Five ways businesses can respond to the IPCC’s ‘atlas of human suffering’
The Intergovernmental Panel on Climate Change (IPCC)'s latest report highlights the "atlas of human suffering" that the climate crisis has caused. The Panel's "bleakest warning" yet offers some key considerations for businesses wanting to take up leadership roles in the net-zero movement.
Published today (28 February), the Sixth Assessment Report from the IPCC’s Working Group 2 warns that historic failures to cut emissions and slow progress on adaptation efforts have left more than 3.3 billion people – half of the world’s population – “highly vulnerable” to the impacts of the climate crisis.
Leaders from across the global green economy are urging policymakers and business decision-makers to heed the findings of a major new report from hundreds of climate scientists, accelerating efforts on adaptation, decarbonisation, backed by adequate levels of finance. Read the industry reaction here.
The report emphasises that the longer that action on the climate crisis is delayed, the greater the financial costs will be, as well as the toll it will take on humanity.
Click here for an in-depth look at the key messages of the IPCC report, but for those sustainability professionals wondering what this latest report means for them and their organisations, edie has summarised five key messages that the IPCC report has that need acting on.
1) Know that 1.5C targets are not a ‘nice to have’
The report predicts that the world is likely to exceed 1.5C of warming on pre-industrial temperatures in the “near-term” on the current trajectory. The report does state that the temperature could be brought down in the future if “transformational” action is taken, but even a temporary breach of 1.5C would be fatal for millions and wipe billions off of the global economy, largely due to extreme weather events and public health impacts.
A long-term, permanent rise above 1.5C is looking increasingly likely, however. The report warns that the window of action for delivering a “livable” future for billions of people is closing faster than anticipated.
As such, efforts to limit average global temperature increases to 1.5C through science-based emissions reduction targets are a prominent way for a business to play a part in efforts to alleviate some of the stark scenarios outlined in the report.
According to Net-Zero Tracker, the total cumulative combined global revenue covered by public company net-zero targets amounted to around $19.5trn, as of November 2021. This figure is up almost fourfold year-on-year and represents almost 75% of total revenues. Yet, questions remain around the credibility of net-zero targets in the main.
Businesses are able to access the Science Based Targets initiative’s (SBTi) Net-Zero Standard or the Carbon Trust’s recently launched Route to Net Zero Standard as means to verify that they are aligned with climate science. However, the IPCC’s latest report stresses that inaction is costly, and if target setting is to become a prerequisite for businesses, then leadership must emerge in the form of tangible action and progress towards net-zero targets.
2) Adapt or die
The IPCC report makes it incredibly clear that we have approached an era of irreversible damage caused by the climate crisis.
The report notes that some regions are already past the point of effective adaptation, due either to “hard limits” like coastal erosion or regular flooding, droughts or wildfires – or to “soft limits” like costs.
Every business needs to be aware that the ecosystems it operates in in 2050 will be vastly different to the ones it relies on now, even if the 1.5C threshold is maintained. For global businesses, every country they operate in will be changed by the deteriorating climate and potential ecological collapse. Developed countries are not immune. Indeed, the UK’s Environment Agency recently claims that the UK is dangerously underprepared for the physical impacts of climate change that are already baked in, regardless of future emissions reductions on the road to net-zero by 2050.
As businesses plot their net-zero journeys, they need to be aware of how their supply chains, operations and even their licenses to operate may change as the climate crisis exacerbates.
With mandates expected on non-financial disclosure in the coming years, businesses can begin to explore how they will be impacted by a range of climate scenarios and plan accordingly.
The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) provide sustainability professionals with the tools to do so, namely through scenario analysis.
The concept of scenario analysis is that it encourages businesses to explore uncertainty to create a “well-established method for developing strategic plans that are more flexible or robust to a range of future states”.
Through the analysis, businesses should evaluate a range of climate-related scenarios, including a 2C scenario to explore physical, strategic and financial risks and opportunities that could emerge. Scenarios should act as a hypothetical construct, rather than a forecast, but should be plausible, relevant, consistent and distinctive examinations of risks that challenge current consumption in the future.
Any corporate that believes the business as usual will serve in a decarbonsied future will likely suffer on the bottom line, with their operations and value chain impacted by loss and damage (more on that later) and their financial returns hindered through a business model that is not fit for purpose. The message from the IPCC is clear: adapt or die.
3) Become community-focused
The IPCC report offers some sobering reading when it comes to the impact that the climate crisis will have on the planet’s population, namely those in the most vulnerable countries.
“With increasing global warming, losses and damages increase and become increasingly difficult to avoid, while strongly concentrated among the poorest vulnerable populations,” the report states.
These losses “are not comprehensively addressed by current financial, governance and institutional arrangements, particularly in vulnerable developing countries.”
Loss and damage has been a thorny subject for global negotiators. At COP26, nations including China and the G77 – which represents 134 developing and emerging economies – expressed anger that their proposals for a Loss and Damage finance facility were watered down, following reported interventions from the US and EU.
