News from the front desk 457: Think we’re running out of time to save the world from catastrophic warming?
Well, it seems much of the corporate world might have given up on the tight timeline needed to meet the Paris Agreement to limit global warming to 1.5 degrees above preindustrial levels.
That might come as a surprise given the amount of public grandstanding going on. Some of the most unlikely of suspects are now getting in on the heart-warming climate action rhetoric, including major emitters in the fossil fuel and resources industries.
- See our story Minerals Council joins corporate scramble to go green
Greenwash has been around as long as we’ve known about climate change and all the other environmental issues the modern world has created for itself. But the latest round of public signalling versus backroom plotting is concerning given how little time we have to turn the ship around.
It’s all in the timing
This week, Bank of England governor Mark Carney warned that global capital is investing in planetary disaster, with international capital financing $85 trillion in stocks and $100 trillion in bonds for activities that will keep us on track for four-degree warming.
Mr Carney told UK MPs on the Commons Treasury committee on Wednesday that although there are some companies “out ahead” due to stakeholder pressure or future-proofing foresight, “there are others that are waiting for the policies to adjust.”
But why stall when we now know that climate impacts will lead to financial strain down the track?
According to an industry source who works with major corporations on climate strategy, it’s all about making a quick buck.
This source told The Fifth Estate that although many large corporates are committing to Paris publicly, their actual transition plans align with a scenario of 3 degrees or more warming, which represents runaway and catastrophic global warming.
They say there’s so much carbon locked into global economy at the moment that behind closed doors, corporations are concluding that an orderly transition towards meeting the Paris Agreement objectives is now impossible.
Theoretically, a Paris aligned transition is possible, but under the current political climate, with conservative global leaders in power and more coal and gas projects getting approved, this critical decade is not looking good.
As a result, the scenarios that corporations are now exploring that are Paris aligned typically foresee elements of short term disorder.
Unpalatable as this would be it would “gift us” with a contracted global economy, that would at least give us a chance to align with the IPCC Special Report’s recommendations on emission reductions by 2030.
Perversely, corporate scenario analysis findings support that the best scenarios in the short-to-medium term for corporations are slower transition pathways, whereby transition risks are relatively contained, and economic turmoil is avoided.
“That gives these corporations a little window of sunshine for the next 15-20 years before the physical impacts of climate change start turning everything sour,” our source said.
This reality is leaving a number of corporations hopelessly contradicted, having both a public commitment to supporting the objective of the Paris Agreement, but a strategy aligned to 3-plus global warming.
The game changer was the IPCC’s Special Report released almost two years after the Paris Agreement was forged.
The Special Report, released in October last year, put to bed the furphy that we could gradually increase ambition from 2030 onwards to reach net zero emissions by 2050. Instead, the report, with an update on the science, ramped up the urgency to transition in the 2020s in order to keep the door open on Paris.
Climate Change 100+ earlier this month said it all in its own recent report. The group, backed by major investors including super funds, looked into the performance of 161 of the biggest corporate carbon emitters in the world, including 13 Australian companies, in curbing emissions.
Although 70 per cent of the companies had some kind of emissions reduction target in place, the report found few of these would put the company on track to meet the Paris target.
Nobody cares about Paris
Perhaps most disturbing is that behind the scenes, according to our source, corporations that publicly support Paris are using their weight to ensure government aligns with their vision and not that of Paris.
In other words, the tension we see in the media between big business and government on climate change has nothing to do with the Paris Agreement. It’s about whether 3-plus degree warming policy should be implemented (as advocated by big business) or whether 4-plus degree warming policy should remain in place, as advocated by the Morrison government.
These companies might claim to be powerless against government inaction, but in fact they have direct lines to politicians well-placed to argue for the climate policy that suits their business model.
This doesn’t go for everyone in these companies. Businesses aren’t homogenous and there are always managers internally championing faster action on climate and other issues. But they’re generally not C-suite decision-makers.
Australasian Centre for Corporate Responsibility director of climate and environment Daniel Gocher said that this picture is fairly consistent with what the shareholder activism group is seeing.
But he says companies shouldn’t really lose that much money if they are prepared to think outside the box. Corporations that aren’t thinking innovatively, though, might take a “big hit” by aligning with the Paris Agreement objectives.
The likes of cement and steel are likely to be genuinely worried but Gocher said these industries aren’t really expected to decarbonise by 2030.
He says that the big priority for decarbonisation is the electricity sector. And with renewables now at costs comparable to fossil fuels, this needn’t come at the expense of price.
Saying one thing, doing another
ACCR is certainly noticing inconsistency in what companies are saying about climate action and what they are doing.
For example, many companies are treating climate-related financial disclosure through the Task Force on Climate-related Financial Disclosures (TCFD) as a “box ticking” exercise.
Although the company might run through the scenarios and see that aligning with the Paris Agreement requires prompt action, this rarely feeds back into the business strategy and business as usual ensues.
There are exceptions to this rule. Earlier this month, Woolworths released an ambitious new emissions target that put the company on track to decarbonise its operations according to Paris commitments.
The company is now aiming for 60 per cent less direct emissions than 2015 emissions levels by 2030, which is significant given the size of the supermarket giant’s carbon footprint.
Is this the first you’re hearing about this? In a sign that we live in extremely complicated and confusing times, Gocher suspects this news flew under the radar because the company didn’t want the feds to accuse them of virtue signalling.
But opportunistic politicians are just part of the story. Gocher says there’s still plenty of lobbying going on behind closed doors regardless of a company’s public stance on climate action.
A good example is the Business Council of Australia’s support for the federal government’s decision to use Kyoto carryover credits to meet Paris emissions reduction targets.
So what are we to do?
So if major corporations, including major emitters, are still very much ensconced in the dodge, delay and deny game, where does that leave us? In the interests of making it out of bed in the morning, Gocher likes to stay positive (an attitude endorsed by The Fifth Estate).
But things are likely to get worse before they get better. Gocher suggests that eventually natural disasters will become so frequent and severe that governments will have no choice but to act on climate, no matter what’s going on behind closed doors.
Will this still be too late? We hope not.