Getting Businesses To Act on the Climate Crisis
“There is no business to be done on a dead planet” – David Bower
What did the IPCC Report say?
‘Code Red for Humanity’ made headlines everywhere as IPCC released its Sixth Assessment, the first major IPCC review to specifically focus on when the world might pass the 1.5°C and 2°C warming levels. As you may guess from the headline, the findings were not very cheerful. The report confirmed that “it is indisputable that human influence has warmed the climate system, raising global surface temperature.” The authors also suggested that the world is likely to pass 1.5°C in the early 2030s, in the absence of rapid emissions mitigation.
While the report overtly focuses on policymakers, businesses have a crucial role to play in this race to zero; they are at the forefront of this transformation. It was reported in 2017, that 100 companies are responsible for 71% of the global emissions. That’s colossal! But the room for corporate climate action is just as monumental. While the urgency to fight climate change is a big complex problem, we must achieve two major goals- radical emission reduction and reversing nature loss to create carbon sinks.
CEOs and Climate Change
Edelman Trust Barometer found that 74% of people around the world want CEOs to take the lead on climate change instead of
waiting for governments. Further, 73% think it’s important for CEOs to speak out about climate change in particular. We need to
make corporate climate action mainstream. We need millions of companies to get on track to drastically reduce their emissions
by 2030. To reach these goals, we need to go all in on climate action. Governments and businesses need to work collaboratively.
But how can companies make the strides needed to limit the most catastrophic effects of the climate crisis? What systematic changes need to be put in place? What has proven effective so far for climate crisis? Here are a few ideas to fight climate change:
1. Sector-wise emissions reduction – We need to be systematic in our approach and go in for a sector-wise emission reduction. This would involve stringent environment clearances handed to businesses. No compromises or shortcuts should be allowed while factoring in the impact on the environment. There is no argument that we need to completely transition to a renewable source of energy. Many coal, gas, and oil companies are already transitioning to renewables but investment in renewables is far below where it needs to be. We need to amp up our investment in a carbon neutral future, and a central part of achieving carbon neutrality is to transform our energy systems to run on cleaner sources like solar and wind energy. The clean energy shift is a double-win for the planet and for businesses, but it will require urgent and large-scale efforts to shift capital now.
Companies also need to look into their value chains for emission reduction. Value chain emissions include all the emissions “outside the company walls” and upstream activities, such as from suppliers, and downstream activities, such as sold products. They normally represent the largest share of a company’s total footprint. Enterprises need to work actively to drive down these value chain emissions.
2. What gets measured, Gets Managed – The first step in transitioning to a sustainable business is to measure the current carbon emissions. Identifying and quantifying CO2 emissions via sustainability software helps to identify excessive energy usage or other inefficiencies. Lowering GHG emissions typically goes hand in hand with increasing efficiency and cost-effectiveness in a company’s processes. With the rise in carbon emission trading and carbon tax, more companies have to pay a price for every tonne of CO2 they emit. So, GHG reduction is not just profitable for the environment but also for your business.
Organisations can use various tools to measure and track their consumption. Tools like carbon tracking software enable you to prepare for future regulations, which otherwise might have a negative financial impact on your company and its value chain. With increasing pressure by governments and consumers to take more climate action, carbon disclosure and transparency on reduction targets will also benefit your company’s competitive advantage and reputation.
3. Incentivise not penalise – A long debated theory across various aspects of life—and we’re debating in favour of the former. A growing collection of evidence seems to support that incentivising companies for positive climate action works better than penalising them for lack thereof. Providing incentives for positive climate action in the form of tax breaks, loans, carbon credits or non-financial forms like, recognition and government cooperation. This would help smoothen the transition for businesses to a sustainable one. Such incentives would be attractive to businesses across sectors, and encourage companies to adopt company policies and processes that are more in line with the global climate goals.
4. Authenticity is key – In the world of greenwashing, gathering authentic data is critical. We read that about 70% of the global economy is committing to net-zero by 2050, but are they actively working towards cutting GHGs now? Many companies underreport their emission
data while others hide the actual data in the fine lines.
With our tiny window for action vanishing fast, we cannot afford carbon washing anymore. It must be different this time—pledges must lead to practical policy and quickly. Globally, an effective and standard reporting format is lacking which occasionally makes it a difficult task to get the detailed data from companies. Since ESG is an evolving sector, the tools are still being developed and refined. As we become more efficient at gathering authentic ESG data, stringent action needs to follow for the companies not complying/underreporting their data. We also need to celebrate the companies working hard on becoming a sustainable business so that more follow suit.
The IPCC Report has made it clear that we need to take urgent climate action. This requires businesses to step up to a new level of leadership. This will demand both words and actions: setting science-based targets and making the necessary investments to meet those goals; collaborating across industries and supply chains; adopting and deploying technologies to accelerate sustainability; and, leading on climate policy. Tetra Pak’s transformation is one of the best case studies to understand the climate crisis and how to act upon it. This is the moment where we leave behind our deeply flawed business as usual approach, and step into a world where business is a force of positive change working towards a triple bottom line.