Such a facility would see developed nations offer reparations for vulnerable nations to respond to the damage caused by climate-induced events. Some African nations already see 10% of GDP equivalent spent on adaptation and damage repair annually.
The Glasgow Climate Pact does confirm that a “technical assistance facility” will be introduced to support loss and damage in relation to climate change in developing countries. This will fall under the Santiago Network from the UNFCCC, but many developing nations left Glasgow reeling from the lack of cooperation from developed nations to support them through additional finance.
Businesses are heavily reliant on the communities that they operate in. With more organisations attempting to find, embed and act upon a newfound sense of “purpose”, adding corporate financial flows to efforts to respond to the climate crisis for the most vulnerable is key to ensuring the net-zero transition is also a “just” transition.
Some corporations will look to the UN’s Race to Resilience, launched in January 2021 by the High Level Climate Champions as a follow-on from the Race to Zero campaign. The Resilience programme aims to unify non-state actors in improving strategic approaches to the resiliency of the public.
At COP26, the initiative revealed that members had helped to increase the climate resilience of more than 2.3 billion people globally. The initiative is targeting four billion by 2030. The programme has also improved more than 100 natural systems including mangroves, forests and coastal zones.
4) Add the H to ESG
In a pre-publication meeting hosted by the ECIU, experts in the field of climate science outlined how this report could impact businesses moving forward.
During the media briefing session, Sir Michael Marmot, UCL’s professor of epidemiology noted that climate impacts needed to resonate much more with everyday business decisions, with the growth in ESG integration providing a positive platform for the private sector to contribute to efforts to combat the climate crisis.
“Businesses need to think about conditions of employment; they need to think about the climate impact of the goods and services they provide; they need to think of themselves as anchor institutions,” Marmot said. “In other words, they need to be looking at their impact on their local community and the wider environment both socially and environmentally.”
Marmot also noted the need for institutions to add H to the ESG movement to denote “health”.
The IPCC report details the “atlas of human suffering” facing civilization. The IPCC report warns that “climate change and related extreme events will significantly increase ill health and premature deaths from the near- to long-term” while “mental health challenges, including anxiety and stress, are expected to increase under further global warming in all assessed regions, particularly for children, adolescents, elderly, and those with underlying health conditions”.
Much has already been said about how rewilding and reforestation can not only capture carbon, but create new habitats for nature to thrive to benefit the physical and mental health of local communities. But more businesses must be willing to share how they are attempting to alleviate parts of the climate crisis in a way that reduces anxiety for staff and customers.
In short, businesses need to enable more of their staff, customers and suppliers to come on this net-zero journey with them, by making them active participants in closed-loop services that are ultimately better for the planet. This can range from training on sustainability actions to explaining the benefits of a low-carbon product or service.
Adding the H to ESG ensures that not only are businesses acting accordingly through the lens of society and the planet, but that it improves mental health and how products and services can assist those suffering the worst impacts of the climate crisis.
5) Rethink your relationship with nature
The IPCC report warns that a mass extinction of species – ranging from corals to trees – is well underway. Some of these key ecosystems could cease to exist if the world hurtles away from the 1.5C threshold, but they are already losing their ability to absorb carbon dioxide. As such, the carbon sinks we are currently relying on (and that businesses are currently investing in) are turning into carbon sources.
While nations have convened through the UN’s Convention on Biological Diversity to conserve around 30% of the world’s natural ecosystems, the IPCC notes that more may be needed to help these ecosystems cope with decades of neglect and damage.
It is here that businesses need to rethink their relationship with nature, not just on how they extract materials from the earth, or use soil and land, but also how corporates are increasingly turning to nature to offset emissions, even though nature’s ability to do so is weakening by the year.
The world is facing an $8.1trn financing gap in nature to help combat the climate crisis and ecological breakdown, according to the UN, which found that annual investments into nature-based solutions (NbS) need to increase fourfold by 2050.
Currently, more than half of the world’s total GDP is either “moderately or highly dependent on nature”, the report notes. Sectors such as agriculture, food and drink and construction are all reliant on nature and generate $8trn in gross added value. However, the report adds that nature only accounts for 2.5% of projected economic stimulus spending following Covid-19.
The report found that current investment into NbS sits at $133bn – 0.10% of global GDP – the most of which comes from public sources. However, up to $4.1trn is required by 2030, which rises to $8.1trn 2050, a four-fold increase.
On offsets, companies invest in NbS and programmes, such as tree planting or restoration to balance their own emissions. However, the current market for these projects has been best with accusations over inconsistent accounting, concerns that they actually fuel climate change and that they enable corporates to “greenwash” their way to net-zero.
With all of this in mind, corporate net-zero targets have been dubbed the “wild west”, where anything goes and not enough scrutiny is placed on claims and actions.
The latest warning from the IPCC paints a clear picture for corporates. Efforts to reach net-zero emissions by 2050 at the latest must be coupled with initiatives and programmes that improve the resiliency on our planet. NbS play a key role here, but businesses may want to start looking at how their own operations and value chains can act as hubs that improve resiliency through measures such as carbon insetting and partnerships with local communities aimed at restoring and protecting nature.
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