Corporate climate leadership (in a world trying to avoid 1.5°C)



By Iain Watt

 

This article was originally published on Forum for the Future and is republished with permission.

 

As my colleague Zoe pointed out in May, the implications of the collective Governmental ‘embrace’ of a 1.5°C target in Paris has led to much brow-furrowing within Forum: What does it mean for our projects? What does it mean for our partnerships? How can we use both to make a meaningful contribution?

 

Ban Ki-moon receives Greenpeace delegation

In terms of the advice we provide to our corporate partners, we’ve long been guided by our ‘Climate Challenge to Business, which outlines what we think represents corporate leadership on climate change.  Developed in 2008, much of it stands the test of time, but we’re now updating it to incorporate what we’ve learned since then, as well as to reflect the urgency of our current situation.

 

Here’s what we’ve come up with, thus far:

 

1) Develop a full understanding of the risks (and opportunities) posed by climate change (see my separate article on getting to grips with climate risk);

 

2) Adopt net positive, or restorative, targets (that cover the full corporate value-chain);

 

3) Ensure the products and/or services that your company sells are ‘fit-for-purpose’ in a society aiming to stay below 1.5°C;

 

4) Undertake effective advocacy and collaboration.

 

Each of these elements are fleshed out in a bit more detail below. Please let us know what you think. Are we on the right track? Are we missing something critical? And would you like to work with us to think through the implications for your company? If so, drop me an email.

 

1) Develop a full understanding of the risks (and opportunities) posed by climate change

 

This is fundamentally important (and, alas, too often lacking) because, without this understanding, it’s hard to see why any company would take on the challenge. But make no mistake, the risks associated with climate change are Brexit-dwarfingly huge!

 

If we cross the 1.5°C threshold, then the resulting geophysical change will put huge stress on the global economy. Alternatively, avoiding 1.5°C will require the rapid and complete transformation of the global energy, transportation and agricultural systems.

 

Either way, climate change, and the societal response to climate change, are going to fundamentally reshape the competitive context in which all companies operate – and any forward-planning business has to start preparing for what will inevitably be ‘interesting times’.

 

2) Adopt net positive, or restorative, targets (that cover the full corporate value-chain)

 

On the plus side, a 1.5°C ambition now means that previously complicated discussions about ‘science-based’ corporate reduction targets have become relatively simple. With only 5 years left of emissions at current levels if we want a 66% chance of avoiding 1.5°C, the science pretty much calls for companies to commit to immediate and complete decarbonisation. And not just for their operations – but across their full value chain too.

 

Unfortunately, to describe the practical implications of this as ‘challenging’ somewhat downplays the reality.  Even if we’re wearing our most optimistic of optimistic hats, action to achieve ‘immediate and complete decarbonisation’ is, at very least, unbelievably hard…

 

So what is a business to do?

 

In terms of target-setting, companies now need to strive to be net positive or restorative. Over extremely tight time-frames.

 

This means redefining the purpose and intent of a corporate carbon target – with the balance between ‘what’s achievable?’ and ‘what’s required?’ swinging heavily towards the latter. We might even see companies set deliberately ‘impossible’ targets as a call to arms (with the very ‘impossibility’ of the target being used to drive broader change).

 

Which makes my fourth point below all the more critical.

 

3) Ensure the products and/or services that your company sells are ‘fit-for-purpose’ for a below-1.5°C world

 

Companies that want to be seen as leaders on climate change need to align the fundamentals of their business with this aspiration. This would seem glaringly obvious, but fundamental disconnects and inconsistencies are, alas, all too common in the arena of climate ‘action’.

 

This means that the climate spotlight must now shine directly on the products and services your company provides. Do they enable your customers to reduce their emissions? Will they help society adapt? Do they out-perform the competition in terms of carbon?

 

Are they, in fact, justifiable in a society that needs to decarbonise rapidly? Having an ultra-efficient supply chain won’t cut it if your supply chain is producing something that’s part of the problem…

 

4) Effective advocacy and collaboration

 

If a corporate target covers its full value-chain, and requires transformative action in a very short timeframe, then we’re going to need collaboration and advocacy on a scale never before seen. (And I’m defining advocacy broadly here: it doesn’t only refer to political lobbying, but also to engaging with, persuading and driving change through supply chains, peers and customers).

 

This is all the more true given that all companies are reliant on the actions of others to truly protect themselves from climate risk. Take the British supermarkets for example. They are collectively at the leading edge of corporate climate action, yet even if they get their operational carbon footprints to zero, they will still be massively exposed to climate risk if global emissions continue to rise.

 

Companies can therefore no longer just focus on ‘their bit’ of the puzzle, but must become effective agents for societal change.

 

This requires a shift away from a passive acceptance of the circumstances within which your company finds itself (“we can’t decarbonise until the government sorts out the grid”) to a proactive effort to change those very circumstances (“what can we do to ensure ‘our’ grid decarbonises as soon as possible?)

 

It also means there must be a vocal, self-motivating, and powerful corporate voice in support forsocietal action on climate change. No denier should be able to spout the tired narrative that “action on climate change is bad for business” without an immediate challenge from the business community itself.

 

What defines corporate leadership on climate change?

 

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