The findings of the first IPCC Assessment Report of 1990 played a decisive role in leading to the United Nations Framework Convention on Climate Change (UNFCCC), which was adopted on 9 May 1992 in New York and was signed in the Rio de Janeiro Summit in 1992 by more than 150 countries and the European Community. It entered into force in 1994 and its ultimate objective was the stabilization of GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. It contained commitments for all Parties and provided the overall policy framework for addressing the climate change issue. The IPCC Second Assessment Report of 1995 provided key inputs for the negotiations of the Kyoto Protocol in 1997, while the Third Assessment Report of 2001 as well as Special and Methodology Reports provided further information relevant for the development of the UNFCCC and the Kyoto Protocol. The Kyoto Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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Protocol was adopted in Kyoto, Japan, at the Third Session of the Conference of the Parties to the UNFCCC and entered into force on 16 February 2005. It contains legally binding commitments, in addition to those included in the UNFCCC, for most Organization for Economic Co-operation and Development (OECD) countries and many countries with economies in transition. These countries agreed to reduce six anthropogenic GHG emissions, namely carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride by at least 5% below 1990 levels in the commitment period 2008 to 2012. The latest Assessment Report (4th Assessment Report) is “Climate Change 2007”, which is the main referenced source of this chapter, while the process towards the 5th Assessment Report has already begun. The IPCC reports continue to be major sources of information for the negotiations under the UNFCCC.

Changes in Atmospheric Constituents and in Radiative Forcing As said earlier, much of the thermal radiation, which is emitted by the land and ocean and which has its origin in the Sun, is absorbed by the atmosphere, including clouds, and is reradiated back to the Earth. This is actually the “Greenhouse Effect”. In order to understand the mechanism of this effect, a particularly useful concept is that of Radiative Forcing (the term “forcing”, which is used also elsewhere in this chapter, is a technical one meaning the capacity of an agent – like a GHG – to do work or cause physical change). Radiative Forcing (RF) is used for quantitative comparisons of the strength of different human and natural agents in causing climate change. In climate science, RF is (loosely) defined as the change in net irradiance at the tropopause, i.e. the boundary between the troposphere and the stratosphere. Troposphere is the lowest part of the atmosphere, from the Earth’s surface to about 10 km in altitude at mid-latitudes (ranging from 9 km at high latitudes to 16 km in the tropics on average), where clouds and weather phenomena occur. In the troposphere, temperatures generally decrease with height. Stratosphere is the highly stratified region of the atmosphere above the troposphere extending from about 10 km (ranging from 9 km at high latitudes to 16 km in the tropics on average) to about 50 km altitude. “Net irradiance” is the difference between the incoming and the outgoing radiation energy in a given climate system and is measured in Watts per square meter. The change is the measured difference relative to the year 1750, the defined starting point of the industrial era. A positive forcing (more incoming than outgoing energy) tends to warm the system, while a negative forcing (more outgoing than incoming energy) tends to cool it. Possible sources of RF are changes in insolation, that is, in the amount of solar radiation reaching the Earth, or the effects of variations in the amount of radiatively active gases and aerosols present. For the IPCC, unless otherwise noted, RF refers to a global and annual average value. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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In Figure 3, the main Earth’s energy agents are shown and an estimate is given of the Earth’s annual and global mean energy balance (IPCC, 2007b, p. 94). Estimates of RF are accompanied by an uncertainty range (value uncertainty) and a level of scientific understanding (structural uncertainty). The value uncertainties represent the 5 to 95% (90%) confidence range, and are based on available published studies. Thus, each RF estimate is given by a number, positive or negative, corresponding to the best estimate, followed by two numbers in square brackets that determine the 90% confidence range, which may be symmetric or asymmetric about the best estimate. The level of scientific understanding is a subjective measure of structural uncertainty and represents how well understood the underlying processes are. Climate change agents with a high level of scientific understanding are expected to have an RF that falls within their respective uncertainty ranges. According to the Report, particularly chapter 2 of the Working Group I Report on the Physical Science Basis of Climate Change (Forster et al., 2007) focusing on the changes in atmospheric constituents and in RF, the combined anthropogenic RF is estimated to be +1.6 [–1.0, +0.8] W per m2 (in this case the confidence range is asymmetric about a best estimate of +1.6). Anthropogenic RF indicates that, since 1750, it is extremely likely that humans have exerted a substantial warming influence on climate (‘extremely likely’ represents a 95% confidence level or higher, whereas ‘likely’ represents a 66% confidence level or higher). This RF estimate is likely to be at least five times greater than that due to solar irradiance changes. For the period 1950 to 2005, it is exceptionally unlikely that the combined natural RF (solar irradiance plus volcanic aerosol) has had a warming influence comparable to that of the combined anthropogenic RF. Increasing concentrations of the long-lived GHGs have led to a combined RF of +2.63 [±0.26] W per m2. Their RF has a high level of scientific understanding. Figure 3. Estimate of the Earth’s annual and global mean energy balance. (Source: IPCC, 2007b)


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The 9% increase in this RF since IPCC’s Third Assessment Report is the result of concentration changes since 1998. Relevant to RF is the term “Global Warming Potential” (GWP), which, according to the Report, is an index, based upon radiative properties of well-mixed GHGs, measuring the RF of a unit mass of a given well-mixed GHGs in the present-day atmosphere integrated over a chosen time horizon, relative to that of carbon dioxide. The GWP represents the combined effect of the differing times that these gases remain in the atmosphere, and their relative effectiveness in absorbing outgoing thermal infrared radiation. The Kyoto Protocol is based on GWPs from pulse emissions over a 100-year time frame. Carbon dioxide, which, as said earlier, is the second-most important GHG, after vapor, has a GWP of 1. The main findings of the Report on the changes in atmospheric constituents and in RF are summarized as follows:

CO2 Its global mean concentration in 2005 was 379 ppm (parts per million), leading to an RF of +1.66 [±0.17] W per m2. Past emissions of fossil fuels and cement production have likely contributed about three-quarters of the current RF. The remainder has been caused by land use changes. The growth rate of CO2 in the atmosphere during the 1995 to 2005 decade was 1.9 ppm per year and the CO2 RF increased by 20%. This, according to the Report, is the largest change observed or inferred for any decade in at least the last 200 years. From 1999 to 2005, global emissions from fossil fuel and cement production increased at a rate of roughly 3% per year.

