Search Here

The latest IPCC sixth assessment report reaffirms the indisputable human influence on the climate emergency. To reach net-zero, emissions from human activities must decrease from 33.9 GtCO2 per year in 2020 to 0 GtCO2 per year by mid-century, requiring emissions to be halved by 2030. Temperature wise, global warming has crossed 1°C above pre-industrial levels as of 2020 and needs to be limited to around 1.5°C. According to the World Meteorological Organization (WMO), at the current trajectory there is a 40% chance that the global temperature will hit 1.5°C in one of the next five years. The good news is globally Climate has become a mainstream topic with government, business, and financial institutions. Moreover, the Paris Agreement, a legally binding treaty on climate change adopted by 196 parties in December 2015 during COP21, is still intact for now.

What does the Paris Agreement mean to business?

A report by the Cambridge Institute for Sustainability Leadership outlined the business implications of the Paris Agreement by applying the PEST model (Political, Economic, Socio-cultural, Technological). The model defines how the Paris Agreement affects the business position, potential, and direction:

• Political: Businesses must anticipate more stringent regulations on climate disclosure, an increase in air quality and land-use regulations, and policy support for low-carbon technologies.
• Economic: Supply chain uncertainties due to climate-induced fluctuations in raw material prices and currencies.
• Socio-cultural: Growing societal sentiment on climate action and decrease in consumerism.
• Technological: Increased share of renewables for power generation and greater role of innovative technologies including AI, ICT, and IOT to create smart cities, smart grids, and smart tech.  

Global Warming Temperature Scenarios

Science-Based Targets Initiative

Science needs to go hand in hand with policy. The Science Based Target Initiative (SBTi) translates the Paris Agreement into meaningful climate targets for business in line with the latest science. Companies from all sectors, geographies and sizes are encouraged to join the initiative.  As of July 2021, 1500+ companies have committed to the initiative. The 2021-2025 SBTi strategy includes strengthening of the technical decision-making body and raising the minimum ambition to 1.5°C.

Risks and Opportunities

The business climate challenge is hard and capital intensive, but the stakes are high, cross 1.5°C and the frequency of severe natural disasters will increase, decarbonize now, and sustain environmental capital for future generations.

Investors try to predict the future; therefore, businesses need to speed up the shift to a low-carbon economy to remain resilient.

Renewable markets for power generation have never been more favourable with solar and wind undercutting the cheapest fossil fuels in most places. Collective action with all stakeholders is key and business has a responsibility.  might be our last chance to take climate action for a just low-carbon energy transition to keep 1.5 degrees alive.