Part II of The 1.5 Degree Series

When I cycle to work on rainy days, when I choose a vegan Bolognese sauce, or when I protest at one of the climate strikes, I feel like i’m doing what I can. But why aren’t businesses doing more? Surely they have just as much of a role to play in the fight against climate change.


After reading the dire forecasts in the 2018 IPCC special report on Global Warming of 1.5 ºC, I began to wonder more about why governments have not taken radical steps or why many businesses are still doing business as usual. With the significant role that private organisations have in today’s society, it’s essential for companies to play their role in climate action, just as much as I should and my government should.

Should companies be responsible for climate action?
Let’s imagine a hypothetical scenario: You are the owner of a multinational corporation. For years you were operating in a certain way, and with all honesty, it was a way without an environmentalist on board. Some questions may not have crossed your mind: the environmental impact of your supply chain; the associated transport emissions; the fossil-fuel derived packaging. Historically these questions were of little importance but eventually stakeholders may begin to ask questions about whether or not your business model is responsible. Perhaps you think it’s not your problem: it’s the government’s fault for creating inadequate policy; the consumers fault for not providing the market signals; or the suppliers’ fault for not addressing the transport emissions. Is it really the fault of corporations for not addressing the overwhelming complexity? This is the reality for the vast majority of companies today, but it must change.

Is Climate Change a threat to Business?
From a business perspective, many companies will be negatively impacted by the direct consequences of climate change. Water availability and changing farming climates will have far-reaching consequences. Increasing frequency and severity of extreme events are already impacting buildings, infrastructure, and supply chains. In fact according to one study, around 70% of the studied extreme weather events were found to have been more likely or more severe as a result of human caused climate change. These increasingly frequent and severe events will surely have massive financial impacts on businesses.

Indirect consequences of climate change pose a threat too. Regulatory and policy changes, the development of disruptive technologies and business models, or shifts in customer behaviour as a result of climate change mitigation or adaptation are all likely to impact businesses. Future regulations mandating reduced emissions must be seen as inevitable now, and companies responsible for high levels of emissions will eventually have to invest substantial funding to upgrade their facilities to reduce, capture or eliminate them. Therefore, especially for energy companies, shifting power generation toward cleaner resources upfront, sounds like quite a good idea to me.

In the infographic below, you can see an overview of how climate change risks will be felt differently by various industries:


Source: McKinsey Analysis

Opportunities for “Sustainable Heros”
I personally believe that preventing a humanitarian and planetary crisis is reason enough to act with urgency, but there are also a host of more traditional business reasons for doing so. With the costs of renewables continuing to fall, companies can save money and improve brand value by purchasing purely renewable energy. Companies can also align with consumers who are increasingly looking to support responsible products and services, and target employees who are demanding work aligned with their values.

How Does it Look Being Corporate & Sustainable
There are more and more eye-catching examples of products made with responsibly sourced materials. The Global Opportunity Explorer is the world’s largest collection of sustainable solutions, showing that it is possible to do business differently. Ananas Anam are making leather from pineapple waste, Sea2See are collecting plastic waste in the ocean to make sunglasses, and Bolt Threads are created leather-like material from Fungi. This is just in the fashion industry, but it is the same across all sectors, solutions exist. However, integrating sustainability into the core of a large multinational company can be extremely challenging. Businesses large and small must examine their impact on the planet, from the resources they are using through to the emissions they are responsible for. This is because businesses have a huge impact on global emissions levels. A 2017 report by CDP reported that 100 companies are responsible for 70% of total emissions since 1988. That is an astonishing fact, and shows that if we are to reduce emissions, the ways companies operate must change. 

When companies do change, they can often make big changes at speed. For example when entities like Google or IKEA decide to switch to 100% renewable electricity by 2020, it has a big impact. Others are moving too: around 100 companies with a market cap of over $2 trillion have committed to setting science-based targets in line with a 1.5°C scenario. If these companies can convert talk into action then we may see the beginning of a movement that has been long needed. We looked into what these companies are doing differently in our most recent report, 1.5°C Business Leadership.

So Why Do We Need Business on Board?
It is clear that businesses have a crucial role to play within society to achieve the sustainability transition. Without this action we will never global warming below 1.5°C. Those companies can make a change of a scale that I can on my bike hardly imagine. And so although I will keep on cycling to work on rainy days and I will keep on persuading myself to buy a vegan Bolognese sauce, I will also continue to monitor which companies are making the most meaningful actions and vote with my purchases wherever possible.

 

This article is part of the 1.5 series, which aims to outline relevant steps for business to not exceed global warming beyond 1.5 degrees celsius. Read the rest here:

Part I: Why should I care about half a degree?