The year business steps up on climate action
Jen Austin, Policy Director at the We Mean Business coalition
It is a pivotal year in the fight against climate change. In 2018, the imperative to step up and shift the curve of emissions to well below 2 degrees Celsius has never been stronger.
By raising their climate ambitions, businesses can make it clear to governments that they see the low-carbon economy as a driver of innovation, competitiveness, risk management and growth. With the backing of business, governments can move further and faster on their national climate plans.
This combination of private and public sector ambition can create a roadmap for delivering the Paris Agreement goals — but the opportunity must be seized now if the global economy is to be on track for deep decarbonization by 2020.
The progress by forward-looking companies will come to the fore at the Global Climate Action Summit in September, where businesses will demonstrate they are harnessing the opportunities of the low-carbon transition. Then, in December, governments of the world will meet at COP24 and take stock of their collective efforts and private-sector progress through the Talanoa Dialogue, where participants will share ideas, skills and experience about making decisions for the collective good.
This irrefutable evidence that business is seizing the opportunity of implementing the Paris Agreement will give governments added confidence to increase their own ambition by 2020 when they will have the chance to update their climate targets.
Ahead of schedule
The good news is that many of the biggest emitters are ahead of schedule in achieving their 2030 targets, laying down the gauntlet to other countries and businesses to accelerate decarbonization efforts.
India is forging ahead with its commitment to increase the share of non-fossil energy to 40 percent by 2030 and expects to reach 57 percent renewable energy capacity (PDF) by 2027. China is on track to peak emissions well before its target date of 2030 — and research has found that this might happen by 2025.
Renewable energy prices have plummeted and investment continues to soar. Solar prices have dropped by more than 60 percent since 2009, while offshore wind costs have halved, according to Bloomberg New Energy Finance.
The electric vehicle (EV) rollout is gathering speed, with India aiming to electrify all new cars by 2030, while Norway, the UK and France are all banning the sale of gasoline and diesel cars in the coming decades. Automakers are responding by committing to rapidly electrify their fleets over the coming years.
The Paris Agreement is increasingly being translated into concrete policies around the world, giving businesses even more clear policy signals to inform their planning.
Private sector signals
The number of companies and investors aligning their business plans with the goals of the Paris Agreement has risen rapidly. Around 1,200 companies aim to have set a science-based target by the end of 2019. Of these, 333 major corporations already have set or committed to set science-based targets through the Science-Based Targets initiative, while 864 companies declared their ambition to do so in their 2017 disclosures to CDP.
Google, Wells Fargo and Autodesk are among the companies that already have achieved their goal to source 100 percent of their electricity needs from renewables, having committed to RE100 — run by The Climate Group in partnership with CDP — while Dalmia Cement recently reported being almost halfway to doubling its energy productivity by 2030 (using a 2010-11 baseline) as part of The Climate Group’s EP100 commitment.
Investors are heeding the signs from governments and business and sending strong signals of their own about the importance of companies considering climate-related risks. At French President Emmanuel Macron’s One Planet Summit in December, investors made major announcements: the World Bank moved to stop investing in upstream oil and gas projects, while AXA, the world’s third-largest insurance company, announced that it is ending insurance and investment in tar sands companies and the pipelines that transport the fuel, and selling off $2.95 billion of coal investments.
Norway’s biggest private pension fund, Storebrand, announced a new $1.3 billion clean bond program, adding to the boom in green bonds and low-carbon investments. A group of influential investors with more than $26.3 trillion in assets under management pledged to engage with the 100 companies responsible for around 85 percent of global emissions to push them to improve governance and disclosure around climate risk and to take action to reduce their emissions in line with the goals of the Paris Agreement.
This is in addition to the 237 companies (PDF) — with a market capitalization of over $6.3 trillion — that have committed to support the Task Force on Climate-related Financial Disclosures to better inform themselves and their investors of the material risks and opportunities that climate change presents.
There is no better example of the irreversible movement towards the low-carbon economy than the continued climate action that US companies, investors and local governments are taking despite the national government’s plans to withdraw from the Paris Agreement.
Like hundreds of businesses and governments across the world, it’s clear they take the increasingly mainstream view, that taking climate action is imperative to protect themselves and their shareholders from the worst impacts of climate change and to drive competitiveness now and into the future.