Who Will Save Our Ailing Earth?

At the end of February 2018, as Europe was in the cold grip of the Buran weather system, the Arctic and Greenland were at their hottest since meteorological records began, with temperatures higher than those recorded in either Zurich or London. These anomalous conditions have led numerous climatologists to launch a new alarm on the acceleration of global warming.

The concentration of CO2 in the atmosphere has already reached 407 ppm. The data indicate that global emissions have returned to growth after a couple of years of apparent stabilization. This threatens our ability to maintain the temperature increase within the 1.5-2°C range, the target value set by the Paris agreement beyond which runaway climate change becomes possible. Despite this, the environmental question seems to have disappeared from the international political agenda. The consequences of the American turnabout under Trump are evident. The European Union itself, which for years had guided the transition to a low-carbon economy with ambitious and innovative policies, seems to have lost its mettle as far as climate leadership is concerned.

In this worrying scenario, it is business actors who have taken a new and proactive role on climate change. Their activism is due to several factors, from the management of climate risk to the business opportunities related to sustainability.

➜ The climate impact on companies
The 2018 edition of the Global Risks Report released by the World Economic Forum highlights how the climate issue has become one of the most critical risk factors in terms of the likelihood and magnitude of its impact on the socio-economic system. Several major industries, from agri-food to energy, are exposed to extreme weather phenomena (droughts and hurricanes) that limit the availability of raw materials and cause price volatility.
As a consequence, some investors have been pushing for the decarbonization of the economy over the last few years. For example, the Portfolio Decarbonization Coalition includes several asset owners who are committed to freeing resources from carbon-intensive investments to redirect them towards cleaner technology. "Unfriend Coal", a research study published in November 2017, reports that a growing number of European insurance companies (including big players like Allianz, Zurich, and Generali) have divested over €20 billion from coal in the last two years.

The effect is a growing demand for disclosure on information related to the management of climate risk and greenhouse gas emissions. Standards for reporting carbon accounting, such as the ones promoted by CDP (Carbon Disclosure Project), have now become in fact necessary for companies that are listed on the main international stock markets.

➜ Where science can take us
Another interesting initiative concerns the definition of science-based targets at the level of the firms. What is this about? One of the rules of management tells us that processes can be managed effectively only if clear targets are defined and results can be measured. Also in the case of CO2 emissions, companies have started setting medium- and long-term targets to combine mitigation strategies and adaptive remedies to contain climate risk. The initiative on science-based targets is promoted by a network that comprises UN Global Compact, CDP, WWF, and the World Resources Institute. The idea is to encourage the private sector to adopt decarbonization targets at the company level in line with the Paris climate targets. Three hundred and fifty-five companies are involved, including big corporations like Enel, Nike, Toyota, Nestlé, and Unilever.

➜ Disclosure and scientific targets offer appreciable answers, but what concrete actions are being taken to combat climate change?
Business accounts for over 50% of global electricity consumption; one of the most interesting answers is that proposed Re100, a network of companies committed to get 100% of their energy needs from renewable sources. To date, 128 multinationals (including Ikea, Google, H&M, Goldman Sachs, Walmart) have committed themselves to this target, which accounts for annual electricity consumption equal to that of a medium economy like Poland or Malaysia. The actions taken by these companies expands the demand for renewable energy, and enables economies of scale in low-carbon technologies. In a context where the scientific community struggles to make its voice heard in the world of politics, business activism is all the more important. Even if these commitments are still limited in scope, they give hope that the transition to a more sustainable future is attainable.