It is the most challenging and the most essential of all the Sustainable Development Goals - and businesses have a critical role to play in determining whether or not it can be met
The imperative to tackle climate change becomes ever more urgent with each passing day and every tonne of carbon dioxide emitted. Confirmation came recently that not only are global greenhouse gas emissions still rising, but levels of greenhouse gases (GHGs) in the atmosphere have reached a new record of 407.8 ppm - a level that is unprecedented in human history.
"There is no sign of a slowdown, let alone a decline, in greenhouse gas concentration in the atmosphere despite all the commitments under the Paris Agreement on Climate Change," admits Petteri Taalas, secretary-general of the World Meteorological Organisation (WMO). "It is worth recalling that the last time the earth experienced a comparable concentration of CO2 was three to five million years ago. Back then, the temperature was 2C to 3C warmer, sea level was 10-20 metres higher than now."
Warming Stripes for GLOBE from 1850-2018 #ShowYourStripes
Last year, the Intergovernmental Panel on Climate Change (IPCC) once again set out the dangers of climate change, the importance of limiting average temperature rises to below 1.5C, and the emission cuts required to stand a reasonable chance of avoiding 'dangerous' levels of warming. According to its influential analysis, emissions need to more than halve by 2030 and the world needs to reach net zero emissions by 2050. But the WMO's figures, coupled with the latest emissions data and the news from the US's National Oceanic and Atmospheric Administration that 2019 is set to be one of the three hottest years ever, further highlight how far the global economy is from delivering such drastic emissions reductions. The world is facing an 'emissions gap' between current and projected greenhouse gas output and the level deemed compatible with the Paris Agreement.
This 'emissions gap' is tracked by the United Nations Environment Programme (UNEP) in an annual report of the same name. It warns that the gap is the upmost importance "because if we can't close it and meet the emissions reduction target, we will face increasingly severe climate impacts worldwide".
"It is important that policymakers, and their citizens, know what the gap is so that the commitments countries are making are sufficient to close the gap," UNEP adds.
Awareness of this gap - or should it be rebadged as a chasm? - is critical because the situation is worsening. "In 10 years of producing the emissions gap report, the gap between what we should be doing and what we actually are is as wide as ever," says UNEP. "On the brink of 2020, we now need to reduce emissions by 7.6 per cent every year from 2020 to 2030. If we do not, we will miss a closing moment in history to limit global warming to 1.5C. If we do nothing beyond our current, inadequate commitments to halt climate change, temperatures can be expected to rise 3.2C above pre-industrial levels, with devastating effect."
If the world had acted on the scientific warnings 10 years ago, the annual reduction required would have been just 3.3 per cent. In contrast, based on current trends the required annual emission reduction rate could have risen to 15.5 per cent. "Every day we delay, the more extreme, difficult and expensive the cuts become," UNEP warns.
That is the rather sombre, yet urgent, context to Sustainable Development Goal (SDG) 13 and its sweeping pledge to "take urgent action to combat climate change and its impacts".
As emissions rise public anger is mounting | Credit: UN Climate Change
Urgent action
The headline goal for SDG13 is so capacious as to take in every corner of the global economy, every corporate boardroom, and every government. But SDG13's targets do seek to drill down to some of the critical metrics that will determine whether the world can avert an escalating climate crisis or not. They include a focus on strengthening resilience and adaptive capacity to climate-related hazards and natural disasters; integrating climate change measures into national policies, strategies and planning; mobilizing $100bn a year to help developing countries to mitigate the impacts of climate change; and helping the least developed countries and small island states to prepare for climate change.
However, for Louise Ayling, stakeholder engagement director at consultancy Radley Yeldar, SDG13 provides perhaps the best example of how the SDGs as a whole work to address the indivisible and interconnected nature of the most pressing sustainability issues facing the planet. "While SDG 13 may come across as a standalone goal, it is in fact completely inseparable from all 16 others," she argues. "In some parts of the world it will affect water scarcity, affecting drinking water availability and crop yields. In other regions, it'll cause flooding, threatening livelihoods and destabilising our food system."
