Business is harnessing the Paris Agreement as a driver of growth
We Mean Business coalition
In the two years since the Paris Agreement was signed, the international business community has witnessed a sea-change in the scale and ambition of corporate climate action.
There has been a 10-fold increase in the number of companies committing to bold climate action via the We Mean Business coalition’s Take Action campaign. Over 640 companies have now committed, compared to just 62 before the COP21 summit in Paris in 2015.
These forward-looking companies have a combined market cap of more than $15.6 trillion – equivalent to 20% of the entire global economy. Together they have made over 1,090 commitments through the campaign, harnessing climate action as a driver of innovation, competitiveness, risk management and growth.
This group of companies includes over 30 with a market cap of more than US$100 billion and represents some 2.31 gigatons of Scope 1+2 emissions, equivalent to the total annual emissions of Russia.
It also includes more than 130 industrial companies, such as Scania, UPS and Thalys, as well as the companies that produce 50% of all India’s cement and over 40 utilities.
Growing momentum
More and more companies are utilizing science-based targets to unlock the business benefits of the low-carbon transition. To date, over 327 companies have committed to set a target via the Science Based Targets initiative (SBTi), or have already had those targets approved. These targets ensure their plans for carbon reduction meet the level of ambition needed to limit the increase in global average temperature to well below 2°C.
This number is set reach around 1200 by the end of 2019, with an additional 864 companies aiming to set a science-based target within two years, according to CDP data.
“We really see a lot of value in science-based targets in driving activities within our business, because of the motivational benefit they deliver,” Kevin Rabinovitch, Global Sustainability Director at Mars, said.
“People that work at Mars and associates of Mars care about this, they care about their communities and they care about their children’s future… This makes people more creative, more excited and they work harder – and they find better ideas which then helps us do a better job of delivering.”
Target setting is common practice among the world’s largest companies – 89% of the 500 largest companies globally have emissions reduction targets in place, according to CDP.
In addition, Schneider Electric committed to sourcing 100% renewable electricity by 2030 through RE100, and doubling its energy productivity by 2030 (2005 baseline) through EP100. In addition, French utility EDF Group has committed to transitioning to electric vehicles by 2030 through EV100, an initiative recently launched by The Climate Group, aiming to make electric transport “the new normal”.
Meanwhile, some 1,400 companies are now factoring a carbon price into their business plans. That’s 8 times more than four years ago and includes over 100 Fortune Global 500 companies. Of world’s largest, high-emitting companies, 89% now have carbon emissions targets, with a fifth planning low-carbon strategies to 2030 and beyond.
They are doing this because taking action on climate change is good for business. The STOXX® Global Climate Change Leaders index, which is based on CDP’s “A list” database, outperformed the STOXX® Global 1800 index by 26% over the past five years.
Bank of America Merrill Lynch’s Managing Director, Climate Finance, Abyd Karmali, said the bank is taking action on climate change because: “Our clients demand it, our employees demand it and our shareholders demand it”.
“The second point is that it’s great business. We have deployed around US$55 billion in the last four years alone in various parts of the clean energy economy. And then the third reason is this is one of the fastest growing areas of the economy – we’re creating jobs and contributing to GDP in all of the countries where we do our investments,” he added.
Renewable power
Many forward-looking businesses have been embracing the shift away from coal and other fossil fuels, by committing to shift to 100% renewable power. RE100, a collaborative global initiative, from The Climate Group in partnership with CDP, unites 118 influential businesses committed to 100% renewable electricity.
Together, they are creating more than 154 terawatt-hours (TWh) in demand for renewable electricity annually – about as much as it takes to power Ukraine.
Jean-Pascal Tricoire, Chairman and CEO, Schneider Electric, said: “When it comes to the climate, I’m neither an optimist nor a pessimist, I’m an activist. Prosperity and energy are intertwined. For Schneider Electric, contributing to the process of achieving carbon neutrality is an ambitious and productive challenge. Joining The Climate Group’s EP100 and RE100 initiatives is a demonstration of how consumers and business can be empowered to ensure the affordability, resilience, sustainability, and security of the energy that they consume.”
“Electricity costs are one of the largest components of our operating expenses at our data centers, and having a long-term stable cost of renewable power provides protection against price swings in energy,” Urs Hölzle, Senior Vice President, Technical Infrastructure at Google, said.
Many of these companies are looking beyond their own operations and actively helping to push the global market for renewables forward. For example, HSBC recently announced it will provide US$100 billion in sustainable financing and investment by 2025, while also committing to reduce exposure to thermal coal and transition to 100% renewable electricity.
“We plan on working closely with RE100, other corporates, governments and regulators to open up renewable energy markets and support the decentralization of power generation across our operational centers,” Andy Maguire, Group Chief Operating Officer, HSBC Holdings said. “This will enable HSBC and other corporates to develop PPAs globally and support the transition to a low-carbon economy and 2-degree world.”
Meanwhile, leading utilities like EDP and ENEL have set science-based targets to help transform energy markets and deliver their corporate strategies.
“Enel’s engagement in climate action is an integral part of the group’s business strategy, as shown by our pledge to become CO2-free by 2050 and our focus on the group’s renewable growth,” Enel Group CEO Francesco Starace said.