Climate Change Regulations
Mapping a Greener Economy
CFO Alex Sink's former deputy chief of staff, Kathy Baughman McLeod, aims to help businesses understand and benefit from efforts to curb carbon emissions.
Kathy Baughman McLeod, 39
» Hometown: Tallahassee
» Family: Husband; two children
» Education: Bachelor’s in international relations, master’s in geography — both from Florida State University
» Previous positions: Deputy chief of staff, Chief Financial Officer Alex Sink (2007-09); co-founder and principal, Healthy Development Inc.; (2004-07); founding principal, Baughman McLeod Associates (2004-05); director, Florida Communities Trust, Florida Department of Community Affairs (2003-04); director of government affairs, southeast region,
Trust for Public Land (1997-2003)
» On leaving Sink’s office: “I can help her in a different way from the outside. I can say some things to her that I couldn’t before. It’s a nice evolution of our relationship.”
Today, following two years as deputy chief of staff to Chief Financial Officer Alex Sink, McLeod is again charting environmental territory. Hired in April to develop and direct a new public policy group at the Bryant Miller Olive law firm, McLeod is helping guide businesses and organizations as they navigate an emerging economy in which carbon emissions will come with a higher price. It doesn’t matter whether you believe in climate change, McLeod says. “The market believes in it, and the regulation is real. That’s a certainty.”
Businesses, she says, will need to keep up with fast-evolving opportunities and challenges created by efforts to curb emissions of greenhouse gases. Those efforts are moving quickly: At the national level, the Environmental Protection Agency, under the direction of administrator Lisa Jackson, recently issued a proposed finding that carbon dioxide and other heat-trapping gases “threaten the public health and welfare of current and future generations” — a step that most see as a precursor to the regulation of greenhouse gases under the Clean Air Act. Lawmakers on Capitol Hill have been working on various climate change proposals that address carbon regulation.
Florida, meanwhile, already has moved further down the same path. Last year, at the behest of Gov. Charlie Crist, the Legislature gave DEP the authority to develop a regulatory program for carbon emissions. Over the past year, the Florida Energy and Climate Commission, a nine-member panel charged with developing the state’s energy and climate change policies and programs, has been drafting a cap-and-trade policy. McLeod, an appointed member of that commission, expects the panel to finish its recommendations by August.
During her two years in the CFO’s office, McLeod was a key player in initial efforts to develop sustainability policies. She helped launch a series of “Conversations on Climate Change” with the governor and his Cabinet in 2007; managed a climate change, insurance and finance tour of the U.K. that same year; organized a CEO roundtable on Clean Energy and Florida Business; and directed financial feasibility projects such as a state clean energy fund, sales of state public infrastructure and submerged lands leasing.
She also led an effort that made Florida the first state to consider companies’ impact on climate change as the state makes investment decisions. As part of its semi-annual review process, the state uses the RiskMetrics Group to analyze the corporate bond holdings of 20 external fund managers and one internal fund manager. Fund managers who have made investments in companies with good climate change governance practices can receive higher scores on their investments.
The ongoing financial crisis and the liquidity demands on state government have created challenges for that program, but McLeod says it has helped the state develop a good baseline for assessing climate risk in its investments. “At first when we started doing it, people would ask, ‘Well, if they score poorly, would you dump that investment?’ The answer is no. It’s not intended to dump them. It’s intended to raise awareness of it, and you can drive behavior by that,” she explains.
Some businesses are already going green, including Florida Power & Light, which has installed solar panels at its new DeSoto plant.
McLeod says other companies can learn from the example. The federal economic stimulus package has created opportunities for small businesses to jump on the green wave, whether by using tax incentives, bonds, grants or loan guarantees aimed at companies that create jobs related to renewable energy generation.
Other companies, she says, need to simply begin preparing for the economic impact of climate-change regulations. “There are so many businesses and leaders that don’t fully have a grasp of climate change, in terms of what it means for business, and economics and the financial side.”
The debate over the science behind global warming and the merits of putting a price on carbon will likely continue, but the “tipping point” in terms of regulation, McLeod says, is already here. “Business thrives on predictability and certainty. This is something you can plan for, so you can take advantage of it.”