As such, climate action will support lots of the other SDGs, points out Karen Jamison, head of sustainability at Workspace. "For example, by limiting global warming we will help SDG14 life below water and SDG15 life on land directly," she says. "Both of these will then have a positive effect on SDG1 no poverty, 2 zero hunger and 3 good health and wellbeing."
People's first priority is still jobs - Maria Mendiluce, WBCSD
It is an analysis echoed by Olivia Sibony CEO of SeedTribe, an online community that showcases impact-driven entrepreneurs, who argues that to have truly sustainable businesses we can no longer isolate one particular issue. "It's about 'systems thinking' - understanding that everything is interrelated and interdependent," she says. "While in the past we might have thought 'I'm producing bottles', now we need to think about where they are produced, what is the impact on land, who is employed in all of these processes? It is about the whole process, from cradle to grave. Who is employed in all of these processes? This links to gender equality and reducing inequality, as well as SDG 8 about decent work and economic growth."
In short, tackle the climate crisis and it helps deliver on virtually every other SDG; fail to avert a climate catastrophe and all the other goals become virtually impossible to achieve.
This is particularly true when it comes to the critical issue of how decarbonisation will impact on jobs. Many high-carbon companies, indeed entire industries, have no long-term future in their current guise and simply must decarbonise. Many workers in these sectors will have transferrable skills - offshore oil workers are in demand in the offshore wind sector, for example - but many will not be so fortunate. The necessary decline of the coal industry could result in thousands of jobs lost, many of which are concentrated in mining communities that have been reliant on the sector for generations. In the car industry, meanwhile, electric vehicles not only have many fewer moving parts but they operate on different platforms and require different skills. "How do companies manage the transition?" asks Maria Mendiluce, managing director for climate and energy at the World Business Council for Sustainable Development (WBCSD). "It has to be carefully done. People's first priority is still jobs. We need to carefully think through how to move from brown jobs to green jobs."
Nations need to think carefully about how to turn brown jobs into green jobs | Credit: Daniel Azocar
One concept that aims to address these risks is the idea of a Just Transition. The Paris Agreement says that the decarbonisation process should "take into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities".
However, while governments, unions, and think tanks have all embraced the idea over the past few years it is yet to translate into concrete policy frameworks - and that is creating risks for the low carbon transition and SDG13. Decarbonisation, "if left to solely to the market, could have massive economic and social consequences, in terms of jobs, skills and knowledge lost and communities destroyed," warns Tim Page, senior policy officer at the UK's TUC. "The lack of a comprehensive just transition policy or coherent industrial strategy to deliver the necessary support and impetus for change, means that many well paid, highly skilled, unionised jobs, are under threat."
This is starkly illustrated by the travails of the German automotive industry, which is struggling to adjust to the transition to electric vehicles. "German auto groups, from Daimler and Audi to suppliers including Continental and Bosch, have announced that about 50,000 jobs will be lost or are at risk so far this year, as their traditional businesses become less profitable," the Financial Times reported recently.
The fear is that a failure to offer workers in carbon intensive industries a clear path towards attractive new roles risks a backlash whereby businesses and governments come under intense pressure to rollback ambitious climate policies and defend the status quo.
SDG13 came face-to-face with the need for a just transition earlier this year when Chile abruptly cancelled plans to host the UN climate talks - which were subsequently moved to Madrid at a month's notice - because of protests against low wages, rising living costs, and high levels of inequality. "Social unrest as a reaction to worsening inequality has the potential to derail multilateral cooperation on climate change and other global issues," says Patrick Schröder, senior research fellow on Energy, Environment and Resources at the think tank Chatham House. "Investments to support just transitions need to ensure investments, not only for large energy infrastructure, but also in the jobs, skills and work vital to both adaptation and mitigation."
Progress to date
According to the UN's Sustainable Development Goals Knowledge Platform, "with rising GHG emissions, climate change is occurring at rates much faster than anticipated and its effects are clearly felt worldwide". There are, as ever, intense debates over how swiftly climate impacts will accelerate as concentrations of greenhouse gases increase. But the serious consequences that climate change is starting to have for people, governments, and businesses around the world are becoming increasingly evident, ranging from global heatwaves, accelerating ice melt, rising sea levels, wildfires in Australia and California and droughts in Southern Africa.