CH4 Its global mean concentration in 2005 was 1,774 ppb (parts per billion), contributing an RF of +0.48 [±0.05] W per m2. Its growth rates in the atmosphere over the past two decades have generally decreased. The cause of this decrease is not well understood, however, this and the negligible long-term change in its main sink (the hydroxyl radical OH) imply that total CH4 emissions are not increasing.

Montreal Protocol Gases These gases, accounting for the destruction of stratospheric ozone, include chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs) and chlorocarbons, and contributed +0.32 [±0.03] W per m2 to the RF in 2005. Their RF peaked in 2003 and is now beginning to decline.


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Nitrous Oxide It continues to rise approximately linearly (0.26% per year) and reached a concentration of 319 ppb in 2005, contributing an RF of +0.16 [±0.02] W per m2. Recent studies have reinforced the large role of emissions from tropical regions in influencing the observed spatial concentration gradients.

Fluorine-Containing Gases Concentrations of many of the fluorine-containing Kyoto Protocol gases (including hydrofluorocarbons (HFCs), perfluorocarbons, and SF6) have increased by large factors (between 4.3 and 1.3) between 1998 and 2005. Their total RF in 2005 was +0.017 [±0.002] W per m2 and is rapidly increasing by roughly 10% per year. The lifetimes, thus RF values, of CH4, HFCs, HCFCs and ozone are influenced by the reactive gas, OH, a key chemical species. This gas plays an important role also in the formation of sulphate, nitrate and some organic aerosol species. Estimates of the global average OH concentration have shown no detectable net change between 1979 and 2004. The Report goes on with more findings on the RF of other agents, including ozone, aerosol direct and cloud albedo (the fraction of solar radiation reflected by clouds) effects, linear contrails from aviation and land use changes. However these agents either have smaller impact on the Greenhouse Effect or tend to decrease it, while the findings in several cases have considerable uncertainties and are characterized by a low or medium level of scientific understanding. In Figure 4 the atmospheric concentrations of the three most important long-lived GHGs over the last 2,000 years are shown (Forster et al., 2007, p. 135). Increases since about 1750 are attributed to human activities in the industrial era.

Surface and Atmospheric Climate Change In chapter 3 of the Working Group I Report on the Physical Science Basis of Climate Change (Trenberth et al., 2007), under the title “Observations: Surface and Atmospheric Climate change”, observed climate changes in the land surface and atmosphere are assessed. In particular, observations concerning surface climate change, including temperature, precipitation, drought and surface hydrology, as well as observations concerning changes in the free atmosphere and in atmospheric circulation are reported. Observations concerning patterns of atmospheric circulation variability as well as changes in the Tropics and Subtropics, in the monsoons and in extreme events are also included.


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The changes reported are substantial. For example, it is shown that surface temperature, examined already in the Third Assessment Report published in 2001, for three sub-periods (1910–1945, 1946–1975 and 1976–2000), had been rising during the first and third sub-periods, while relatively stable global mean temperatures have been observed during the second sub-period. The 1976 divide is the date of a widely acknowledged ‘climate shift’ (Trenberth, 1990) and seems to mark a time when global mean temperatures began a discernible upward trend. This trend has been at least partly attributed to increases in GHG concentrations in the atmosphere. Observations regarding surface and atmospheric climate change are summarized in chapter 3 of the Working Group I Report and include, among others, the following:

Global Mean Surface Temperatures Rising Global mean surface temperatures have risen by 0.74°C ± 0.18°C when estimated by a linear trend over the last 100 years (1906–2005). The rate of warming over the last 50 years is almost double that over the last 100 years (0.13°C± 0.03°C vs. 0.07°C ± 0.02°C per decade). Global mean temperatures averaged over land and ocean surfaces are consistent within uncertainty estimates over the period 1901 to 2005 and show similar rates of increase in recent decades. An important finding is that the trend is not linear, and the warming from the first 50 years of instrumental record (1850–1899) to the last 5 years (2001–2005) is 0.76°C ± 0.19°C.

Warmest Years 2005 was one of the two warmest years on record. The warmest years in the instrumental record of global surface temperatures are 1998 and 2005, with 1998 ranking Figure 4. Atmospheric concentrations of important long-lived GHGs over the last 2,000 years. (Source: Forster et al., 2007)


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first in one estimate, but with 2005 slightly higher in the other two estimates. 2002 to 2004 are the 3rd, 4th and 5th warmest years in the series since 1850. Eleven of the last 12 years (1995 to 2006) – the exception being 1996 – rank among the 12 warmest years on record since 1850. Surface temperatures in 1998 were enhanced by the major 1997–1998 El Niño (a basin-wide warming of the tropical Pacific Ocean east of the dateline) but no such strong anomaly was present in 2005. Temperatures in 2006 were similar to the average of the past 5 years.

Land Regions Warming Faster than the Oceans Warming has occurred in both land and ocean domains, and in both sea surface temperature and night time marine air temperature over the oceans. However, for the globe as a whole, surface air temperatures over land have risen at about double the ocean rate after 1979 (more than 0.27°C per decade vs. 0.13°C per decade), with the greatest warming during winter (December to February) and spring (March to May) in the Northern Hemisphere.

Extremes of Temperature Consistent with Climate Warming Changes in extremes of temperature are also consistent with warming of the climate. Observations in 70 to 75% of the land regions where data are available show a widespread reduction in the number of frost days in mid-latitude regions, an increase in the number of warm extremes and a reduction in the number of daily cold extremes. The most marked changes are for cold (lowest 10%, based on 1961–1990) nights, which have become rarer over the 1951 to 2003 period. Warm (highest 10%) nights have become more frequent. Temperature range during the day decreased by 0.07°C per decade averaged over 1950 to 2004, but had little change from 1979 to 2004, as both maximum and minimum temperatures rose at similar rates. The Report refers to the record-breaking heat wave over western and central Europe in the summer of 2003 as an example of an exceptional recent extreme. That summer, from June to August, 2003, was the hottest since comparable instrumental records began around 1780 (1.4°C above the previous warmest in 1807) and is very likely to have been the hottest since at least 1500.

Warming Strongly Evident at All Latitudes in Sea Surface Temperatures Recent warming is strongly evident at all latitudes in sea surface temperatures over each of the oceans. However, there are inter-hemispheric differences in warming in the Atlantic, the Pacific is punctuated by El Niño events and Pacific decadal variCopyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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ability that is more symmetric about the equator, while the Indian Ocean exhibits steadier warming. These characteristics lead to important differences in regional rates of surface ocean warming. These differences affect the atmospheric circulation.

