Business is showing government it’s time to raise ambition on climate change
Nigel Topping, CEO of the We Mean Business coalition
At the close of the U.N. Climate Action Summit in New York, where global leaders gathered to discuss the urgent need to step up efforts on tackling climate change, it’s crucial policy makers take confidence from the shift that is happening in the private sector across the world. It’s not going to be possible to win the fight against climate change without business driving the innovations and market changes towards a zero-carbon economy.
Since June, in response to a call to action, 87 companies with a combined market capitalization of over US$ 2.3 trillion and direct emissions equivalent to 62 million cars on the road for one year — are taking action to align their businesses with what scientists say is needed to limit the worst impacts of climate change. The companies collectively represent over 4.2 million employees from 28 sectors and are headquartered in 27 countries. They have committed to set climate targets across their operations and value chains aligned with limiting global temperature rise to 1.5°C above pre-industrial levels and reaching net-zero emissions by no later than 2050.
This powerful signal from business to global governments shows that robust decarbonization is desirable and achievable — and that it makes good business sense.
It’s critical that the new level of corporate climate leadership that we’re seeing today is met with an increase in global government ambition so companies have the clarity and confidence they need to invest in the zero-carbon economy of the future. Some of the companies already aligning their business strategies with the latest science on climate change include SwissRe, Danone, IKEA, Salesforce and L’Oreal. They are some of the most ambitious of the group of nearly 650 companies already committed to the goals of the Paris Agreement through the Science Based Targets initiative.
These 87 companies are the vanguard, and the rest of the private sector will follow suit because business knows that decarbonization is the only way to retain a competitive advantage. The question is: Which countries and industries will lead in the zero-carbon transition?
Notably, Russia is beginning the process of joining the Paris Agreement after the country’s manufacturers warned that staying out of the deal would damage their global competitiveness. For governments, the transition will unlock new economic opportunities and create jobs. The New Climate Economy reports that shifting to a low-carbon economy will create a $26 trillion growth opportunity and 65 million new jobs by 2030.
The companies that are stepping up their action are proof that businesses from all different industries and geographies are seizing the opportunities of decarbonization at the most ambitious level — working toward reaching net-zero emissions globally by 2050. They represent telecommunications, power generation, heavy industry and more — hailing from the UK, the US, India, Kenya, Spain and other regions of the world.
Since the Paris Agreement was signed in 2015, hundreds of companies have taken climate action and increased the standard of ambition. This — paired with the fact that technology advances are accelerating the zero-carbon transition — signals that major transformations are underway. New renewable electricity from unsubsidized wind and solar is now cheaper than coal in most countries, and as costs fall and performance improves, electric vehicle sales are rising at an exponential rate.
Building on this momentum to create a prosperous, net-zero carbon economy by 2050 requires systemic transformation of unprecedented pace and scale. Business leaders cannot do it alone; strong and decisive political leadership is a crucial complement.
Feike Sijbesma, CEO of Royal DSM, the Dutch health, nutrition and materials multinational company, says it is critical that policymakers implement the policies needed to embed climate action into our financial system, such as carbon pricing. Royal DSM and other corporates are increasingly calling for more clarity on climate policies. For example, in May, over 120 business leaders called on the UK Prime Minister to legislate for a net-zero emissions by 2050 target; the target was set the following month.
2020 marks a turning point, as many countries will be updating their national climate plans and long-term strategies in support of the Paris Agreement. If governments use this opportunity to solidify their economic development pathways and plans for a net-zero carbon future, they will unlock even greater business leadership.
Collective policy and business action are essential to accelerating progress. The companies committed to limiting global warming to 1.5°C stand ready to support governments in the development of effective climate policies, which are essential to unlocking further investments in climate solutions. Building on business leadership, all governments must move confidently toward net-zero emissions by 2050.
Climate action thrives when governments and businesses push each other to go further and faster on emissions reduction targets, creating a positive ambition loop. May this ring ever true for the businesses and countries that will unveil their climate plans at the U.N. Climate Action Summit. There is no time to lose in the race to the zero-carbon future.