Five ways companies can lead on climate actionJennifer Gerholdt, Director of Corporate Engagement for the We Mean Business coalition
More and more leading companies are embracing the transition to a low-carbon economy as a driver of innovation, competitiveness, risk management and growth. But sometimes it can be unclear what the most effective strategies or actions are to reap the business benefits of this transition.
That’s where the We Mean Business coalition comes in. We Mean Business is a global coalition of nonprofit organizations working with the world’s most influential businesses to take action on climate change. To date, nearly 750 companies representing $16.9 trillion in market cap have made over 1,225 climate commitments through our Take Action campaign, ushering in a new era of corporate climate leadership.
Here are five key ways that we are seeing companies step up on climate action this year:
1) Setting science-based targets to reduce emissions
Science-based targets are the new gold standard for companies setting ambitious emissions reduction goals. They are in line with the level of decarbonization that, according to climate science, is required to keep global temperature increase within 1.5 to 2°C compared to pre-industrial temperature levels.
More than 425 companies have committed to setting science-based emissions reduction targets, including major power utilities such as Ørsted, the world’s biggest company by revenue, Walmart, and consumer goods giants such as Unilever. Plus, over 800 more have indicated that they plan to set science-based targets before 2020.
Companies are increasingly seeing that the risks of not acting on climate change is a real threat to their business – from stranded assets to increased disruptions in their supply chains and operations due to extreme weather. They are also finding that the cost savings from acting on climate are significant. Take Walmart, which saved nearly $1 billion in a single year, due to actions taken toward achieving its science-based target.
2) Committing to 100 percent renewable power
As the cost of wind and solar continues to drop, companies are embracing renewable energy and saving significantly on energy bills. Over 130 companies have committed to go ‘100% renewable’ as part of The Climate Group’s RE100 initiative, and a growing number of these companies are reaching their targets ahead of schedule. Apple and Google are now both 100 percent powered by renewable energy, having just joined the initiative in 2016. As part of its global commitment, Budweiseris working with Thunder Ranch Wind Farm in Oklahoma to meet its electricity needs for brewing in the U.S.
Together, RE100 companies are now creating annual demand for renewable electricity equivalent to what is needed to power all of New York state.
One of the most effective ways for companies to drive down costs while cutting emissions is increasing energy productivity.
The Climate Group’s global EP100 initiative, in partnership with the Alliance to Save Energy, brings together a growing group of energy-smart companies committed to using energy more productively, to lower greenhouse gas emissions and accelerate a clean economy. Companies can also engage with the EP100 initiative by cutting out energy waste and owning and operating energy-smart buildings.
Energy productivity improvements at Wisconsin-based Johnson Controls have contributed to both a 41 percent reduction in the company’s greenhouse gas emissions intensity and over $100 million in annual energy savings.
4) Accelerating electric transport
Leading companies are helping accelerate the transition to electric vehicles (EVs) and make electric transport the new normal by 2030. In doing so, they’re not only ensuring that their emissions are reduced, but they’re helping to shape a dynamic and growing market that will allow others to decarbonize.
Companies, like the global leader in printing technology, HP Inc., are embracing the opportunities that EVs offer. HP already offers more than 120 EV charging stations to employees in Germany, India, Israel, the United States and U.K., and will now work to roll out this offering globally.
5) Using disclosure as a strategic tool
Since their launch last year, the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)have been embraced by forward-looking businesses as a way to manage climate risk, maximize opportunities and demonstrate to investors that they are taking climate issues seriously.
Delivering on the recommendations helps companies become more resilient to the physical and transitional risks associated with climate change. Companies investing in the assessment and understanding of climate-related risks and opportunities will be able to make better decisions for their future business, and support the fair and orderly market transition to a low-carbon economy.
S&P Global Ratings is using the TCFD recommendations as a benchmark to better assess the climate risk faced by certain companies, which in some cases is influencing their credit ratings.
Taking action on climate change represents one of today’s most significant business opportunities. 2018 is a critical year for businesses to step up their climate commitments so governments have the confidence needed to increase their national climate plans, thereby supporting companies in achieving their climate and sustainability goals.
Companies can consider leveraging some of this year’s key moments such as the Global Climate Action Summit and Climate Week NYC to unveil their climate leadership, and become part of the We Mean Business coalition. If you would like to explore how to set and achieve climate and energy targets aligned with your long-term business strategy, contact us at [email protected].