Urban Heat Island Effects Local urban heat island effects have been observed, that have not biased the largescale trends. Effects of urbanization and land use change on the land-based temperature record, as indicated by a number of recent studies, are negligible (0.006ºC per decade) as far as hemispheric- and continental-scale averages are concerned because the very real but local effects are avoided or accounted for in the data sets used. These effects are not present in the sea surface temperature component of the record. Urban heat island effects, as increasing evidence suggests, extend to changes in precipitation, clouds and diurnal temperature range, with these detectable as a ‘weekend effect’ owing to lower pollution and other effects during weekends.

Arctic Temperatures Double in 100 Years Average arctic temperatures increased at almost twice the global average rate in the past 100 years. Arctic temperatures have high decadal variability. Note that a slightly longer warm period, almost as warm as the present, that was also observed from the late 1920s to the early 1950s, appears to have had a different spatial distribution than the recent warming.

Lower-Tropospheric Temperatures Lower-tropospheric temperatures have slightly greater warming rates than those at the surface over the period 1958 to 2005.

Lower Stratospheric Temperatures Lower stratospheric temperatures feature cooling since 1979.

Precipitation: Varying Trends Precipitation has generally increased over land north of 30°N over the period 1900 to 2005. However, downward trends dominate the tropics since the 1970s. From 10°N to 30°N, precipitation increased markedly from 1900 to the 1950s, but declined after about 1970. Downward trends are present in the deep tropics from 10°N to 10°S, especially after 1976/1977. Notably, tropical values dominate the global mean. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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It has become significantly wetter in eastern parts of North and South America, northern Europe, and northern and central Asia. On the other side, it has become drier in the Sahel, the Mediterranean, southern Africa and parts of southern Asia. When comparing patterns of precipitation change to those of temperature change, patterns of precipitation change are more spatially and seasonally variable than temperature change. However, where significant precipitation changes do occur, they are consistent with measured changes in stream-flow.

Increased Heavy Precipitation Events Substantial increases in heavy precipitation events are reported in the IPCC report. Increases in the number of heavy precipitation events within many land regions are likely to have taken place, even in those regions where there has been a reduction in total precipitation amount, consistent with a warming climate and observed significant increasing amounts of water vapor in the atmosphere. Increases have also been reported for rarer precipitation events (1 in 50 year return period), but only a few regions have sufficient data to assess such trends reliably.

Droughts More Common Droughts have become more common, especially in the tropics and subtropics, since the 1970s. As pointed out in the Report, observed marked increases in drought in the past three decades arise from more intense and longer droughts over wider areas, as a critical threshold for delineating drought is exceeded over increasingly widespread areas. Important factors that have contributed to more regions experiencing droughts are decreased land precipitation and increased temperatures that enhance evapotranspiration (the combined process of evaporation from the Earth’s surface and transpiration from vegetation) and drying. The regions where droughts have occurred seem to be determined largely by changes in sea surface temperatures, especially in the tropics, through associated changes in the atmospheric circulation and precipitation. In the western USA, diminishing snow pack and subsequent reductions in soil moisture also appear to be factors, while in Australia and Europe, direct links to global warming have been inferred through the extreme nature of high temperatures and heat waves accompanying recent droughts.

Increasing Tropospheric Water Vapor Tropospheric water vapor is increasing. Surface specific humidity has generally increased after 1976 in close association with higher temperatures over both land


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and ocean. Total column water vapor has increased over the global oceans by 1.2 ± 0.3% per decade from 1988 to 2004, consistent in pattern and amount with changes in sea surface temperature and a fairly constant relative humidity. Total column water vapor has increased by 4% since 1970, as suggested by strong correlations with sea surface temperature. Similar upward trends in upper-tropospheric specific humidity have also been detected from 1982 to 2004. These trends considerably enhance the Greenhouse Effect,

Cloud Changes Dominated by ENSO Cloud changes are dominated by the El Niño-Southern Oscillation (ENSO) phenomenon and appear to be opposite over land and ocean (ENSO is an atmosphereocean phenomenon, with preferred time scales of two to about seven years, whereby El Niño is associated with a fluctuation of a global-scale tropical and subtropical surface pressure pattern called the Southern Oscillation, with a great impact on the wind, sea surface temperature and precipitation patterns in the tropical Pacific and climatic effects in many other parts of the world).

Decreases in Continental Diurnal Temperature Widespread (but not ubiquitous) decreases in continental diurnal temperature range since the 1950s coincide with increases in cloud amounts. Radiation changes at the top of the atmosphere from the 1980s to 1990s, possibly related in part to the ENSO phenomenon, appear to be associated with reductions in tropical upper-level cloud cover, and are linked to changes in the energy budget at the surface and changes in observed ocean heat content.

Changes in Atmospheric Circulation Changes in the large-scale atmospheric circulation are apparent. Atmospheric circulation variability and change is largely described by relatively few major patterns. ENSO is the dominant mode of global-scale variability on inter-annual time scales, although there have been times when it is less apparent. The 1976–1977 climate shift, related to the phase change in the Pacific Decadal Oscillation (a key measure of Pacific decadal variability, which is a coupled decadal-to-inter-decadal variability of the atmospheric circulation and underlying ocean in the Pacific Basin) and more frequent El Niños, has affected many areas and most tropical monsoons.


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Mid-Latitude Western Winds Increased Mid-latitude westerly winds (western winds) have generally increased in both hemispheres. These increases in atmospheric circulation are predominantly observed as ‘annular modes’, related to the zonally averaged mid-latitude westerlies, which strengthened in most seasons from the 1960s to at least the mid-1990s, with poleward displacements of corresponding Atlantic and southern polar front jet streams and enhanced storm tracks.

Intense Tropical Cyclone Activity Increased Intense tropical cyclone activity has increased since about 1970. Variations in tropical cyclones, hurricanes and typhoons are dominated by ENSO and decadal variability, which result in a redistribution of tropical storm numbers and their tracks, so that increases in one basin are often compensated by decreases over other oceans. Trends are apparent in sea surface temperatures and other critical variables that influence tropical thunderstorm and tropical storm development. Globally, estimates of the potential destructiveness of hurricanes show a significant upward trend since the mid-1970s, with a trend towards longer lifetimes and greater storm intensity, and such trends are strongly correlated with tropical sea surface temperature. As pointed out in the IPCC Report, these relationships have been reinforced by findings of a large increase in numbers and proportion of hurricanes reaching categories 4 and 5 globally since 1970 even as total number of cyclones and cyclone days decreased slightly in most basins. The largest increase was in the North Pacific, Indian and southwest Pacific Oceans. However, numbers of hurricanes in the North Atlantic have also been above normal (based on 1981–2000 averages) in 9 of the last 11 years, culminating in the record-breaking 2005 season. Moreover, the first recorded tropical cyclone in the South Atlantic occurred in March 2004 off the coast of Brazil.

