As COP25, the 25th annual Conference of Parties for the United Nations Framework Convention on Climate Change, is progressing in Madrid, we are looking at the most recent scientific data, trends in environmental policy-making, and the role of large businesses in carbon-free economy.
Part 2: Climate Change & Big Business
How serious are we about climate change?
Public awareness of the irreversible damage caused by climate change is growing year on year, with 2019 bringing a previously unseen number of environmental protests and an increasing pressure on governments to address the emergency. It is estimated that close to 8 million people took part in over 3,400 street protests during the Global Climate Strike week in September, with children and adults demanding more decisive actions and stricter environmental regulations.
In May this year, the UK became the first country in the world to declare a climate emergency and made the 2050 net-zero emission target legally binding. Currently, 1,192 jurisdictions in 25 countries, with a total population of 454 million people, have declared climate emergency.
Last week, the European Investment Bank (EIB), the world’s largest multilateral financial institution, announced that within the next two years it will stop financing oil, gas and coal projects that contribute to climate change.
‘Climate is the top issue on the political agenda of our time’, said Werner Hoyer, EIB’s president. ‘We will stop financing fossil fuels and launch the most ambitious climate investment strategy of any public financial institution anywhere.’
Following the EIB’s announcement, investment fund TCI, which manages assets worth £22 billion, sent a letter to its portfolio companies. The fund warns it will stop financing businesses that fail to disclose their carbon emissions and that do not have a credible plan for their reduction.
‘Investing in a company that doesn’t disclose its pollution is like investing in a company that doesn’t disclose its balance sheet. If governments won’t force disclosure, then investors can force it themselves’, commented Sir Christopher Hohn, the fund manager at TCI.
Climate change and big businesses
The attitude towards decarbonisation of the economy is changing among the industrial and commercial businesses, which increasingly often look for ways to increase the sustainability of their operational processes.
The Climate Group, an international network of businesses and governments committed to tackling climate change, runs RE100, a voluntary scheme for businesses committed to achieving 100% renewable electricity targets. Based on the recently published annual review for 2019, the RE100 campaign has passed the 200-member milestone. The average target date for 100% renewables among the RE100 signatories now stands at 2028, with 30% of them already using renewables to meet more than 75% of their annual energy consumption.
Unfortunately, the optimistic statistics are often overshadowed by the worrying evidence of businesses not acting quickly enough on the climate emergency. In September, the Guardian reported that 80% of the world’s largest companies are unlikely to meet the 2050 targets set out in the Paris Agreement. The study of almost 3,000 publicly listed companies, conducted by Arabesque S-Ray, found that only 18% of them have disclosed plans that are aligned with goals to limit rising temperatures to 1.5°C levels by the middle of the twenty-first century.
Other reports, published by the Guardian in 2017, pointed out that just 100 companies are responsible for 71% of the total global emissions and that the fight against climate emergency will be doomed to fail without their involvement. Ultimately, it will be down to large energy consumers if global emissions are to be reduced in time to prevent irreversible damage.
Missed part 1 of our sustainability series? Read it here: Part 1: COP25 and Science: Catalyst for Change