People should be very worried – and they should then choose hope over despair in response. Despair leads to being overwhelmed, passivity and no change. Hope is the source of all positive change in the world. The first step on the path to action is daring to believe that we can make a better world.
Young people are right to demand more action. I’m inspired by the leadership of Greta Thunberg. She famously told the audience at this year’s World Economic Forum, “I want you to panic!” – a call to action, not to despair. School strikes are a positive form of action which are forcing more politicians and business leaders to wake up.
This escalating concern is clearly valid as the impacts of climate change are increasingly being felt across the globe. The urgency for greater action on climate was also clearly underlined by the Intergovernmental Panel on Climate Change (IPCC) report on the impacts of global warming above 1.5°C. The report shows that limiting global warming to 1.5°C is still possible, though it requires rapid and radical progress across all sectors and geographies.
While there are definitely reasons for concern, it’s vital that the response is bold and effective action, and this is what we work on at the We Mean Business coalition. We catalyse business action and drive policy ambition to accelerate the zero-carbon transition. This transition could, according to research from the New Climate Economy, deliver economic benefits amounting to $26 trillion USD through to 2030 and in that same year create 65 million new low-carbon jobs and avoid 700,000 premature deaths from air pollution.
Over 870 leading companies are already committed to bold climate action, through the We Mean Business coalition’s Take Action campaign. More than 535 of these companies have aligned their businesses with the goals of the Paris Agreement by committing to set science-based targets. They include Denmark’s Maersk, which is the world’s largest shipping company, India’s Dalmia Cement and Mahindra Group, and Japan’s Sanyo Special Steel.
Meanwhile, policymakers are seizing the opportunity by setting ambitious, long-term policies to transition to resilient zero-emissions economies. Countries, such as Costa Rica, France and Portugal, have committed to achieve zero-emissions by 2050 at the latest. These transitions require a radical shift from all sectors of the economy, including power, transport, buildings, land use and heavy industry, but harnessing the solutions that already exist can help unlock economic growth and jobs.
As was shown in the IPCC special report on 1.5°C global warming, published in 2018, we have 12 years to get on track to limit warming to 1.5°C. I am hopeful we can do this for three reasons. Firstly, we are seeing growing numbers of businesses committing to transformative action that goes significantly beyond what they are required to. And, there is no doubt that because the window for action is incredibly short, it’s vital that more companies and governments step up and commit now to taking the action required to deliver the zero-carbon economy by 2050. Companies can do this by setting bold science-based emission-reduction targets that align with the most ambitious goals of the Paris Agreement and committing to reach net-zero emissions by mid-century.
Secondly, this leadership from the private sector positively influences policy ambition. Inspired by business, countries, states and cities are starting to seize the opportunity to create the zero-carbon economy by providing clear, long-term policy signals, which encourage innovation and investment. This accelerating progress from both businesses and policymakers creates ambition loops: positive feedback loops in which bold government policies and private sector leadership reinforce each other. By harnessing the power of ambition loops, it is still possible to create the level of radical transformation required to limit global warming to 1.5°C.
Thirdly, we know how industrial transformations take place: through the power of exponential change. It is important that we understand the mathematics of transformation; otherwise, we might despair at what looks like slow progress. For example, it might look like the transition to electric vehicles (EVs) is not happening fast enough – they comprise just 3.2% of car sales. But when you see that the market share for EVs is growing at an average of 56% per year, and realise that this means a doubling in less than two years, you can see that the internal combustion engine is on its way out and that we will have fully electric car sales by the early 2030s.
The climate crisis has deep roots in the industrial revolution and stems from an outdated mode of value creation that puts an unsustainable drain on the world’s natural resources and vastly exceeds the planetary boundaries. Climate change has been an unintended consequence of the bounty of hydrocarbon fuels – a bounty which has also created vast wealth, supported population growth and improved quality of life for billions of people. Businesses – the creators of value through the transformation of inputs into valued outputs – are at the heart of the global economy. And so business must be at the heart of the transition away from unsustainable sources of energy in the global economy.
The need to act on climate change is the greatest potential cause of disruption faced by new and established businesses alike, and is also the greatest catalyst for innovation for those willing to harness it. The good news is that there is a growing number of companies embracing disruptive innovation and finding ways to create value without contributing to climate change. The switch to EVs and renewable energy are two key routes that will have a major impact on emissions, but there are more unusual solutions emerging too. For example, chemical company LanzaTech is tackling pollution from heavy industry and turning it into useful products. It’s developed a biological process that takes the waste emissions and makes ethanol, fuel and chemicals using bacteria. And alcoholic drinks company Diageo is using the spent grain from its distilling and brewing processes to create renewable energy, with onsite bioenergy facilities using anaerobic digestion and biomass burning. By rethinking the problem of climate change as an opportunity to develop regenerative value creation, companies can be an active part of the solution and avoid being disrupted themselves.
Companies that embrace the transition to a zero-carbon economy will be at a competitive advantage to those that continue with business as usual. This is partly because the urgency of achieving the goals of the Paris Agreement means there will be increasing regulation around environmental impacts – what the UN Principles for Responsible Investment (PRI) group calls an “inevitable policy response”.