Temperature Increases Consistent with Observed Changes in the Cryosphere and Oceans The temperature increases are consistent with observed changes in the cryosphere (see below) and oceans. Consistent with observed changes in surface temperature, there has been an almost worldwide reduction in glacier and small ice cap (not including Antarctica and Greenland) mass and extent in the 20th century. Snow cover has decreased in many regions of the Northern Hemisphere, sea ice extents have decreased in the Arctic, particularly in spring and summer, the oceans are warming and sea level is rising.


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Changes in Snow, Ice and Frozen Ground Snow, river and lake ice, sea ice, glaciers and ice caps (dome shaped ice masses, usually covering a highland area), ice shelves (floating slabs of ice of considerable thickness extending from the coast) and ice sheets (mass of land ice sufficiently deep to cover most of the underlying bedrock topography), and frozen ground are the constituents of cryosphere. In terms of the ice mass and its heat capacity, the cryosphere is the second largest component of the climate system (after the ocean). The cryosphere on land stores about 75% of the world’s freshwater. The volumes of the Greenland and Antarctic Ice Sheets are equivalent to approximately 7 m and 57 m of sea level rise, respectively. As pointed out in chapter 4 of the Working Group I Report on the Physical Science Basis of Climate Change, under the title “Observations: Changes in Snow, Ice and Frozen Ground” (Lemke et al., 2007), the cryosphere integrates climate variations over a wide range of time scales, making it a natural sensor of climate variability and providing a visible expression of climate change. This is because, in the climate system, the cryosphere is intricately linked to the surface energy budget, the water cycle, sea level change and the surface gas exchange. Recent decreases in ice mass are correlated with rising surface air temperatures. This is especially true for the region north of 65°N, where temperatures have increased by about twice the global average from 1965 to 2005. According to the Report, evidence concerning the cryosphere, include the following, with the uncertainty range denoting the 5 to 95% confidence interval:

Snow Cover Decreased Snow cover has decreased in most regions, especially in spring and summer. In the Northern Hemisphere (NH), snow cover observed by satellite over the 1966 to 2005 period decreased in every month except November and December, with a stepwise drop of 5% in the annual mean in the late 1980s. In the Southern Hemisphere, the few long records or proxies mostly show either decreases or no changes in the past 40 years or more. Where snow cover or snow-pack decreased, temperature often dominated, while where snow increased, precipitation almost always dominated.

Freeze-Up and Breakup Dates for River and Lake Ice Exhibit Spatial Variability Averaged over available data for the NH spanning the past 150 years, freeze-up date has occurred later at a rate of 5.8 ± 1.6 days per century, while the breakup


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date has occurred earlier at a rate of 6.5 ± 1.2 days per century. Some regions show trends of opposite sign.

Decline in Annual Mean Arctic Sea Ice A continuation of the 2.7 ± 0.6% per decade decline in annual mean arctic sea ice extent since 1978 is indicated by Satellite data. The decline for summer extent is larger than for winter, with the summer minimum declining at a rate of 7.4 ± 2.4% per decade since 1979. Other data indicate that the summer decline began around 1970. Similar observations in the Antarctic reveal larger inter-annual variability but no consistent trends.

Average Sea Ice Thickness in Central Arctic Very Likely Decreased The average sea ice thickness in the central Arctic has very likely decreased by up to 1 m from 1987 to 1997, as indicated by submarine-derived data for the central Arctic. Model-based reconstructions support this finding, suggesting an arctic-wide reduction of 0.6 to 0.9 m over the same period. Large-scale trends prior to 1987 are ambiguous. Mass loss of glaciers and ice caps is estimated to be 0.50 ± 0.18 mm per year in sea level equivalent (SLE) between 1961 and 2004, and 0.77 ± 0.22 mm per year SLE between 1991 and 2004. It is likely that the late 20th-century glacier wastage has been a response to post-1970 warming. Strongest mass losses per unit area have been observed in Patagonia, Alaska and northwest USA and southwest Canada. Because of the corresponding large areas, the biggest contributions to sea level rise came from Alaska, the Arctic and the Asian high mountains.

Ice Sheets in Greenland and Antarctica Contribute to Sea Level Rise It is very likely that the ice sheets in Greenland and Antarctica, taken together, have been contributing to sea level rise over 1993 to 2003. Thickening in central regions of Greenland has been more than offset by increased melting near the coast. Flow speed has increased for some Greenland and Antarctic outlet glaciers, which drain ice from the interior. The corresponding increased ice sheet mass loss has often followed thinning, reduction or loss of ice shelves or loss of floating glacier tongues. According to estimates, a mass balance of the Greenland Ice Sheet of between +25 and –60 Gt per year (–0.07 to 0.17 mm per year SLE) from 1961 to 2003, and –50 to –100 Gt per year (0.14 to 0.28 mm per year SLE) from 1993 to 2003, with even larger losses in 2005 is suggested. Regarding the Antarctic Ice Sheet, estimates for Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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the overall mass balance range from +100 to –200 Gt per year (–0.28 to 0.55mm per year SLE) for 1961 to 2003, and from +50 to –200 Gt per year (–0.14 to 0.55 mm per year SLE) for 1993 to 2003. The recent changes in ice flow are likely to be sufficient to explain much or the entire estimated antarctic mass imbalance, with changes in ice flow, snowfall and melt water runoff sufficient to explain the mass imbalance of Greenland.

Temperature at Top of Permafrost Layer Significantly Increased The temperature at the top of the permafrost layer has increased by up to 3°C since the 1980s in the Arctic (permafrost is ground that remains at or below 0°C for at least two consecutive years). The permafrost base has been thawing at a rate ranging up to 0.04 m per year in Alaska since 1992 and 0.02 m per year on the Tibetan Plateau since the 1960s. Permafrost degradation is leading to changes in land surface characteristics and drainage systems.

