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How businesses can demonstrate their commitment to climate leadership

Posted by Neha De

May 13, 2022

The Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report “Climate Change 2021: The Physical Science Basis” has propelled the urgent topic of climate change into the public eye yet again. IPCC is a committee mandated by the United Nations to continuously deliver objective scientific information related to understanding human-induced climate change to the policymakers of the world.

The report makes it clear that the warming we have experienced to date has made changes to many of our planetary support systems that are irreversible on timescales of centuries to millennia, according to BBC. In fact, the UN chief has called the IPCC report “a code red for humanity.”  

To make matters worse, the report has found human influence to be the main driver of the decrease in Arctic sea-ice as well as the global retreat of glaciers since the 1990s, which has ultimately led to warmer climates across the world. 



In 2015, nearly 200 nations adopted The Paris Agreement , which “set out a global framework to avoid dangerous climate change by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. It also aims to strengthen countries’ ability to deal with the impacts of climate change and support them in their efforts.” 

While a number of nations agreed to fully adopt solutions laid out by The Paris Agreement, over the next couple decades, the authors of the IPCC study now argue that Earth’s temperatures will rise, irrespective of additional fossil fuel consumption, by 2040. 

Climate change's impact on business 

In 2019, The New York Times touched upon a report conducted by the CDP, an international nonprofit organization that works with businesses around the world to publicly disclose the opportunities and risks that climate change could create for their businesses. 

According to the New York Times article, “After analyzing submissions from 215 of the world’s 500 biggest corporations, CDP found that these companies potentially faced roughly $1 trillion in costs related to climate change in the decades ahead unless they took proactive steps to prepare. By the companies’ own estimates, a majority of those financial risks could start to materialize in the next five years or so.”

According to the IPCC, “Averaged over the next 20 years, global temperature is expected to reach or exceed 1.5°C of warming.” And if things are not brought under control, climate change will lead to devastating and unparalleled extreme global weather events.

Climate change will devastate populations, damage economies, increase resource scarcity and impact business costs dramatically. So for both business and humanitarian reasons, it is crucial that organizations of all sizes take action now! 

What action must businesses take?

The World Economic Forum summarizes four pillars for climate leadership within your business: 

Pillar 1: Reduce your own emissions

– Targets for emission reduction need to be aligned with climate science, starting with at least 50% reduction in carbon emissions from business operations in the next decade. These include emissions from sources such as furnaces and vehicles, as well as purchases of electricity, cooling and heating. 

Business travel should also be part of this pillar. One way to achieve emission reduction from business travel is to make virtual meetings a permanent feature of our working lives. The COVID-19 pandemic has shown that businesses can effectively reduce the need for many kinds of business travel if required.

Important actions for pillar one are:

• Outline your own greenhouse gas emissions.
• Determine your base year for the reduction commitment and set an official target.
• Decide the order in which to remove emissions and come up with a plan on how to reach set goals. Begin with easy to achieve goals that are economically beneficial and create positive momentum in the company.
• Be transparent. Disclose your organization’s carbon emissions, plans to reduce them along with emissions reductions as part of your public reporting every year.

Pillar 2: Reduce your value chain emissions

– Value chain emissions comprise all emissions that can be found outside the company walls, including upstream activities (such as from suppliers) as well as downstream activities (such as sold products). These normally represent the largest share of a firm’s total footprint.

Businesses should work actively to bring down their value chain emissions, by making changes in the design of products, procurement guidelines and supplier code of conduct criteria, and collaborations with suppliers and customers among other ways.

Important actions for pillar two are:

• Draw up the carbon emissions associated with your value chain to identify the most substantial ones, and start tracking them systematically.
• Set a target for the first halving of absolute value chain emissions within the first year itself.
• Determine the order in which to reduce carbon emissions and build a plan on how to reach the set goals.
• Be transparent here, too. Divulge your value chain emissions as well as plans to reduce them to the public.

Pillar 3: Integrate climate into your business strategy

– There are numerous industries that need to be fundamentally redesigned if they wish to achieve a target of 1.5°C. Business models will need to be transformed to open new revenue streams and drive innovation. Business leaders can begin by laying out the net-zero future of their organizations. 

Some possible ways to achieve this are by developing new fossil-free materials and adopting renewable energy solutions and electric vehicles. Businesses can also help shift consumer patterns through circular economies, vehicle sharing or close-to-home tourism.

Important actions for pillar three are:

• Review and update your vision, mission statement, strategy and processes to reflect your commitment to climate action.
• Shift your portfolio toward fixes that help your customers avoid emissions and scale these fixes dramatically.
• Combine your climate strategy in your products and services roadmaps and ensure all new solutions are compatible with the 1.5°C target.
• Consider accounting for a price on carbon to make climate a priority of your investment procedures.

Pillar 4: Influence climate action in society

– Climate leaders should use their business networks and their sphere of influence to support and speed up climate action, by working with and influencing a wide range of governments, suppliers, customers and nongovernment agencies.

Important actions for pillar four are:

• Join forces with customers and suppliers to enable innovative technologies and sustainable transformation of value chains.
• Influence local and national policymakers to step up climate action and policies in line with the 1.5°C goal.
• Including the 1.5°C climate commitment in corporate and government policies, including financial policies. 


Neha De
Neha De

Neha De is a writer and editor with more than 13 years of experience. She has worked on a variety of genres and platforms, including books, magazine articles, blog posts and website copy. She is passionate about producing clear and concise content that is engaging and informative. In her spare time, Neha enjoys dancing, running and spending time with her family.

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