A CLIMATIC FIRST STEP
In January, the European Union fired a shot heard round the world in what could evolve into a global battle against climate change. The unexpectedly aggressive energy and climate policy calls for minimum cuts of 20% in CO2 emissions by 2020 and is the first outline for emission limits that go beyond the Kyoto Protocol's expiration date in 2012. "The package is coherent and ambitious and it integrates climate and energy issues," says Kate Hampton, policy manager with climate-related investment banking group Climate Change Capital in London. "It remains to be seen whether the EU is able to agree on this and achieve it, but if you want to solve the climate-change problem, this is the first step towards doing that."
In stark contrast to the Bush administration, which until recently argued against the need for any new restrictions in the developed world, the EU has proclaimed its readiness to act alone if necessary. The plans will next be debated by the leaders of EU member states at a summit in Germany in March, and the future of the proposals rests on the willingness of those states to keep strictly national interests in check, says Hampton: "If they take an a la carte approach, then their coherence will completely unravel because a lot of proposals are dependent upon each other."
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States may find it hard not to tamper with the plans, which touch on a host of sensitive subjects. The minimum 20% reduction in CO2 levels, for example, could be increased to as much as 30% if other major carbon emitters are willing to emulate the EU's commitment. The plans take a more rigorous approach to Europe's existing emissions trading scheme (ETS), meaning that the cost of buying CO2 emissions beyond a company's allotment should increase.
The proposals also envisage an unprecedented common energy policy. Until now, nations have jealously guarded the right to determine their own energy mix. If the new policy becomes law, they would find themselves bound by EU-wide mandatory targets for renewable energy use. It would also force all new power plants to be built or retrofitted in a way that would justify investment in the development of technology to capture and store CO2 emissions.
These changes will be controversial in countries like Germany, Poland, France and Greece, which were all criticized last year for undermining the ETS–although Germany is now the holder of the EU's rotating presidency and is under extra pressure to uphold climate objectives. There has already been some pushback from the power sector, but many European companies now either accept that global warming is a real phenomenon with unavoidable business implications or recognize that the tide of political and public opinion has turned decisively against inaction.
As the EU unveiled its proposals, chairmen and CEOs from BP, Shell, British Airways, Siemens, Rolls-Royce and 12 other companies met in London as part of a new climate task force. "The risks are too big to ignore. The business community needs to take action which is urgent, concrete and measurable," says Ben Verwaayen, CEO of telecom giant BT and chairman of the new group.
LOTS OF M&A, LOTS OF MISHAPS
With experts predicting a record year in 2007 for mergers and acquisitions, a new survey finds that most executives characterize their mergers as poorly executed. Of the 124 executives surveyed, 63% said the integration efforts were at best average or below average. Only a third said they successfully completed the integration in the optimal time frame of six months to a year, while two-thirds said it took between a year and five years to do. The problem? Management teams are not addressing integration issues quickly enough. "You need fast turnaround on key decisions–around personnel, organizational structure, infrastructure information technology and operational integration," says survey author Timothy Galpin, a senior fellow at Katzenbach Partners LLC. He likens the situation to an emergency room: "You've got to get the patient off the table because there are immediate needs [to tend to] right now."
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