Between 1998 and 2017, direct economic losses from disasters were estimated at almost $3tr and climate-related and geophysical disasters claimed an estimated 1.3 million lives. There are credible projections that suggest these impacts could become a lot worse as temperatures rise and some parts of the planet become virtually uninhabitable. The UN recently warned that levels of global hunger have started to worsen for the first time since the turn of the century, with climate impacts identified as a primary cause.
Economic losses from extreme weather are set to multiply as emissions rise | Credit: Moorefam
"There is a lot of work to do," says Mendiluce. "There has been a lot of talk about climate and energy, but the world is just not reducing emissions. It's not that people aren't paying attention, there is just so much inertia built into the system, which is why we're not seeing the results that we're seeing with other SDGs such as poverty."
The global trend for emissions is alarming, agrees Alberto Carrillo Pineda, director for the Science Based Targets at CDP. "It definitely shows that much more needs to be done but on the other hand, there are pockets of action that keep my hopes alive," he says. "There are businesses, governments, cities, regions and even countries that are doing really well, but they represent a leadership movement rather than the mainstream that is needed to meet the targets. There are signs that things can change, but we need to scale up."
Optimists cling to these signs that a step change is on the horizon. As influential analysts such as Michael Liebreich have noted, mainstream projections for clean energy deployment have been repeatedly exposed as being overly pessimistic, as the cost competitiveness of wind and solar power in particular has worked to reshape global markets. With electric vehicle and battery costs also falling fast there is evidence that global economic growth and emissions growth have decoupled. Some experts predict a global emissions peak is imminent and could be quickly followed by peak demand for oil as clean technologies start to enjoy near exponential growth.
But while there are positive trends in terms of clean tech deployment, climate finance flows, and the development of ever more ambitious national climate action plans - or nationally determined contributions (NDCs) in the Paris Agreement jargon - far more ambitious policies and accelerated action are needed on both mitigation and adaptation, the UN maintains. "Access to finance and strengthened capacities need to be scaled up at a much faster rate, particularly for least developed countries and small island developing States," it warns in its official assessment of progress against SDG13.
It is clear that the world is not currently on track to keep temperature rises below 1.5C and that if it is to have any chance of meeting the goals of the Paris Agreement, much more needs to be done - and fast. As with every SDG, it is businesses that are likely to hold the key to unlocking more rapid progress.
The role of business
"Businesses are uniquely positioned to find innovative solutions to addressing SDG13, in a way that is financially attractive," points out SeedTribe's Sibony. "Tackled correctly, this can be a great opportunity to transform business and make it work for all."
The business case for bolder climate action has never been clearer, according to Dr James Robey, global head of sustainability at Capgemini. "Global business is a major contributor to rising levels of atmospheric carbon emissions, with just 100 companies responsible for more than 70 per cent of all emissions," he says. "Climate change will increasingly impact on economies, increasing weather related disruption, disrupting ecosystem services and ultimately impact the cost of doing business."
As such, the expectations placed on businesses by governments and wider society are clear. "As a minimum, businesses must operate responsibly, reducing their own impacts - and then must pursue opportunities to bring business innovation to resolve societal challenges - and do so soon," Robey continues. "The IPCC's 2030 target gives us all just 10 years to radically transform how we operate within the global economic system to limit a climate change disaster. Unless organisations collaborate with one another and with their stakeholders to deliver the significant carbon reduction targets recommended, business as usual may not survive beyond 2030."
Companies like IKEA have set ambitious environmental targets | Credit: IKEA
The good news is that the climate crisis is no longer a topic addressed only by sustainability or corporate social responsibility teams, says Phillip Smith, chief operating officer at global business consultancy Xynteo. "CEOs of the largest multinational companies in Europe are engaging with climate sustainability, and overall, conversations around business and climate change have mainly moved on from 'why would we act?' to ask instead, 'how can we act?'," he adds. "The CEOs we've spoken with this year shared general impatience for progress and action, and the last decade has seen a welcome rise in businesses setting ambitious, long-term science-based climate commitments."
