Article by Dr. Susan T. Jackson
Wrapping up the year finds us at the start of the 2023 United Nations Climate Change Conference (COP28) – the world’s only multilateral decision-making forum on climate change. Going into COP28, stakeholders are aware we are critically close to missing our climate targets as recent reports and research again indicate we are heading in the wrong direction. A press release for a new UN report warns us “tipping points of risk post new threats” and another report announces we have experienced a “broken record [as] temperatures hit new highs, yet world fails to cut emissions.”
There are immediate and near-term reasons for companies to pay attention to these global events and reports. More so, there are immediate and near-term actions companies can take to be part of the solution.
“There is no person or economy left on the planet untouched by climate change, so we need to stop setting unwanted records on greenhouse gas emissions, global temperature highs and extreme weather,” said Inger Andersen, Executive Director of UNEP. “We must instead lift the needle out of the same old groove of insufficient ambition and not enough action, and start setting other records: on cutting emissions, on green and just transitions and on climate finance.”
The current state of the climate crisis
The Paris Agreement on climate change called for limiting global warming to well below 2°C of pre-industrial levels, with a goal of 1.5°C at most. The United Nations Environment Program (UNEP) provides an annual emissions gap assessment that marks the difference between the current emissions trajectory and what that trajectory should be to meet the climate goals. The 2023 emissions gap report estimates that we are on track for a 2.5-2.9°C rise in temperature, significantly more than the world can withstand. To meet the 2°C threshold, we would need to cut GHG emissions by 28% by 2030 and for the 1.5°C threshold by 42%. Meeting those goals relies on quick, concrete actions including those that can be taken by businesses.
Why do GHG emission cuts matter to your business?
EU and national regulations on GHG emissions, transparency and accountability around sustainability actions are increasing each year. For example, the Corporate Sustainability Reporting Directive introduced new rules on the social and environmental information companies are required to report. This kind of legislation means companies need to report more and provide better information to be compliant with reporting regulations. However, compliance is the low bar; many consumers expect more transparency than the minimum reporting.
Through their value chains and activities, companies make direct and indirect contributions to climate change and global warming. Reporting on emissions along value chains is challenging in part because reporting of Scope 3 emissions (emissions that accrue from upstream and downstream activities) is largely voluntary and lacks a unified approach for measurement. New rules on mandatory reporting are in development meaning companies will need to work on their Scope 3 emissions data.
What actions can businesses take
The example actions described here incorporate taking a leader stance, using innovative approaches to developing strategies that work toward transforming business models and mindsets that future-proof your business.
Conduct value chain due diligence
With increasing and expanding reporting requirements, conducting data gathering and value chain due diligence is more than a trend. Holistic value chain assessments also can improve sourcing that not only decreases your carbon footprint but also can address the social aspects of your value chains, such as ensuring your products are ethically made.
Address root causes and drivers
Companies can contribute to climate change mitigation by addressing the root causes and drivers of GHG emissions. Transformational solutions that disrupt business-as-usual have the most impact. For example, as the world is heating up, cooling with power derived from fossil fuels can lower the temperature inside but also adds to global warming. Transitioning to renewable energy for cooling systems or passive cooling systems such as cool roofs, companies are taking transformative action by challenging a system that runs on fossil fuels.
Increase your transparency
Proposed in March 2023, the EU’s so-called Green Claims Directive proposal sets out a number of requirements that companies will have to meet when they make claims about their environmental sustainability. The requirements also will cover information on how companies can communicate their claims, including rules on environmental labelling. The Directive aims to protect consumers from greenwashing – the deceitful practice of representing a company’s environmental impacts in ways that make the company look better than it is. Companies will need to increase their transparency to ensure they comply with the new rules once they go into force. The European Parliament is expected to discuss the law in March 2024.
Given the high level of urgency we face with the climate crisis and growing evidence of its causes, businesses are well-positioned to work on the solutions we need – both to the benefit of the planet and as a future-proofing step for business itself.