In a year where “record-breaking” weather events have become the norm, the urgency of the climate crisis has never been more tangible. Extreme temperatures engulfed vast regions of the world, exacerbating wildfires in Canada, Hawaii and Europe, and set the scene for heavy rainfall and devastating flooding on almost every continent.
The need for bold leadership and immediate action on climate change is indisputable, yet the pace of progress remains painfully slow. We need a clearer signal from both government and business leaders that they are ready to turn climate ambition into action.
While we have made great strides in scaling-up clean energy solutions, with clean energy getting more affordable each year, emissions are still rising globally. That’s because we have not done enough to scale down the primary cause of climate change: burning fossil fuels.
Today, fossil fuels still account for close to 80% of global energy supply, a share that has hardly changed for more than 25 years. The International Energy Agency’s Fatih Birol recently forecast that fossil fuel consumption would peak before 2030 and then begin to decline. While existing and planned policies are projected to bring about the peak in fossil fuel consumption forecast by the IEA, they are not sufficient to wind down demand in line with keeping global warming within 1.5 degrees Celsius. This is why we need policymakers to be bold.
With heightened geopolitical tensions, increasing energy security concerns leading to higher costs that are driving inflation, and high interest rates across much of the Western world, the climate crisis is not the only issue on the agenda for political leaders. However, tackling climate change is one on which they do not need to act alone. Businesses also have the tools and the influence to drive change.
The role of businesses has never been more important. As we enter an era of doubts and some backlash against pro-climate policies, it’s critical that business leaders step forward and send a clear signal to governments not to backtrack on their climate commitments.
This week 131 businesses from around the world, across sectors and company sizes, signed a letter to global leaders ahead of COP28 in Dubai urging them to phase out fossil fuels by the 2040s. Companies including Volvo Cars, Mahindra Group, BT, Vodafone, IKEA, eBay, Nestle, Iberdrola, JLL and Unilever called on leaders to set clear targets and timelines for phasing down and out unabated fossil fuels, and to back that up with policies enabling the rapid scaling of clean energy.
Policy coherence is vital for business. A recent poll conducted by the We Mean Business Coaltion found that 82% of businesses surveyed see government regulation as the most important, or second most important, accelerator for the energy transition. By outwardly committing to the acceleration of clean energy, and providing a clear, science-aligned timeline for their own fossil fuel transition, businesses will give governments the confidence to act. This is turn will help create a regulatory environment in which clean solutions can be deployed at the speed and scale required. This creates a positive ambition loop, driving ever greater progress.
The challenges facing businesses vary by region, industry and scale, and while there is no one-size-fits-all solution, there are clear steps that every business can take to begin driving this change, starting with a commitment to phasing out the use of unabated fossil fuels across operations by 2040 at the latest.
Of the business leaders we polled, nearly half (47%) surveyed expect to phase out fossil fuels from their companies by 2040, and 70% by 2050. It is a good start, but more companies need to come on board. That is why We Mean Business has developed, with advice from the Science Based Targets initiative and the Energy Transitions Commission, a set of principles for global fossil fuel phase-out. These detail what each actor – oil and gas producers, corporate energy consumers, government and finance – must do to ensure a well-managed and just transition from fossil fuels to clean energy by the 2040s at the very latest.
Any company that has set a science-based target should be looking at how to reduce and replace the use of fossil fuels. Many of the clean energy solutions we need exist today, and businesses and governments that invest in these technologies will send a clear signal to peers that the move to net zero can be profitable, manageable and just.
This isn’t just about what’s good for the planet, it’s also what’s good for business. Companies everywhere are becoming acutely aware of the growing threat to their operations. According to PwC, more than half of chief executives say their companies will be exposed to some degree of climate risk in the next five years.
Those that choose to rapidly scale renewables, electrification and energy efficiency are poised to reap the significant benefits of protecting their businesses from the impacts of climate change. An EY survey found that nearly 70% of over 500 global companies reported higher than expected financial returns on climate initiatives benefiting the planet.
Boldness and courage in voice and action are urgently needed. Businesses and governments must rise to the challenge of a well-managed transition from fossil fuels to clean energy.
