Meeting net-zero requires ‘rapidly escalating’ carbon pricing, corporate leaders urge
Senior sustainability representatives at major corporates have called on national governments to implement "meaningful and rapidly-escalating" carbon pricing, in order to support businesses on the road to net-zero.
Speaking as part of a recent media briefing hosted by We Mean Business, representatives from DSM, Schneider Electric and Salesforce were asked what calls to action they would like to issue to policy leaders at the upcoming UN Climate Summit in New York, in order to help other firms follow their lead in setting science-based targets.
To date, more than 46 firms have had their 1.5C-aligned emissions reduction goals approved by the Science-Based Targets Initiative (SBTi). These companies collectively leverage a global market capitalisation of $1.3trn+.
While welcoming this progress, representatives present at the briefing emphasised the importance of policy support to help all other businesses align with the Paris Agreement, ahead of the IPCC’s mid-century target for total decarbonisation.
Schneider Electric’s senior vice-president for sustainability Gilles Vermot Desroches, Salesforce’s vice-president for sustainability Patrick Flynn and DSM’s vice-president for sustainability Jeff Turner both listed carbon pricing as top of their green policy wishlist.
“We recognise, very clearly, that any scenario we anticipate can only be delivered with the appropriate policies in place – in particular, by making sure that greenhouse gas (GHG) emissions are firmly embedded into our financial system through a price on carbon,” Turner said.
“Putting a price on carbon internally has helped to drive the mindset transformation and is also why we are committed to advocating externally.”
Turner is notably a member of The World Bank Group’s Carbon Pricing Leadership Coalition, alongside more than 30 national governments and more than 200 other private sector organisations.
His sentiments were echoed by Schneider Electric’s Vermot Desroches, who added that a “meaningful and rapidly escalating” carbon price, coupled with additional incentives to decarbonise existing buildings and transport systems, would “dramatically alter” the kinds of products and services offered by businesses.
Salesforce’s Flynn, meanwhile, explained that his firm’s decisions to set an internal carbon price will “fuel carbon-smart decisions and add additional incentives to doing the right thing for the climate”.
Such decisions taken by the software giant to date include switching to 100% renewables across its direct operations and reporting in line with the Task-Force on Climate-Related Disclosures (TCFD) recommendations – decisions which, Flynn claimed, could be taken by other businesses with the right policy support.
“A 1.5C trajectory is going to require transformation at an unprecedented pace and scale,” he said.
“It’s on countries to step up to the urgent challenge; to develop clear and consistent policies for the full decarbonisation of all parts of the economy. Those policies must embed the cost of carbon into the financial system, drive innovation and create clear demand for zero-carbon products and services.”
Ministers in the UK have proposed a new carbon-emissions tax, which combined with the Carbon Support Price, creates a combined cost of £34/t, higher than the current EU ETS price of £22/t, which covers nearly 1,400 UK installations that are accountable for around 145Mt of emissions annually. As for the UK’s involvement in the ETS, it has been widely reported that the UK will leave the system and create its own equivalent once Brexit negotiations have been finalised.
Almost a sixth of the entire global Gross Domestic Product (GDP) is now covered by net-zero carbon emissions targets, according to the Energy and Climate Intelligence Unit (ECIU).
Nonetheless, leading climate and economic research bodies have repeatedly concluded that global emissions are rising as the population grows, and as nations fail to set short and medium-term policy frameworks to support their long-term decarbonisation goals.
Here in the UK, the nation is currently off-track to meeting the Climate Change Act 2008’s original target of an 80% reduction in emissions, against a 1990 baseline, by 2050. Green economy leaders, including the Government’s own Committee on Climate Change (CCC), have repeatedly warned that policy overhauls in several key areas are needed to buck this trend, including transport, heating and cooling and energy.
According to the UN Global Compact’s chief of programmes, Lila Karbassi, who was also present during We Mean Business’s media briefing, there is still time for all national governments and large businesses worldwide to become “1.5C-compatible”. However, she noted that those which have already taken that step will be “best placed to succeed economically” through to 2050.
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