As the COP24 drew to a close last weekend, it was hard not be concerned by the political rifts the process has revealed, notably regarding the Intergovernmental Panel on Climate Change’s (IPCC) 1.5C report. But in the real economy there are clear reasons for optimism, writes Nicolette Bartlett.
Nicolette Bartlett is Director of Climate Change at CDP, a UK-based organisation which aims to make environmental reporting and risk management a business norm.
As the UN’s climate negotiations drew to a close at the weekend, it felt like a bitter sweet victory for the climate movement. The conference’s central achievement, the Paris rulebook, which will act as the framework for the Paris Agreement once it comes into force in 2020, was finally agreed to exhausted applause but it is hard not to be concerned about the political rifts the process revealed and the fact that it remains unclear whether we will see countries ramp up their ambition in 2020, as the latest science demands.
While the final text fell short of ‘welcoming’ the findings of the IPCC’s Special 1.5C Report, one of the most interesting trends to emerge at the COP24 talks has been the clear lead that European companies and cities are taking to catalyse the ambitious action that the scientists are calling for.
Here are three ways the real economy is moving ahead on climate:
- Cities setting the bar
From Basel to Bolzano, many European cities are not waiting for national governments to take action on climate, they are taking matters into their own hands. For example, major urban centres such as Copenhagen, Paris and Stockholm have set targets to be net-zero carbon by mid-century.
Meanwhile, Basel, Bolzano, Lubljana and Reykjavik are among the cities that already source 100% of their energy from renewables. In the UK, more than 90 cities and local authorities have committed to shift to 100% clean energy by 2050.
New research shows that globally, states and regions have committed to decarbonise at a rate of 6.2% a year to 2050, more than double the rate of the G20 national governments.
With cities home to half the world’s population and responsible for over 70% of energy-related carbon emissions, it’s crucial to have municipal leaders onboard the transition to a low-carbon economy.
- Using science to drive innovation
As corporate executives seek to future-proof growth in the face of growing environmental regulation and technological changes, more and more businesses are using climate science to set emissions reduction targets. 500 companies – including nearly a fifth of Fortune 500 companies – have now committed to Science-Based Targets (SBTs) that align their climate efforts with the Paris Agreement goals.
Meanwhile, the growing list of firms with SBTs, features European companies from carbon intensive sectors such as Thalys and SNCF from the transport industry as well as Royal BAM Group and Obrascon Huarte Lain from the construction industry.
A YouGov survey for the Science Based Targets initiative found that 63% of executives believe that the setting of tough targets which are scientifically aligned with the Paris Agreement is helping unlock innovation.
The automotive industry in particular accentuates the impact climate science can have on business models. The electric vehicle market is projected to soar to $1 trillion by 2030, with 30% of new car sales expected to be zero emissions or plug-in hybrid. A study by CDP on the environmental performance of the sector found European companies are leading the pack with BMW and Daimler coming out on top.
It’s a similar story in the oil & gas sector, as European firms are investing up to 7% in low carbon, while the sector as a whole is investing just 1.3% of total 2018 capital expenditure.
- Comprehensive climate reporting
You can’t manage what you don’t measure and the transparent reporting of environmental risk, impact and opportunity is the foundation for meaningful action by companies and cities if the world is to lift its ambition on environmental action.
In 2018 over 7,000 companies and 750 cities reported their environmental data to CDP. That is helping investors and wider society to monitor progress on global warming and encourage the transition to a low-carbon economy. European countries should take note of these numbers and make it mandatory for companies to integrate climate risk into their annual reports to the market.
Whether the new rulebook etched out in Katowice will catalyse action and push nations to make good on their commitments under the Paris Agreement remains to be seen. But in the real economy there are clear reasons for optimism – with European companies and cities taking on the leadership required to move climate action forward.