The pandemic has led more companies to take action on climate change, but so far there is a major disconnect between ambition and action, a survey of sustainability leaders has found.
Most organisations’ climate mitigation efforts have not been cut back and even accelerated under covid-19, according to research commissioned by the global climate change experts, South Pole, which helps organisations design and implement their sustainability strategies.
Its CEO, Renat Heuberger, says: “Our survey indicates that the net zero ambitions of most organisations are not only showing some immunity to the COVID-19 crisis, but many are actually using the major reset to accelerate their responses to the even greater threat of climate breakdown.”
In a poll of 120 sustainability leaders, who had attended an online conference on net zero carbon and came from a wide range of sectors, most had realised that they are vulnerable to external shocks and are thinking strategically about what could be the next shock – the climate emergency.
“Covid-19 has underlined the urgency for all businesses to build resilience to the risks we face – the greatest of all remains climate change,” said Claire O’Neill, managing director for climate and energy at the World Business Council on Sustainable Development.
“Businesses aligning their strategy and products with a net zero economy will benefit from a range of opportunities: a lower cost of capital, enhanced resilience against future external shocks and a licence to operate in a transforming net-zero economy,” O’Neill continued.
“As boards take stock, restructure their models and revamp their strategies, now is the moment to align Covid-19 recovery plans with pathways to net-zero emissions.”
Around 83 per cent of organisations polled in the survey have either set a net zero target (50 per cent) or are considering doing so (33 per cent).
Heuberger says he finds this “very exciting. We are planning for a doubling of demand. We had expected that the pandemic would reduce interest in taking action on climate change but the opposite has been the case.”
The survey also shows that more companies are investing in innovation, enhancing supply chain resilience, and collaborating with industry players to find solutions, and are interested in collaboration.
Most organisations’ climate mitigation efforts (65 per cent) have either remained the same through covid (38 per cent), or even accelerated (27 per cent).
The drive for decarbonisation accelerated most in the financial services (19 per cent) and technology and telecommunications (16 per cent) sectors.
Need for science-based targets
However, around a third of respondents (36 per cent) did say that their climate mitigation efforts had slowed down (20 per cent) or had temporarily paused until there is more economic certainty (16 per cent).
And only 11 per cent of organisations have set a science-based target for reducing emissions, none of which are among those who have set a net zero target.
A science-based approach to decarbonisation to net-zero would put them in line with a 1.5°C level of ambition. Companies without such an approach cannot say they’re serious about any kind of climate action, which Heuberger calls “worrisome”.
As if to underline the fact that companies have a long way to go, the research also found that less than half (48 per cent) of those who had set a net zero target had set milestones to get there.
“There is a risk that CEOs and boards have adopted such targets as a means to drive goodwill and manage reputational risk, but are not taking the difficult steps to restructure their business models and decarbonise their supply chains to reach these targets on time,” concludes the survey.
Yet, when South Pole scoured the list of FTSE100 companies for net zero commitments, “we found that well over a third of organisations in both samples – our survey and the FTSE100 – have committed to net zero (50 per cent and 35 per cent respectively).
“In the case of the FTSE100, the financial services and retail sectors are the most active in setting net zero targets (14.3 per cent each), while in our survey, the financial services (18 per cent) and industry and manufacturing (17 per cent) were the most active.”
In a separate survey carried out in September by the UNFCC, the United Nations body tasked with supporting the global response to the threat of climate change, 1101 businesses were found to have net zero targets. Most are aiming for a zero-carbon economy by 2050, as part of the UN Race to Zero campaign.
Patricia Espinosa, the executive secretary of UN Climate Change, said “the world cannot afford to be let down. Nor can this campaign become something that allows nations to defer action until a later date. It’s about needing more climate ambition and climate action now — in 2020”.
What about SMEs?
Small and Medium-sized Enterprises make up 90 per cent of businesses worldwide, employ two billion people and have been among the hardest hit by Covid-19. Their emissions are not quantified.
So the UNFCC has set up a SME Climate Hub supported by corporations such as Ericsson, IKEA, Telia, BT Group and Unilever, to help small and medium-sized enterprises join the Race to Zero.
Not only that, but, quoting a Bloomberg report that says “around 20 per cent of the world’s emissions come from a group of businesses that don’t report their emissions, their production or even basic financial data — the unlisted national oil companies that dominate production from the Persian Gulf as well as parts of Asia, Africa and Latin America”, Heuberger also calls their emissions “invisible”.
“Only a fraction of emissions are caused by listed companies. They are more difficult to track. The level of action taken by companies globally now is nowhere close enough to tackle the problem. To capture those invisible emissions we need a higher price for carbon, regulation alone is not delivering,” says Heuberger.
“These are the companies we really need to tackle.”
Do it by 2030!
The Race to Zero requires members to meet a minimum set of leadership criteria to maintain quality control.
A total of 762 certified B Corporations have pledged to reach net zero emissions by 2030 — 20 years before the Paris Agreement’s goal. Amazon is one of a further five companies who aim to meet the Paris Agreement by 2040, by signing The Climate Pledge.
Asian agri-food conglomerate, C.P. Group, is one of those with a 2030 goal. “We aim to meet this opportunity by leveraging innovation and working closely with all our partners and stakeholders across our diverse set of businesses in the group around the world,” said Suphachai Chearavanont, its chief executive.
LafargeHolcim, a Swiss multinational manufacturer of building materials, is another aiming for 2030. Its CEO, Jan Jenisch, said he was “proud to announce our net zero pledge with science-based targets to accelerate green construction and the transition to a net zero world.”
Besides a higher carbon price, Heuberger regards The European Union’s Platform on Sustainable Finance and the EU Taxonomy for environmentally sustainable economic activities as “a very exciting framework. It links sustainable development with competitiveness and inclusive growth. I’m optimistic, as it is clear that sustainable development is good for a company’s bottom line.”
David Thorpe is the author of ‘One Planet’ Cities and Director of the One Planet Centre Community Interest Company in the UK.