Maximum Extent of Seasonally Frozen Ground Decreased The maximum extent of seasonally frozen ground has decreased by about 7% in the NH from 1901 to 2002, with a decrease in spring of up to 15%. Its maximum depth has decreased about 0.3 m in Eurasia since the mid-20th century. In addition, maximum seasonal thaw depth over permafrost has increased about 0.2 m in the Russian Arctic from 1956 to 1990. Earlier growing season but no change in duration have been caused by onset dates of thaw in spring and freeze in autumn that have advanced five to seven days in Eurasia from 1988 to 2002. The above results indicate that the total cryospheric contribution to sea level change ranged from 0.2 to 1.2 mm per year between 1961 and 2003, and from 0.8 to 1.6 mm per year between 1993 and 2003. The rate increased over the 1993 to 2003 period primarily due to increasing losses from mountain glaciers and ice caps, from increasing surface melt on the Greenland Ice Sheet and from faster flow of parts of the Greenland and Antarctic Ice Sheets. Estimates of changes in the ice sheets are highly uncertain, and no best estimates are given for their mass losses or gains. However, strictly for the purpose of considering the possible contributions to the sea level budget, a total cryospheric contribution of 1.2 ± 0.4 mm per year SLE is estimated for 1993 to 2003 assuming a midpoint mean plus or minus uncertainties and Gaussian error summation.


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Oceanic Climate Change and Sea Level As pointed out in chapter 5 of the Working Group I Report on the Physical Science Basis of Climate change, under the title “Observations: Oceanic Climate change and Sea Level” (Bindoff et al., 2007), the large amount of heat, which has been mainly stored in the upper layers of the ocean, plays a crucial role in climate change. Indeed, the ocean’s heat capacity is about 1,000 times larger than that of the atmosphere, and the oceans net heat uptake since 1960 is around 20 times greater than that of the atmosphere. The transport of heat and freshwater by ocean currents can have an important effect on regional climates, while the large-scale Meridional Overturning Circulation (a term referring to the overturning circulation in the ocean quantified by east-west sums of mass transports in depth or density layers) influences the climate on a global scale (Vellinga & Wood, 2002). Oceanic parameters can be useful for detecting climate change, in particular temperature and salinity changes in the deeper layers and in different regions. Furthermore, changes in the storage of heat and in the distribution of ocean salinity cause the ocean to expand or contract and hence change the sea level both regionally and globally. The main conclusions of the Report regarding oceanic climate and sea level changes are the following:

Oceans Warming Over the period 1961 to 2003, global ocean temperature has risen by 0.10°C from the surface to a depth of 700 m. Global ocean heat content (0–3,000 m) has increased during the same period to an extent equivalent to absorbing energy at a rate of 0.21 ± 0.04 W per m2 globally averaged over the Earth’s surface. Global ocean heat content observations show considerable inter-annual and inter-decadal variability superimposed on the longer-term trend. Notably, the period 1993 to 2003 has high rates of warming relative to 1961 to 2003, but since 2003 there has been some cooling.

Salinity Trends Large-scale, coherent trends of salinity are observed from 1955 to 1998. They are characterised by a global freshening in sub-polar latitudes and a salinification of shallower parts of the tropical and subtropical oceans. Freshening is pronounced in the Pacific while increasing salinities prevail over most of Atlantic and Indian Oceans. These trends are consistent with changes in precipitation and inferred larger water transport in the atmosphere from low latitudes to high latitudes and from the Atlantic to the Pacific. Observations do not allow for a reliable estimate of the global average change in salinity in the oceans. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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Oceanic Water Masses Changing Key oceanic water masses are changing; however, there is no clear evidence for ocean circulation changes.

Ocean Biogeochemistry Changing The total inorganic carbon content of the oceans has increased by 118 ± 19 GtC between the end of the pre-industrial period (about 1750) and 1994 and continues to increase. It is more likely than not that the fraction of emitted carbon dioxide that was taken up by the oceans has decreased from 42 ± 7% during 1750 to 1994 to 37 ± 7% during 1980 to 2005.

Global Mean Sea Level Rising From 1961 to 2003, the average rate of sea level rise was 1.8 ± 0.5 mm per year. For the 20th century, the average rate was 1.7 ± 0.5 mm per year. There is high confidence that the rate of sea level rise has increased between the mid-19th and the mid-20th centuries. While this refers to global mean values, sea level change is highly non-uniform spatially. In some regions, rates are up to several times the global mean rise, while in other regions sea level is falling. There is evidence for an increase in the occurrence of extreme high water worldwide related to storm surges, and variations in extremes during this period are related to the rise in mean sea level and variations in regional climate.

Decadal Variability of Sea Level The rise in global mean sea level is accompanied by considerable decadal variability. For the period 1993 to 2003, the rate of sea level rise is estimated as 3.1 ± 0.7 mm per year, significantly higher than the average rate. Similar large rates have occurred in previous 10-year periods since 1950. It is unknown whether the higher rate in 1993 to 2003 is due to decadal variability or an increase in the longer-term trend.

Improved Understanding of Contributions to Sea Level Change While there are uncertainties in the estimates of the contributions to sea level change, understanding has significantly improved for recent periods. For the period 1961 to 2003, the average contribution of thermal expansion to sea level rise was 0.4 ± 0.1 mm per year. For the period 1993 to 2003, for which the observing system is much better, the contributions from thermal expansion (1.6 ± 0.5 mm per year) and loss Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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of mass from glaciers, ice caps and the Greenland and Antarctic Ice Sheets together give 2.8 ± 0.7 mm per year. For the latter period, the climate contributions constitute the main factors in the sea level budget, which is closed to within known errors.

Consistency of Observations The patterns of observed changes described above regarding global ocean heat content and salinity, sea level, thermal expansion, water mass evolution and biogeochemical parameters are broadly consistent with the observed ocean surface changes and the known characteristics of the large-scale ocean circulation.

