AUTHOR
As Antonio Guterres, Secretary-General of the UN emphasized at the World Economic Forum’s annual meeting in Davos “The battle to keep the 1.5C limit alive will be won or lost in this decade…our climate goals need the full engagement of the private sector.” There is a clear sense of urgency for action today. However, slow progress and commitments on National Determined Contributions to cut down greenhouse gas emissions (GHGs) have made it increasingly evident that the current level of government investment is simply not enough to bring us closer to 1.5°C with 2030 targets.
It’s an imperative not just for the planet, but for businesses too. Private sector investment backed by ‘The Alliance of CEO Climate Leaders’ (among many others like it) has signaled both the intent and ability of corporations to step up and deploy swift measures, funding and resources to address our climate ambition. Consumers, investors, regulators, and employees are all demanding that companies do more to address their environmental and social impact. They're not just asking for pledges and commitments – they want tangible action. While we’ve seen progress with many companies looking at sustainability roadmaps and embedding sustainability into operations, there’s still more we can do. In 2023, five critical sustainability themes are drivers to progress, signaling leading, urgent actions from the private sector.
1. Net Zero: Taking real action
Net zero has been discussed since the Paris Agreement in 2015, but the discussion has been amplified with recent scientific evidence suggesting that current pledges and actions to reduce GHGs are insufficient. Momentum toward urgent action is accelerating. While many companies have set ambitious targets for reducing emissions, the reality is that achieving net zero requires significant investment and action in the years to come. And, with an evolving sustainability landscape – considering guidelines like the recent European Union (EU) deal for issuing green bonds, or the US Green Deal – a roadmap for achieving these targets can be complex.
2. Climate Risk: An urgent need for transition plans
Extreme weather events and subsequent supply chain disruptions have increased the risk companies are facing due to climate change. It is no longer a distant threat – it’s affecting businesses today. In 2022, heavy rains and flooding in U.S. Midwest caused significant damage to agricultural crops, impacting the supply chain of many food and beverage companies. Technology companies too were impacted by wildfires in California, leading to power outages and disruptions across the value chain. These challenges call for effective mitigation plans to de-risk operations and the supply chain. Adding to this, businesses are facing increasing pressure to develop climate transition plans in response to increasing scrutiny through regulatory frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Securities and Exchange Commission’s (SEC) recent rule on climate risk disclosure.
For these very reasons, we’re seeing a surge in demand for climate risk assessments, scenario planning, and transition planning. Companies are taking climate risk seriously – from both a de-risking and impact perspective – to develop robust transition plans to address it. We're helping them identify and prioritize the risks and opportunities associated with climate change, and develop strategies to mitigate those risks and capitalize on opportunities in a sustainable way.
3. Biodiversity: A key solution to net zero
A report by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) shared that the restoration and protection of ecosystems could contribute to over one-third of the total climate change mitigation needed by 2030 to keep global temperature rise under 2°C. Protecting and restoring natural ecosystems can also support adaptation efforts and promote social and economic resilience.
Following COP15 in Montreal last year, it’s clear there needs to be increased and sustained public and private sector financial support toward biodiversity conservation efforts, with a focus on scaling up nature-based solutions.
