In a special report issued in early October, 2018, the Intergovernmental Panel on Climate Change (IPCC) published what will likely be one of their most dire and mobilizing research conclusions: 1.5C in global temperature rise is more dire and closer at hand (as early as 2030) than originally thought. Gone are the days where the Paris Accord’s 2C goal was sufficient. Action is needed now and is recommended by the IPCC to be accomplished in 10 short years to curb the worst outcomes .
What’s going on 10 years from now? That’s enough time to pay off a 1/3 of a mortgage. High schoolers are probably through their college years and moved into the workforce.
All that is to say, this is not very far away at all. Thanks to many climate champions in companies, legislatures, think tanks and communities across the globe, there are a foundation of tools and solutions to rise to the occasion.
There is a silver lining of the IPCC report for sustainability practitioners that have struggled to get climate change on into strategic conversations: the “uncertain, improbable and far-off” impacts of climate change just became more real, more tangible and closer to the present. Additionally, organizations from BlackRock to the Norway pension fund increasingly see Environmental, Social and Governance (ESG) risk management (of which climate change mitigation is a topic) as evidence of a strong company.
To lead in climate action, and do well by shareholders and investors, companies have a few key levers to pull:
- Set a science-based target or carbon-neutrality target – Align corporate energy reduction and emissions targets with the 1.5C pathway identified by the IPCC report. The Science-Based Targets Initiative (SBTI) encourages companies to set targets based on their own ambition levels. Why not align with the new report?
- Evaluate climate risks – There will be risks to businesses associated with the low-carbon economic & policy transition and the increased severity of physical risks (e.g., sea-level rise, natural disasters, etc.) from climate change. As companies, nations and communities respond to climate change, there will be more pressure to adopt low-carbon technologies, provide greener products & services and reduce emissions. Work with internal risk management teams and sustainability consultants to better understand where there may be risk in the various time horizons.
- Check your company’s climate resilience – How does climate change impact business strategy? Will new markets or products need to be developed? Are supply chains resilient to economic and weather changes? These are all crucial questions to help evaluate a company’s resiliency in a 1.5C warmer world. Commonly referred to as scenario analysis, this exercise of stress testing businesses helps to inform a more nimble and climate resilient strategic plan. Be on the lookout for an upcoming post from Schneider Electric on this topic.
- Look for opportunities in clean technology – Wind, solar, biofuels, battery storage and more technologies all support unique value propositions and innovative financing structures that allow companies to clean up their energy supply and optimize financial returns at the same time. Check out recent blogs on renewable energy myths to bust and how renewable energy helps companies meet environmental sustainability (and financial) goals. Don’t forget about energy efficiency!
- Engage the supply chain – For most companies, the majority of your emissions are from indirect activities in the supply chain. Companies should work with their supply chains to decarbonize by encouraging SBT adoption, introduction of pilot low-carbon technologies, and disclosure of their climate preparedness.