CLIMATE CHANGE EVOLUTION, CLIMATE MODELS AND THE SRES SCENARIOS The credibility of the estimates of the IPCC reports regarding climate change evolution is dependent on the confidence that may be placed on these estimates, based on the scientific evidence supporting them. It is therefore important to specify the extent to which these reports are trustful as several climate scenarios have been developed by the scientific community and used by IPCC in its assessment reports. According to the Annex I (Glossary) of the Report, a climate scenario is a plausible and often simplified representation of the future climate, based on an internally consistent set of climatological relationships that has been constructed for explicit use in investigating the potential consequences of anthropogenic climate change, often serving as input to impact models. A climate scenario is distinguished from a climate projection, which often serves as the raw material for constructing climate scenarios, but climate scenarios usually require additional information such as about the observed current climate. A climate projection is defined as a projection of the response of the climate system to emission or concentration scenarios of GHGs and aerosols, or RF scenarios, often based upon simulations by climate models. Climate projections are distinguished from climate predictions in order to emphasize that climate projections depend upon the emission/concentration/ RF scenario used. The latter are based on assumptions concerning, for example, future socioeconomic and technological developments that may or may not be realized and are therefore subject to substantial uncertainty. Chapter 8 of the Working Group I Report on the Physical Science Basis of Climate Change, under the title “Climate Models and Their Evaluation” (Randall et


52 Global Warming

al., 2007), assesses the capacity of the global climate models used in the Report for projecting future climate change. Confidence in model estimates of future climate evolution has been enhanced via a range of advances since the previous (3rd) IPCC Assessment Report. Climate models are based on well-established physical principles and have been demonstrated to reproduce observed features of recent climate and past climate changes. Confidence in quantitative estimates of future climate change, particularly at continental and larger scales, is higher for some climate variables (e.g. temperature) than for others (e.g. precipitation). Progress since the IPCC 3rd Assessment Report includes, among others: • • • •

• •

enhanced scrutiny of models and expanded diagnostic analysis of model behaviour more comprehensive tests of climate models including, for example, evaluations of forecasts on time scales from days to a year better understanding of the inter-model differences in equilibrium climate sensitivity improvements to resolution, computational methods and parametrizations, while additional processes (e.g. interactive aerosols) have been included in more of the climate models increased overall confidence in the models’ representation of important climate processes improved ability to simulate extreme events, etc.

Thus there have been significant developments in model formulation, model climate simulation, analysis methods, and the evaluation of climate feedbacks. The analysis of processes contributing to climate feedbacks in models and recent studies based on large ensembles of models suggest that in the future it may be possible to use observations to narrow the current spread in model projections of climate change. One of the most important contributions of IPCC reports is their role in raising awareness for future climate change. This is greatly facilitated by climate change projections, which summarize and extend present knowledge about climate and the impacts of GHG emissions on climate into the future. Future GHG emissions will be the product of very complex dynamic systems, determined by driving forces such as demographic and socio-economic developments and technological change. The Report has made use of the global climate models in order to project future climate change. These models have reproduced the results, which are the subject of chapter 10 of the Working Group I Report on the Physical Science Basis of Climate Change, under the title “Global Climate Projections” (Meehl et al., 2007). In particular these results are based on a hierarchy of models, ranging from Atmosphere-Ocean General Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Global Warming 53

Circulation Models (AOGCMs) and Earth System Models of Intermediate Complexity (EMICs) to Simple Climate Models (SCMs). The climate projections shown in chapter 10 of the Report are based on the so-called SRES scenarios developed by Nakićenović and Swart (2000). The SRES scenarios represent the range of driving forces and emissions so as to reflect current understanding and knowledge about underlying uncertainties. They exclude only outlying “surprise” or “disaster” scenarios in the literature. The scenarios do not include additional climate initiatives, which means that no scenarios are included that explicitly assume implementation of the United Nations Framework Convention on Climate change (UNFCCC) or the emissions targets of the Kyoto Protocol. However, GHG emissions are directly affected by non-climate change policies designed for a wide range of other purposes. In particular, the SRES scenario set includes four scenario families, A1, A2, B1 and B2 (IPCC Special Report Emissions Scenarios, 2000). Scenario families are scenarios that have a similar demographic, societal, economic and technical change storyline. The four scenario families are the following.

The A1 Storyline and Scenario Family It describes a future world of very rapid economic growth, global population that peaks in mid-century and declines thereafter, and the rapid introduction of new and more efficient technologies. Major underlying themes are convergence among regions, capacity building, and increased cultural and social interactions, with a substantial reduction in regional differences in per capita income. The A1 scenario family develops into three groups that describe alternative directions of technological change in the energy system. The three A1 groups are distinguished by their technological emphasis: fossil intensive (A1FI), non-fossil energy sources (A1T), or a balance across all sources (A1B) (balanced is defined as not relying too heavily on one particular energy source, on the assumption that similar improvement rates apply to all energy supply and end use technologies).

The A2 Storyline and Scenario Family It describes a very heterogeneous world. The underlying theme is self-reliance and preservation of local identities. Fertility patterns across regions converge very slowly, which results in continuously increasing global population. Economic development is primarily regionally oriented and per capita economic growth and technological change are more fragmented and slower than in other storylines.


54 Global Warming

The B1 Storyline and Scenario Family It describes a convergent world with the same global population that peaks in midcentury and declines thereafter, as in the A1 storyline, but with rapid changes in economic structures toward a service and information economy, with reductions in material intensity, and the introduction of clean and resource-efficient technologies. The emphasis is on global solutions to economic, social, and environmental sustainability, including improved equity, but without additional climate initiatives.

The B2 Storyline and Scenario Family It describes a world in which the emphasis is on local solutions to economic, social, and environmental sustainability. It is a world with continuously increasing global population at a rate lower than A2, intermediate levels of economic development, and less rapid and more diverse technological change than in the B1 and A1 storylines. While the scenario is also oriented toward environmental protection and social equity, it focuses on local and regional levels. The models are forced with concentrations of GHGs and other constituents derived from various emissions scenarios ranging from non-mitigation scenarios to idealized long-term scenarios. Non-mitigated projections of future climate change at scales from global to hundreds of kilometers are assessed, while further assessments of regional and local climate changes are provided in chapter 11 of the Working Group I Report on the Physical Science Basis of Climate Change under the title “Regional Climate Projections” (Christensen et al., 2007). Projections are based on multi-model means, differences between models can be assessed quantitatively and in some instances, estimates of the probability of change of important climate system parameters complement expert judgment. Continued GHG emissions at or above current rates will cause further warming and induce many changes in the global climate system during the 21st century that would very likely be larger than those observed during the 20th century. In particular, according to the Report:

Continuing Increases in Global Mean Surface Air Temperature All models assessed, for all the non-mitigation scenarios considered, project increases in global mean surface air temperature is continuing over the 21st century, driven mainly by increases in anthropogenic GHG concentrations, with the warming proportional to the associated RF.


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Heat Waves More Intense and Frequent and Longer Lasting, Decreasing Cold Episodes It is very likely that heat waves will be more intense, more frequent and longer lasting in a future warmer climate. Cold episodes are projected to decrease significantly in a future warmer climate. Almost everywhere, daily minimum temperatures are projected to increase faster than daily maximum temperatures, leading to a decrease in diurnal temperature range. Decreases in frost days are projected to occur almost everywhere in the middle and high latitudes, with a comparable increase in growing season length.