Robert Stevens, director of partnerships at carbon offset specialist ClimateCare, agrees a shift is underway in business engagement with SDG13. "A lot of corporate clients are coming to us with an increased level of desire to act on climate change and understand what they can do," he says. "However, the challenge is for companies to make sure they are creating short-term action plans that set out how to reach those targets, and measuring and disclosing their progress. They cannot hide behind impressive targets - but need to build a plan towards their grand goals and report regularly on actions taken. The path to get there needs to be tangible."
Business imperative
Ayling at Radley Yeldar insists the business case for engaging with SDG 13 has become "a no brainer". "Businesses that don't adapt, won't survive," she predicts. But despite overwhelming scientific evidence, climate change is still considered a nebulous and distant topic by far too many businesses, she adds.
The numbers certainly back up Ayling's concerns. While the cohort of high profile corporates committing to ambitious decarbonisation goals and even net zero targets is growing all the time, EcoAct's Climate Change Business Leaderboard recently highlighted how 85 per cent of FTSE 100 companies still do not have a sufficient emissions reduction strategy in place to limit global warming to safe levels, while only eight per cent have achieved carbon neutrality.
However, change is afoot. Over the past couple of years, climate change has moved from being a corporate responsibility issue to a core part of business strategy, Stevens says, which is a big change.
"We have reached a time of climate crisis," Sibony adds. "This means that the negative environmental impacts of previous business practices are being felt by all of us and we are all starting to pay the price for it - more flooding, less predictable weather patterns which are wreaking havoc on agriculture and therefore food prices, dirty oceans leading to depleting fish populations as well as contaminated fish which is leading to health issues.
"Businesses are feeling the pinch on their bottom lines so a change is inevitable in order to be future-proof. The companies that are leading the way will reap the long-term benefits from having implemented sustainable practices into their business models and will be ahead of the game compared to those burying their head in the sand, thinking that we can continue to close our eyes to these growing challenges."
There is absolutely no doubt that this a business-critical issue, Robey adds. "We firmly believe that those organisations failing to grasp the sustainability agenda will cease to operate in the hard realities of the environment beyond 2030," he says. It might sound like a bold prediction, but consider this week's from the Principles for Responsible Investment detailing how some pretty basic and increasingly widespread climate policies could knock trillions of dollars off the valuations of carbon intensive businesses that fail to adapt and it is clear that climate change could completely reshape the global economy.
Moreover, research by Capgemini, based on inputs from 170 of the world's largest companies, looked at the drivers behind corporate motivation to invest in becoming more sustainable and found that in addition to reputational drivers, for example the ability to attract and retain the best staff, businesses were also facing the hard implications of climate change. Or as Mendiluce puts it, "businesses can't succeed in societies that fail".
'Ultimate regulator'
Xynteo's Smith identifies two more key factors driving business engagement with SDG13: there is now increased pressure from consumers on businesses to tackle climate change, and sustainability has steadily risen up the agenda for investors. "Our research shows that 41 per cent of business leaders in Europe recognised consumers as 'very influential' in driving environmental performance in their business," he explains. "The consumer is becoming the 'ultimate regulator'. Both current consumer pressure and expected demands from future consumers are shaping company behaviour, pushing them both to make changes to supply chains and to change their offerings."
Businesses of all stripes are finding themselves caught in a pincer movement between climate concerned consumers and climate concerned investors. "Sustainability, including climate change in particular, is moving rapidly up the focus of investors," continues Smith. "In 2006, 63 investment firms with $6.5tn in assets under management (AUM) signed up to the UN-backed Principles for Responsible Investment (PRI). In so doing they pledged to integrate Environmental, Social, and Governance (ESG) criteria into their investment decisions. In 2018, the number of signatories to PRI had swelled to 1,715, representing $81.7tn in AUM. The business imperative for engaging with SDG13 is clear."
