After the IPCC report, what should businesses do next?
The long-awaited report from the world's top climate scientists contained some stark warnings. Here's how companies should respond.
Earlier this week the world's top climate scientists delivered what is likely the most influential report of their careers, a deep-dive analysis of what it will take to avert the most dangerous levels of global warming and the disastrous impact the world faces if we fail to heed their advice.
The time and effort expended on the endeavor — the paper has been three years in the making and negotiators spent a week in South Korea wrangling line by line over the summary for policymakers — gives an indication of how influential scientists and governments hope the final document will prove.
But while the message for politicians might be clear — that much more ambitious climate policies are needed the world over to avert dangerous levels of warming — the takeaway for businesses may be less obvious. After all, it's not often that the world of the chief executive collides with that of a climate scientist.
Yet firms should not make the mistake of ignoring the report. Its findings spell out in stark terms the risks of inaction and the opportunities present in leading the low-carbon transition, each with significant potential impacts on global business.
"Don't let the fact that it's not packaged in a business-friendly structure put you off from the fact that there is some really useful things in there," advised Eliot Whittington, director of the Prince of Wales' Corporate Leaders Group. "I would urge businesses that can to find a way to access that content, because I think it is potentially really useful in informing them about the choices and the situation going forward."
The paper itself shines a spotlight on the fact that the only way to stop climate change in its tracks is to cut emissions down to net zero. That should give businesses a very clear sense of direction, Whittington said.The findings spell out in stark terms the risks of inaction and the opportunities present in leading the low-carbon transition, each with significant potential impacts on global business.
"If you want to face up to the climate change challenge, then fundamentally we need to take the greenhouse gas emissions that arise from our economy out of the equation, and therefore net zero needs to be the end point," he said. "If you want to aim for 2C rather than 1.5C, what does that buy you? It buys you a decade or two of extra time. But the destination is the same."
This should be a "simple and empowering" message for businesses, he argued, giving them a clear call to action to consider how to cut emissions within their operations. "There is a very clear end point destination which is net zero emissions, and we should all be heading towards that destination as quickly as possible," he said.
Some firms are doing just that — as BusinessGreen spotlighted recently in a long-read special on the rise of the net zero target. Tech giant Siemens has, for example, set itself a net zero target to achieve by 2030. "We welcome the IPCC's report on the benefits of limiting global warming to 1.5 degrees which supports the urgency of delivering the Paris Agreement goals," said Sarah Handley, the firm's carbon neutral program manager. She wants to see other organizations and policymakers follow suit in setting 1.5 degree targets in light of the IPCC's report.
"We are going to have to get to zero carbon as a society, which means that businesses are going to have to get to zero carbon," agreed Gudrun Cartwright, environment director of Business in the Community, a U.K. charity promoting responsible business, CSR and corporate responsibility. "It feels like there is a message from science [in this report] that is a much more specific call to action than previous [reports]," she said.
But setting a net zero target straight off the bat might not be possible for every business, experts acknowledge. For starters, some sectors of the economy need to act further and faster than others in delivering emissions cuts, according to the IPCC, while delivering net zero simply may not yet be commercially or technically possible in other areas.
According to the IPCC, the most polluting industries will need to make the most radical change. In the energy sector, renewables must seize control to provide 70 to 85 percent of power by 2050, while energy-intensive industries will need to slash their emissions by 75 to 90 percent by mid-century, and buildings and transport also will need to shift heavily towards low-carbon models. Agriculture and land use will be another target area, with an urgent drive to boost reforestation and improve soil health to create new carbon sinks.We are going to have to get to zero carbon as a society, which means that businesses are going to have to get to zero carbon.
As Whittington pointed out, responding to the report will mean "different things to different businesses." "For businesses that can set a net zero target, that is really valuable and really helpful, and probably one of the most useful things in terms of aligning themselves with a future economy that is sustainable in the long term," he said. "But not all businesses can do that."
Cartwright agreed, adding there is a danger some firms — particularly smaller outfits — can get "stuck in planning" if they believe promising net zero is the only choice. "Business needs to be thinking about what they can do now," she advised. "There's the big-picture strategy stuff, but there's also the really practical things that can be done right now. If you're a food business, for example, what are you doing about the soil that is in your supply chain? If you are not 100 percent renewable, how can you get to 100 percent renewable?"
And firms shouldn't lose sight of the need to prepare for adaptation, alongside mitigation efforts. Even 1.5C of warming will bring big changes to the world's weather systems, and firms should be prepared to manage that, said Whittington. "Climate action will also involve thinking about where you are exposed to the impacts and what that means for your business," he said, suggesting some companies may need to move their factories from vulnerable sites or even pull out of countries altogether.
"If you are a supplier to the power sector, you need to think about both the resilience of that sector and the drivers of change that will come through," he said. "If you are in the agriculture sector, you need to think about how agriculture will be more stressed, but also how about how agriculture will need to be more conscious about its emissions and potentially about the driving trends of consumption and demand."
Integrating mitigation and adaption concerns into a holistic business strategy will be crucial for reassuring investors that your business is climate-proofed, Cartwright added. "Getting money to grow your business is going to be increasingly dependent on demonstrating that you are making a positive impact, rather than just showing that you are managing risk," she said.
Of course, the business community alone cannot solve climate change. As media coverage of the IPCC report makes clear, much of the impetus to act lies at the door of policymakers and governmental leaders around the world.Integrating mitigation and adaption concerns into a holistic business strategy will be crucial for reassuring investors that your business is climate-proofed.
"Today's report reiterates the need for policymakers to accelerate action to reduce carbon emissions and meet the agreed aims of the Paris Agreement," noted Steve Waygood, chief responsible investment officer for Aviva Investors, in a comment that summed up much of the response from the business and NGO community.
And to ensure governments do respond, businesses must step up their efforts in lobbying for greener policies, Whittington advised. "We've had some really impressive leadership from some companies who are really well profiled on this, and that leadership should be celebrated," he said. "But things like this report bring home that in short order this will become a practical business-critical issue for a surprising large number of businesses, and to hear those voices louder and louder and at a concrete level in the halls of power is what we need."
Cartwright echoed his sentiment: "There's a need to let policymakers know that strong action is welcomed… that businesses want the rules of the game changed so that everyone is competing in a way that drives positive progress. That is the most important thing that businesses can do, really."
The IPCC paper is clear that the investment costs of limiting warming to 1.5C likely will be higher than for 2C — by 12 percent for the energy sector alone. But it is equally clear that 1.5C avoids some of the worst humanitarian and economic impacts of climate change, including saving millions more people from water stress, food scarcity and deadly diseases. In the long run, such action in all likelihood could be cheaper than doing nothing, it suggested.
In light of the report, businesses face a choice, according to Cartwright. "Regardless of what we do, this does change everything. We can either choose to look at it as a positive opportunity to build a robust and resilient business model that is going to take us towards a desirable view of the future… or we don't and nature will react, and then we will respond to that," she said. "So one way or another, things will change."
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