Varying Precipitation Trends Precipitation will generally increase in the areas of regional tropical precipitation maxima (such as the monsoon regimes) and over the tropical Pacific in particular, with general decreases in the subtropics, and increases at high latitudes as a consequence of a general intensification of the global hydrological cycle. Globally averaged mean water vapor, evaporation and precipitation are projected to increase.

Increased Intensity of Precipitation Events Intensity of precipitation events is projected to increase, particularly in tropical and high latitude areas that experience increases in mean precipitation. Even in areas where mean precipitation decreases (most subtropical and mid-latitude regions), precipitation intensity is projected to increase but there would be longer periods between rainfall events. There is a tendency for drying of the mid-continental areas during summer, indicating a greater risk of droughts in those regions. Precipitation extremes increase more than does the mean in most tropical and mid- and highlatitude areas.

Decreasing Snow Cover and Sea Ice Extent, Glaciers and Ice Caps Losing Mass Snow cover and sea ice extent will decrease, while glaciers and ice caps will lose mass owing to a dominance of summer melting over winter precipitation increases. This will contribute to sea level rise. There is a projected reduction of sea ice in the 21st century in both the Arctic and Antarctic with a rather large range of model responses. The projected reduction is accelerated in the Arctic, where some models project summer sea ice cover to disappear entirely in the high-emission A2 scenario in the latter part of the 21st century. Widespread increases in thaw depth over much Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

56 Global Warming

of the permafrost regions are projected to occur in response to warming over the next century.

Reduced Efficiency of Earth System to Absorb Anthropogenic CO2 Future climate change will reduce the efficiency of the Earth system (land and ocean) to absorb anthropogenic CO2. As a result, an increasingly large fraction of anthropogenic CO2 will stay airborne in the atmosphere under a warmer climate. For the A2 emission scenario, this positive feedback will lead to additional atmospheric CO2 concentration varying between 20 and 220 ppm among the models by 2100. Atmospheric CO2 concentrations will range between 730 and 1,020 ppm by 2100.

Increasing Acidification of Surface Ocean Increasing atmospheric CO2 concentrations lead directly to increasing acidification (i.e. decrease in the pH due to the uptake of CO2) of the surface ocean. Multi-model projections based on SRES scenarios give reductions in pH of between 0.14 and 0.35 units in the 21st century, adding to the present decrease of 0.1 units from preindustrial times. Low-latitude regions and the deep ocean will be affected as well.

Sea Level Rise Sea level is projected to rise between the two last decades of the previous (1980–1999) and the end of this century (2090–2099) to varying degrees under the different SRES scenarios (under the B1 scenario by 0.18 to 0.38 m, B2 by 0.20 to 0.43 m, A1B by 0.21 to 0.48 m, A1T by 0.20 to 0.45 m, A2 by 0.23 to 0.51 m, and A1FI by 0.26 to 0.59 m).

Weak Shift of Mean Tropical Pacific Climate Regarding the mean Tropical Pacific Climate change, there is a weak shift towards average background conditions which may be described as ‘El Niñolike’, with sea surface temperatures in the central and east equatorial Pacific warming more than those in the west, weakened tropical circulations and an eastward shift in mean precipitation.

ENSO Inter-Annual Variability will Continue El Niño-Southern Oscillation (ENSO) inter-annual variability will continue in the future no matter what the change in average background conditions. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Global Warming 57

Varying Trends in Precipitation An increase in precipitation is projected in the Asian monsoon (along with an increase in inter-annual season-averaged precipitation variability) and the southern part of the west African monsoon with some decrease in the Sahel in northern summer, as well as an increase in the Australian monsoon in southern summer in a warmer climate. The monsoonal precipitation in Mexico and Central America is projected to decrease in association with increasing precipitation over the eastern equatorial Pacific.

Sea Level Pressure Increasing Sea level pressure is projected to increase over the subtropics and mid-latitudes, and decrease over high latitudes.

Peak Wind Intensities Increasing, Frequency of Tropical Storms Decreasing A likely increase of peak wind intensities and notably, where analyzed, increased near-storm precipitation in future tropical cyclones is projected. Tropical storm frequency shows a decrease in the overall number of storms.

Fewer Mid-Latitude Storms Fewer mid-latitude storms averaged over each hemisphere are projected, associated with the pole-ward shift of the storm tracks that is particularly notable in the Southern Hemisphere, with lower central pressures for these pole-ward shifted storms. The increased wind speeds result in more extreme wave heights in those regions.

Further Warming of 0.5°C should GHGs were Stabilized If GHGs were stabilized, then a further warming of 0.5°C would occur. This should not be confused with ‘unavoidable climate change’ over the next half century, which would be greater because forcing cannot be instantly stabilized.

Greenland Ice Sheet Largely Eliminated The Greenland Ice Sheet is projected to contribute to sea level after 2100, initially at a rate of 0.03 to 0.21 m per century for stabilization in 2100 at A1B concentrations. The contribution would be greater if dynamical processes omitted from current Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

58 Global Warming

models increased the rate of ice flow, as has been observed in recent years. Except for remnant glaciers in the mountains, the Greenland Ice Sheet would largely be eliminated. The result would be a sea level rise by about 7 m, if a sufficiently warm climate were maintained for millennia, while this would happen more rapidly if ice flow accelerated. Models suggest that the global warming required lies in the range 1.9°C to 4.6°C relative to the pre-industrial temperature. Even if temperatures were to decrease later, it is possible that the reduction of the ice sheet to a much smaller extent would be irreversible.

Antarctic Ice Sheet Contribution to Sea Level Rise Negative for Coming Centuries The Antarctic Ice Sheet is projected to remain too cold for widespread surface melting, and to receive increased snowfall, leading to a gain of ice. Loss of ice from the ice sheet could occur through increased ice discharge into the ocean following weakening of ice shelves by melting at the base or on the surface. In current models, the net projected contribution to sea level rise is negative for coming centuries, but it is possible that acceleration of ice discharge could become dominant, causing a net positive contribution.

