From carbon pricing to supplier engagement: CEOs rally behind ten-point plan to accelerate low-carbon transition

The plan is supported by companies across 26 nations with more than nine million staff collectively, including Ikea, SwissRe, the Coca-Cola Company, Unilever, ArcelorMittal, HP and Volvo.

It emphasises how action in the private sector, especially from corporates and the finance sector, can significantly drive progress towards closing the major emissions gap between the Paris Agreement’s 1.5C trajectory and the climate plans of nations.

These national plans are believed to be consistent with a 2.7C pathway. In that scenario, climate scientists have warned, economic shocks will be significant as one-third of the population faces an ‘unliveable’ future by the end of the century.

Companies “can and should drive systemic impact beyond their internal climate initiatives”, the new plan from the Alliance for CEO Climate Leaders states.

The plan calls on businesses to accelerate their work on reducing emissions in supply chains, which, for most multinationals, are far greater than those generated in their direct operations. CDP puts the average ratio for a large multinational at 11.4 to one.

Around one-tenth of global emissions lie in the supply chains of the world’s largest companies, the WEF claims. These firms are called upon to set and deliver credible science-based low-carbon targets that cover their supply chains. Delivery will need to include greater data collection and targeted support to different kinds of suppliers, who may not have the knowledge and resources needed to implement impactful changes.

By coupling supply chain decarbonisation with efficiency measures in logistics and changes to materials and/or business models, companies could halve emissions of consumer goods with an end-price impact of less than 1%, the plan states.

These measures can be delivered at a quicker pace and scale, while reducing costs, through partnerships within and between industries.

This counters narratives that low-carbon initiatives are simply too costly in the current economic downturn, which has led to a cost-of-living crisis in markets including the US and UK.

Policy advocacy

The final corporate action covered by the plan is advocacy for more progressive climate policies.

Cited in the plan is recent InfluenceMap research which revealed that 95% of companies are either advocating for weaker climate policies or sending mixed signals to lawmakers. This research covered direct lobbying as well as engagement in trade bodies and business groups.

The specific policy changes CEOs are encouraged to push for are:

• The creation of net-zero targets where they do not exist, and the acceleration of 2050 targets in markets where they have been set
• More tangible short-term planning to support long-term net-zero targets
• Carbon pricing which is ‘material’ and ‘meaningful’
• Doubling of financing for green public procurement
• Measures to remove obstacles to green infrastructure projects such as permitting lead times and grid connections queues
• Comprehensive plans to close green skills gaps
• Communications and education programmes to address distrust and misinformation

To this latter point, the WEF this week released its annual global risks report, drawing on the expertise of 1,400 risk managers. The biggest perceived near-term risk across all kinds of experts is misinformation and disinformation. This is linked to the third-biggest perceived risk across this timeframe – social polarisation.

The risks report also came with a warning about corporate action on environmental action. The WEF found that managers in the private sector are less likely to view climate and nature risks as imminent and urgent than their counterparts in policymaking and in civil society.

Commenting on the new plan, the WEF’s head of climate ambition initiatives Pim Valdre said: “We need to urgently shift into delivery mode, focusing on immediate actions with outsized impacts. Enabling these actions calls for public-private action to drive the right policies, technologies and financial solutions needed to achieve a system-wide transformation.”

Hundreds of decision-makers including policymakers, business leaders and philanthropists are set to convene from 15-19 January for the WEF’s annual summit in Davos. ‘Rebuilding trust’ has been selected as this year’s summit theme.