What's the business case for climate science?
Let's be honest, the transition to a low carbon economy is going to require some difficult and far-reaching change from most companies and sectors. But emerging leadership from the corporate world is showing that remodelling business strategies around climate science is already driving innovation, growth and other business benefits.
A new 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.
To take just one example, the engineers at Kellogg’s waffle-making facility in San Jose are now using fuel cell technology which generates electricity. Meanwhile, Sony has developed its own recycled plastic, SORPLAS, which is made from up to 99% recycled material and saves up to 80% CO2 emissions during manufacturing.
The automotive industry in particular accentuates the impact climate science can have on business models. The electric vehicle market is projected to soar to $1trn by 2030, with 30% of new car sales expected to be zero emissions or plug-in hybrid. Meanwhile, technological innovations are driving down the price of lithium-ion battery packs. By factoring in climate science to their business plans and developing science-based targets for emissions, companies are giving their engineers a licence to innovate and are reaping the rewards.
Protecting brand reputation
It’s no secret that brand is everything when building a business, and CEOs and executives are increasingly tapping in to science-backed climate action to protect brand reputation. The YouGov poll also found that 79% of corporate executives surveyed found a strengthened brand reputation to be one of the most significant business benefits for their company from committing to the Science Based Targets initiative.
Companies with science-based targets are attesting to that. For multinational technology company Dell, setting a science-based target offers a way to deliver the level of corporate responsibility their customers expect of them. Electricity operator EDP, meanwhile, says setting a science-based target shows ‘robustness, confidence and credibility’.
Brand credibility also matters to investors. And as pressure continues to grow from investors concerned about environmental risk – catalysed by developments such as the Taskforce on Climate-related Financial Disclosures (TCFD) or the threat of stranded assets in the fossil fuel sector - more and more questions are being posed to companies about their sustainability performance. Having a science-based target is becoming an essential part of a credible corporate climate risk management process.
Indeed, the stranded assets argument, which contends that fossil fuel companies are overvalued as the vast majority of fossil fuel reserves are likely to be rendered unburnable, is a great example of how climate science is holding sway over investors as they begin to recognise these risks.
The new green economy poses a number of opportunities for businesses and those that incorporate climate science into their business strategies will put themselves ahead of the pack with a boost to innovation, strengthened brand reputation, greater investor confidence and a more sustainable future.
Dexter Galvin is global director of corporations & supply chains at CDPCDP