PALAEOCLIMATE As said in the Introduction of this chapter, in addition to the above, the Report makes also reference to some other subjects including Palaeoclimate, i.e.climate during periods prior to the development of measuring instruments, including historic and geologic time, for which only proxy climate records are available. Thus, in chapter 6 of the Working Group I Report on the Physical Science Basis of Climate Change, which is devoted to this subject (Jansen et al., 2007), the Report gives answers to a set of questions. Among others, addressing the question “What is the relationship between past GHG concentrations and climate?” the Report points out that the sustained rate of increase over the past century in the combined RF from the three main GHGs (carbon dioxide, methane, and nitrous oxide) is very likely unprecedented in at least the past 16,000 years. Pre-industrial variations of atmospheric GHG concentrations observed during the last 10,000 years were small compared to industrial era GHG increases, and were likely mostly due to natural processes. Also, the Report points out that it is very likely that the current atmospheric concentrations of CO2 (379 ppm) and CH4 (1,774 ppb) exceed by far the natural range of the last 650,000 years. Ice core data indicate that CO2 varied within a range of 180 to 300 ppm and CH4 within 320 to 790 ppb over this period. Over the same period, Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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Antarctic temperature and CO2 concentrations co-vary, indicating a close relationship between climate and the carbon cycle. On the other hand, it is very likely that glacial-interglacial CO2 variations have strongly amplified climate variations, but it is unlikely that CO2 variations have triggered the end of glacial periods. Another interesting question addressed by the Report in chapter 6 is “How does the 20th-century climate change compare with the climate of the past 2,000 years?”. The Report points out that it is very likely that the average rates of increase in CO2, as well as in the combined RF from CO2, CH4 and N2O concentration increases, have been at least five times faster over the period from 1960 to 1999 than over any other 40-year period during the past two millennia prior to the industrial era. Ice core data from Greenland and Northern Hemisphere mid-latitudes show a very likely rapid post-industrial era increase in sulphate concentrations above the preindustrial background. Additionally, while the Third Assessment Report pointed to the exceptional warmth of the late 20th century, relative to the past 1,000 years, subsequent evidence has strengthened this conclusion. It is very likely that average Northern Hemisphere temperatures during the second half of the 20th century were higher than for any other 50-year period in the last 500 years. It is also likely that this 50-year period was the warmest Northern Hemisphere period in the last 1,300 years, and that this warmth was more widespread than during any other 50-year period in the last 1,300 years. These conclusions are most robust for summer in extra-tropical land areas, and for more recent periods because of poor early data coverage. Finally, according to the Report, the rise in surface temperatures since 1950 very likely cannot be reproduced without including anthropogenic GHGs in the model forcings, and it is very unlikely that this warming was merely a recovery from a pre-20th century cold period.

DISCUSSION AND CONCLUSION The basic facts of global climate warming have been summarized in this chapter based almost exclusively on the Fourth Assessment Report of Working Group I of UN’s Intergovernmental Panel on Climate Change. These facts refer to changes due to global warming, in atmospheric constituents and in RF, in surface and atmospheric climate change, in changes in snow, ice and frozen ground and in oceanic climate change and sea level. There is no doubt that the findings of the above Report appearing in this chapter are not arbitrary. They are all well documented, based on the most recent scientific research available. Particular care has been taken in the Report, so that the findings be characterised by a corresponding degree of confidence, expressed qualitatively by the terms “likely” or “very likely”. Findings that are not certain enough are eiCopyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

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ther characterized as such or are ignored. Thus, decision makers are disposed of a concrete ground of knowledge about facts as well as of forecasts about the evolution of our planet in future decades and even centuries, on which they may rely in order to work out policies and formulate decisions. In order to summarize and further explicate the existing knowledge, the Working Group I Report devotes one chapter (chapter 9) on the subject of understanding and attributing climate change (Hegerl et al., 2007). The arguments are focused mainly on ascertaining that warming of the climate system is human-induced. In particular, in chapter 9 of the Report (Hegerl et al., 2007), among others, the following are summarized: •

•

•

Human-induced warming of the climate system is widespread. Anthropogenic warming of the climate system can be detected in temperature observations taken at the surface, in the troposphere and in the oceans. GHG forcing has very likely caused most of the observed global warming over the last 50 years. The observed pattern of tropospheric warming and stratospheric cooling is very likely due to the influence of anthropogenic forcing, particularly GHGs and stratospheric ozone depletion. Regarding anthropogenic forcing, it is likely that it has contributed to the general warming observed in the upper several hundred meters of the ocean during the latter half of the 20th century. Anthropogenic forcing, results in thermal expansion from ocean warming and glacier mass loss. It has very likely contributed to sea level rise during the latter half of the 20th century. It is likely that there has been a substantial anthropogenic contribution to surface temperature increases in every continent except Antarctica since the middle of the 20th century. Anthropogenic influence has been detected in every continent except Antarctica (which has insufficient observational coverage to make an assessment), and in some sub-continental land areas. No climate model that has used natural forcing only (i.e. zero anthropogenic contribution) has reproduced the observed global mean warming trend or the continental mean warming trends in all individual continents except Antarctica over the second half of the 20th century. Surface temperature extremes have likely been affected by anthropogenic forcing. Many indicators of climate extremes and variability, including the annual numbers of frost days, warm and cold days, and warm and cold nights, show changes that are consistent with warming. An anthropogenic influence has been detected in some of these indices, and there is evidence that anthropogenic forcing may have substantially increased the risk of extremely warm summer conditions regionally, such as the 2003 European heat wave.


Global Warming 61

•

•

•

Anthropogenic forcing has likely contributed to recent decreases in arctic sea ice extent and to glacier retreat. The observed decrease in global snow cover extent and the widespread retreat of glaciers are consistent with warming, and there is evidence that this melting has likely contributed to sea level rise. Trends over recent decades in the Northern and Southern Annular Modes, which correspond to sea level pressure reductions over the poles, are likely related in part to human activity, affecting storm tracks, winds and temperature patterns in both hemispheres. The response to volcanic forcing simulated by some models is detectable in global annual mean land precipitation during the latter half of the 20th century. The latitudinal pattern of change in land precipitation and observed increases in heavy precipitation over the 20th century appear to be consistent with the anticipated response to anthropogenic forcing. It is more likely than not that anthropogenic influence has contributed to increases in the frequency of the most intense tropical cyclones. Many observed changes in surface and free atmospheric temperature, ocean temperature and sea ice extent, and some large-scale changes in the atmospheric circulation over the 20th century are distinct from internal variability and consistent with the expected response to anthropogenic forcing. The simultaneous increase in energy content of all the major components of the climate system as well as the magnitude and pattern of warming within and across the different components supports the conclusion that the cause of the warming is extremely unlikely ( 99% probability of occurrence

Very likely

> 90% probability

Likely

> 66% probability

About as likely as not

33 to 66% probability

Unlikely

< 33% probability

Very unlikely

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