The business end of climate change
by Paul Simpson, CEO, CDP
We established CDP – then the Carbon Disclosure Project – over 15 years ago with a vision that one day businesses would be playing an active leadership role in combating climate change. Last December’s historic Paris Agreement set an unequivocal new direction for corporate climate action, and today our vision is becoming reality.
Since Paris, a growing number of major companies around the world have been showing a real commitment to playing their part in decarbonizing the economy. A new report launched today by the We Mean Business Coalition, along with CDP, shows just how significant that business contribution could be.
The business contribution
The report, called The Business End of Climate Change, gives us the first ever figure for what business can contribute on the path to keeping global temperature increases below 2°C. That figure is based on business signing up to five key climate change initiatives:
- Science Based Targets (of which CDP is one of the founding partners, along with UNGC, WRI and WWF)
- RE100 (a project of CDP and The Climate Group)
- Zero deforestation (powered by CDP guidance on risk assessments, target-setting, implementation and progress tracking)
- EP100 (run by The Climate Group)
- Low Carbon Technology Partnership Initiative (LCTPI) (led by the World Business Council for Sustainable Development)
If these initiatives meet their current ambitions for company commitments, by 2030, business will have cut its greenhouse gas emissions by 3.7bn metric tons of CO2 equivalents a year. That alone is over 60% of the total emissions cuts pledged by countries in the Paris Agreement through their own Nationally Determined Contributions (NDCs). Put another way, it’s the equivalent of taking over 1,000 coal-fired power stations permanently out of use, almost 75% of the world’s total.
But business has the potential to make an even greater impact. If all relevant companies were to sign up to these initiatives, by 2030 the business contribution would amount to around 10bn metric tons of emissions reductions per year. That’s equivalent to what China, the world’s largest emitter, pumps out annually, and it would take us over halfway to a below 2°C world.
What does this mean for companies?
Put simply, these figures show that business will be a key driver of climate action between now and 2030. At CDP, we are seeing many companies already playing their part through setting emissions reduction targets in line with climate science, committing to using 100% renewable electricity or working to remove commodity-driven deforestation from supply chains.
And businesses aren’t wasting time: More than two per week have been signing up to the Science Based Targets initiative over the past year. Now, over 160 companies are planning to set ambitious targets based on climate science. Recent commitments have come from Cisco, Toyota and Metro AG. Of these, 18 companies including Sony, Dell, Pfizer, Postnord and Kellogg’s have already set and are working towards ambitious targets.
- Sony has a vision of having a zero environmental footprint by 2050 (‘Road to Zero’). This will be delivered via a 90% reduction in emissions from 2008 levels by 2050 (scopes 1, 2, and 3).The remaining 10% will be achieved through renewable energy products. Sources may be renewable energy certificates, credits or Sony’s own power generation.
- NRG has a target to reduce absolute emissions 90% by 2050 from 2014 levels (scopes 1, 2 & 3).
- Enel’s target is to reduce CO2 emissions 25% per kWh by 2020, from a 2007 base-year. The target includes the decommissioning of 13 GW of fossil power plants in Italy, and is a milestone in the long term goal to operate in carbon neutrality by 2050.
These companies are at the forefront of the global transition to a low-carbon, climate resilient economy. They are showing that all types of businesses – including carbon-intensive industries such as energy, chemicals and mining – can get on a low carbon path. And they are set to reap the benefits: Science-based targets drive innovation, reduce costs, and enhance profitability, helping companies gain long-term competitive advantage and safeguard their future prosperity.
Achieving ambition through a virtuous circle of action
To realize its full potential in tackling climate change, business must work with government to create the right regulatory framework. Our analysis reveals that business is clearly primed to take us far on reducing emissions, but they can go even further with clear and consistent policy in place.
By removing barriers and creating incentives, governments will accelerate business efforts to cut emissions. That will, in turn, make it easier for governments to achieve their NDCs – and even go beyond them.
Transparency drives a race to the top
The core principles which underpin all of the initiatives we looked at in the report – measurement, transparency and accountability – will have a critical role to play in helping business fulfil its potential. As countries work to implement the Paris Agreement, we need to shine a spotlight on progress. Disclosure of climate information is essential to keep track of corporate progress and spur ever greater action.
Companies taking steps to ensure their future climate resilience are not just managing risk, but capitalising on one of our biggest economic opportunities. The race to the top has begun and an abundance of benefits awaits.
We have arrived at the business end of climate change. Private sector ambition is clear to see, and with supportive and consistent policy in place business could take us a long way down the sub 2 degree pathway. The work has only just begun, but the impetus to ramp up ambition and drive action has never been stronger.
Read the full report The Business End of Climate Change www.businessendofclimate.org
Read our article on Five reasons why setting science-based targets makes business sense. [https://sciencebasedtargets.org/2016/06/21/five-reasons-why-setting-science-based-targets-makes-business-sense/]
Find out how your company can commit to set a science-based target [https://sciencebasedtargets.org/commit-to-setting-science-based-targets/]
Find out more about the five initiatives and others here [http://www.wemeanbusinesscoalition.org/take-action]