Bank of England Governor Mark Carney has been a powerful voice encouraging companies and investors to consider climate risk | Credit: Bank of England
This increased focus is becoming more formalised as well, through initiatives such as the Taskforce for Climate-related Financial Disclosures (TCFD), whose recommendations on how companies should tell investors how they are dealing with climate risks are starting to gain traction. There are also a number of schemes targeting the biggest emitters, such as Climate Action 100+, which sees top investors engage with the companies most responsible for greenhouse gas emissions. The group has already chalked up some significant successes, such as securing agreement from Shell to introduce an emissions-reduction target that includes not only its own emissions but those from customers using its products.
Further pressure will come from the tightening of governments' NDCs, the targets they introduced to cut emissions through the Paris Agreement and which are due to be revisited at next year's COP26 Summit in the UK. "Governments have an obligation to increase their NDC ambitions," Mendiluce says. "With current NDCs, we're on track for a 3.2C increase in average temperatures. We need to bring it to below 2C. Many businesses are asking for this so governments need to turn emissions reductions into regulations, and those regulations need to be as harmonised as possible."
If governments come to COP26 with significant new decarbonisation pledges in hand - and it is important to remember the EU is working on a net zero goal, China is keen to beef up its plans, and a victory for the Democrats at next year's US election would deliver a new President committed to delivering net zero emissions - then the investment signal for businesses will become even louder.
At the same time, it is also becoming clear that there are considerable market opportunities in tackling climate change. "In 2017, the predicted market opportunity for investing with an SDG lens was $12tr," explains Sibony. "This has significantly increased in the last two years, as we realise the targets need to be increased."
Business action
Faced with this matrix of escalating pressures the corporate world is slowly starting to get to grips with what it must do to decarbonise.
Leading businesses are stepping into the void left by national governments - Helen Clarkson, The Climate Group
As such, 2020 will see a lot of action from non-state actors, Carrillo Pineda says. "A lot of companies have emissions targets that expire in 2020, so they will have to upgrade them," he predicts. "There is sufficient awareness and pressure around climate change that it is almost unavoidable they will have to step up, meaning we will see an unprecedented level of action."
Targets tend to deliver results, according to Robey. "Leading with ambitious targets is critical to drive an organisational approach to climate change action," he says. "We were one of the first in our industry to set science-based targets - and are well on our way to meet them by reducing our carbon emissions by 30 per cent per employee by 2030."
Initiatives such as the Science Based Targets (SBTs), as well as complementary initiatives, such as RE100, EV100, and EP100 - which focus on sourcing 100 per cent renewable energy, 100 per cent EV fleets, and rapid energy efficiency improvement, respectively - are among the easiest ways to demonstrate your commitment to decarbonising and delivering on SDG13. More than 200 of the world's biggest companies have signed up to RE100, committing to source all of their electricity from renewable sources, and half of them are pushing other stakeholders such as utilities and policymakers to speed the transition to clean power. "At a time when UN research has said countries are underdelivering on climate action, leading businesses are stepping into the void left by national governments and accelerating the clean energy transition," argues Helen Clarkson, CEO of the Climate Group, which leads the RE100 programme along with CDP.
Meanwhile, the SBTs allow businesses to set greenhouse gas emissions reduction targets in line with what science says is required to avert dangerous climate change and meet the goals of the Paris Agreement. A new report published recently by the Science Based Targets initiative (SBTi), says that 285 companies responsible for more than 752 million metric tons of CO2e emissions a year from their operations - more than the combined annual emissions of France and Spain - have set reduction targets in line with the Paris Agreement, with 76 of them opting for targets in line with limiting warming to 1.5C above pre-industrial levels. These pledged reductions are set to reduce emissions by the equivalent of shutting down 68 coal-fired power plants.
But setting targets is just the first stage in delivering on SDG13. "The challenge is to make sure [companies] are creating short-term action plans that set out how to reach those targets, and measuring and disclosing their progress," advises Smith. "They cannot hide behind impressive targets - but need to build a plan towards their grand goals and report regularly on actions taken."
Ultimately though, it is these corporate action plans and their effective execution that will determine whether or not SDG13 is met and the climate crisis is averted. And time is running out. "[Businesses] can't wait for governments to get their act together," says Mendiluce. "They have a lot to lose. But it requires a lot of collaboration among businesses because none of them can solve this alone."