But it is also because companies embracing solutions to climate change can better harness climate action as a driver of innovation, competitiveness, risk management and growth. Sustainable business models have the potential to unlock $12 trillion in new market value, according to a report by the Business & Sustainable Development Commission. For example, modelling for the US indicates that doubling energy productivity by 2030 could save $327 billion USD annually in energy costs and add 1.3 million jobs. More and more companies are already embracing this opportunity and realising the business benefits. Walmart, the world’s largest company by revenue, saved nearly 1 billion USD in one fiscal year through its climate action schemes; UK telecoms company BT has saved over 220 million GBP (291 million USD) since 2009, thanks to energy-efficiency improvements.
One of the most significant shifts in business practices to be more planet-positive has been the transition to renewable energy. To date, over 165 leading companies have committed to switching to 100% renewable electricity through RE100, led by The Climate Group in partnership with CDP (formerly Carbon Disclosure Project). This includes Google, which is now the world’s largest consumer of renewable electricity. Together, RE100 members are now creating demand of over 184 TWh of renewable electricity annually, more than enough to power Argentina and Portugal combined.
Finally, if companies want to win the hearts and minds of future customers and future staff, if they want to win “the war for talent”, which will be key to future success, then they will have to put purpose at the heart of their strategy. And what greater purpose is there than solving the greatest challenge of our time?
Independent philanthropies, such as the IKEA Foundation, play a vital role in climate action. In the run-up to the 2015 climate negotiations that resulted in the Paris Agreement, the IKEA Foundation recognised the need for forward-looking businesses, and the NGOs representing them, to present a united voice to policymakers and negotiators to ensure success. It’s this vision that resulted in the We Mean Business coalition, which brings together seven international non-profit organisations: BSR, CDP, Ceres, The B Team, The Climate Group, The Prince of Wales’s Corporate Leaders Group and WBCSD (World Business Council for Sustainable Development). Since then, and with the continued support of the IKEA Foundation, the coalition has provided a vital platform to encourage businesses to set bold climate targets, demonstrate climate action on the back of those commitments and highlight the impact of that action to policymakers around the world.
The 870 companies that are committed to climate action through the coalition partners’ initiatives are spurring greater ambition from governments, which is in turn encouraging businesses to go further and faster. By providing the platform, the IKEA Foundation, through the work of the coalition, has been able to bring stakeholders together behind a common vision. While both businesses and governments are vital in this process, neither could achieve the scale of impact required alone. Unlike individual businesses and governments, philanthropies have the ability to tackle systemic complexity in a unique way and deploy resources rapidly.
As more and more companies harness the opportunities of the zero-carbon economy, the focus for the coalition and independent philanthropies, such as the IKEA Foundation, is rightly shifting to tackling emissions from heavy industries such as cement, steel and plastics. The challenges to decarbonising these heavy industries are often more difficult to overcome, because of underdeveloped pathways, complex process emissions and traditional business models. This is why it’s vital that philanthropies provide the support needed to work with these industries to fast-track solutions, bring them to scale across whole sectors and show governments that full decarbonisation of these sectors is possible.
Many companies from heavy-emitting sectors recognise the urgent need to transition to the zero-carbon economy. By supporting these leaders, philanthropic action can help pave the way to a truly zero-carbon economy by mid-century.
There have been countless vital milestones since the We Mean Business coalition was first formed in the run-up to the 2015 climate conference in Paris. Firstly, as a team player (although I admit my rugby days are long behind me), I have been delighted with the improved collaboration between all the partners of the We Mean Business coalition.
Secondly, of course it was the moment the gavel came down in Paris. This was something I witnessed literally from the front row, having been invited to the closing session by Christiana Figueres herself in acknowledgement of the work of the coalition in achieving the Paris Agreement.
Many other satisfying developments have been the result of bold leadership from companies in sectors that were considered too difficult to make the transition. For example, Anand Mahindra committed the whole of Indian industrial conglomerate Mahindra Group to go net-zero at the Global Climate Action Summit in San Francisco last year. And the world’s largest shipping company Maersk and the Indian cement-maker Dalmia Cement committed to being carbon-neutral by 2050 or earlier. These moves would have been nearly unthinkable at the time the Paris Agreement was signed, and show how far the world has come in just a few short years. This leadership shows entire sectors and even economies that reaching zero-carbon by 2050 is not only possible, but there is growing momentum to achieving it.
For me personally, one of the most satisfying developments has been championing the early stages of the exponential rise in EVs. This is thanks to strong demand signals from companies committed to accelerating the transition to electric vehicles, along with the EV100 initiative from The Climate Group, coupled with the radical shift from vehicle manufacturers, such as Volkswagen and Volvo to produce EVs. But policymakers have also played a vital role in paving the way for EVs to be accepted as a viable option by the wider public. I expect to see all the major vehicle manufacturers announce an end to internal combustion engine production in the coming two years. Volkswagen have just said they will be zero-carbon by 2050 – a good start but the commitment doesn’t go far enough to limit global warming to 1.5°C. Let’s see who’s next with a more ambitious goal!