WE’RE GOING IN THE RIGHT DIRECTION, BUT WE HAVE TO DRAMATICALLY PICK UP THE PACE
Paul Simpson of CDP charts a year when initiatives like RE100 and Science Based Targets surged in membership, but the scale of the challenge grew more stark.
It’s been another momentous year for the global climate change agenda. This year’s landmark report from the Intergovernmental Panel on Climate Change (IPCC) underlined the urgent need to bend the curve of global greenhouse gas (GHG) emissions by 2020, or face the scorching consequences of dangerous climate change. And the latest update from UN Environment is a stark reminder of the gap between where we are now and where we need to be. It’s encouraging then, that 2018 saw a quickening pace in the transition to a low carbon economy.
It was a year that saw more companies disclose environmental data, and more set stretching targets to reduce emissions.
In 2018, over 7,000 companies, worth more than 50% of global market capitalisation, and more than 750 cities, states and regions disclosed environmental data through CDP. That’s an 11% jump on the previous year.
Disclosure of environmental risk and impacts is a crucial first step for action. Companies can only focus their resources effectively once they know where their key impacts, risks and opportunities lie. And only with this transparency can other stakeholders – like investors, customers and governments – move to support more sustainable business.
More companies are aiming to cut their carbon footprints, too. Even in the heaviest-emitting sectors we are seeing leaders emerge. Our latest research report found that 15 of 24 oil and gas majors ranked by CDP have now set emissions-reduction targets, while in the automobile sector there has been a profusion of targets for low-emission vehicles.
Perhaps most encouragingly, the first nine months of 2018 saw a nearly 40% surge, compared with the same period in 2017, in the number of companies committing to set emissions reduction targets in line with climate science and the goals of the Paris Agreement. Almost 500 companies have now joined the Science Based Targets initiative – from Levi Strauss & Co to Tyson Foods to Dalmia Cement – and I fully expect that number to continue to swell in 2019 as more business leaders recognize the risks of inaction and the business benefits of science-based climate targets.
Climate action is on the agenda in city halls as well as the boardroom
The continued growth of corporate environmental targets and disclosure has been given a boost this year by the recommendations from the Financial Stability Board’s Taskforce for Climate-related Financial Disclosures (TCFD), chaired by Mark Carney and Michael Bloomberg. This year, CDP integrated the TCFD recommendations into our environmental disclosure questionnaires, helping to reduce the reporting burden on companies, while ensuring we ask the most relevant questions. This means that the 7,000 plus companies that have disclosed through CDP this year are already collecting and structuring the data they need for TCFD-aligned disclosures. Early analysis shows that 72% of disclosing companies were able to answer 21 or more of the 25 new TCFD questions.
Climate action is on the agenda in city halls as well as the boardroom. CDP data shows there was a 90% increase in the number of cities setting targets to reduce their emissions, between the signing of the Paris Agreement in December 2015 and this year. No business operates in a vacuum, so climate action by the cities where they operate helps to reinforce the work of corporates and attract investment and jobs to the area.
The Investor Agenda launched at GCAS in September. (Credit: Global Climate Action Summit)
Three years since the Paris Agreement was signed and one year after President Trump pledged to pull the US out, California hosted the Global Climate Action Summit (GCAS) in September. Aiming to build momentum ahead of the first global stocktake in 2020, the summit saw thousands of leaders from all sectors of society showcasing their climate action.
Particularly significant was California Governor Jerry Brown’s commitment to set the world’s fifth largest economy on a path to become carbon-neutral by 2045. Over 1,300 companies, cities, states and regions also rose to Governor Brown’s Universal Climate Disclosure Challenge to report their environmental data through CDP for the first time.
GCAS also saw the launch of the Investor Agenda, which provides a platform for nearly 400 investors with $32trn in assets under management to report actions they are taking on low-carbon investment, engagement with companies, transparency and policy advocacy.
2018 saw some of the most extreme weather conditions to date, at enormous costs to both capital markets and wider society
Meanwhile, the global expansion of the RE100 initiative, which consists of companies that have committed to 100% renewable electricity, is another encouraging sign.
In 2018, 37 new companies signed up to the initiative, with 10 of these based in Japan, a new climate action hotspot. RE100’s 155 members are creating demand for 188 terrawatt hours (TWh) of renewable power per year, more than the electricity consumption of Poland.
Despite all this progress, there have been some serious hurdles this year in the race to Paris. At the end of October, Brazil elected a president whose policies threaten the future of the Amazon rainforest, one of the biggest carbon sinks. In the US, a recent report describes how climate change will cause hundreds of billions of dollars of damage to the US economy in the coming decades. Yet President Trump has dismissed the report, instead continuing with deregulation and attempts to resurrect the failing coal industry.
And there’s no denying that 2018 was a year of intensifying climate impacts.
From a Europe-wide heatwave to record droughts in Cape Town, hurricanes in the Americas and wildfires in the Arctic, 2018 saw some of the most extreme weather conditions to date, at enormous costs to both capital markets and wider society.
To stay below the 1.5°C guardrail, the IPCC tells us the global economy needs to reach net zero carbon by mid-century and halve emissions by 2030, compared with 2010 levels. This represents nothing short of a complete transformation of the global economy and is going to take unprecedented co-operative action between companies, investors, cities, states and governments across all sectors.
It’s clear that we urgently need to scale and accelerate environmental action in 2019
For one encouraging example, look to the 11 companies, including Tesco, Sky and Siemens, that are working together with the mayor of London to help the capital become a zero-carbon city by 2050. The mayor, Sadiq Khan, confirmed in September that the first ever London Climate Action Week is planned for 1–8 July 2019, which will showcase the capital as a global hub for climate expertise, services and action. A sustainable economy needs more collaborative action like this. It’s clear that we urgently need to scale and accelerate environmental action in 2019.
This will be the final year before nations update their national climate plans for the Paris Agreement, just as global emissions need to peak. This is the time for businesses to ramp up action, transparently report on their efforts and send a clear signal to governments that they are embracing this zero-carbon transition and need the policy ambition to match.
Business as usual is no longer an option, but a prosperous and sustainable low carbon future is achievable, if we choose to rise to the challenge. We must, we can and I believe we will.