One year on: How the IPCC report has redefined sustainable business leadership
One year ago today (8 October), the Intergovernmental Panel on Climate Change (IPCC) published what it described as its "landmark" report on global heating. While the pressure the paper's findings would place on governments was obvious from day one, the study's impact on business has been continually evolving - as explored by edie reporter Sarah George.
At the end of the first working week of October last year, I was scrolling through LinkedIn as usual, hoping to catch up on all the green business announcements. Post after post told me the same message: that something big was coming from the IPCC the following Monday.
With reports on the disastrous impacts of global warming having emerged at a pace since the Paris Agreement’s ratification in 2015, I wasn’t initially convinced that the report would contain any messages that hadn’t already been heard and broadly disregarded by businesses and governments.
I couldn’t have been more wrong.
The report laid bare in detail, for the first time, the difference in impact between 2C of warming and 1.5C. Crucially, this impact was translated into economic and human health effects as well as those which would be felt by the environment. The half-degree difference, governments and businesses were warned, would significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of people. And the only way to reach 1.5C, the report clearly stated, was the complete net-decarbonisation of the global economy by 2050.
As former Irish President Mary Robinson put it during a speech in Paris last week, the IPCC’s findings “altered the global understanding” of the Paris Agreement’s aims – which, in 2015, had not been backed by a large cohort of scientists.
“The whole world knew that staying below 1.5C of warming was the only safe level – that further warming, up to 2C, would pose considerable risk to the planet,” Robinson said.
“As a consequence, I believe that we can no longer afford to regard the 2030 (SDG) agenda and the Paris Agreement as voluntary. Instead, the full implementation of both of these frameworks has become imperative to have a safe future for our children and grandchildren.”
I knew, as a Millennial myself, that my generation would not idly stand by brands which were willing to stand by a 2C trajectory in full knowledge of the report’s findings. A trajectory which several of the world’s biggest corporates had previously badged up as “world-leading” would now be associated with devastating human impacts to be felt globally, and particularly by the poorest communities. Nothing but 100% decarbonisation by 2050 or sooner would be regarded as “world-leading”.
In the days that followed the report’s publications, the silence was deafening from companies. Perhaps I was naïve for predicting that at least a few corporations would come forward immediately to admit their 2C-aligned targets were no longer enough – even though, at the time, by the Science Based Targets initiative’s (SBTi) own admission, there wasn’t a sizeable pool of resources to support businesses in developing 1.5C-aligned frameworks.
The first to move was BT, which built on its existing 1.5C-aligned targets with a new commitment to reach net-zero by 2045. Weeks after, Pukka Herbs became the smallest company in a cohort of just four members to have 1.5C targets approved by the SBTi. The early signs that businesses were taking the IPCC report, which contained input from thousands of scientists, were beginning to tentatively emerge.
But progress only really started to accelerate when the SBTi’s updated support package for businesses was released in April this year. After this point, news of businesses setting standalone approved targets was regularly landing in my inbox – from retailers like the Co-op and Burberry, to construction giant Multiplex Europe, brewer Molson Coors and even ITV.
The SBTi’s support started a snowball effect. While I could previously count the number of 1.5C-aligned businesses on one hand – Carlsberg, BT, Tesco as of September 2018 – the pool grew at a pace.
Fast-forward to now, and I’ve seen that pool grow in a way not driven by individual businesses, as had been the case until recently, but by collectives. The UN’s Climate Action Summit in New York saw a coalition of 87 corporates, convened by the We Mean Business Coalition, vow on a public stage to set 1.5C targets within a 24-month window.
This exponential growth in support proves, in my eyes, that businesses are beginning to admit to themselves and to the public that 1.5C is the new standard of green business leadership – albeit in a ‘safety in numbers’ way.
And not only are end-user businesses spurring each other to join in; they’re engaging suppliers as well. Leadership has evolved from addressing Scope 1 and Scope 2 emissions to measuring and reducing Scope 3s too – an approach now being championed by the likes of Multiplex Construction, Orsted, Ball Corporation, Tesco and Target, to name but a few. Indeed, CDP believes that corporate demands for supplier transparency on carbon has increased eight-fold in the past decade.
As Robinson noted during her speech, business action has likely snowballed in 2019 not just because of support of bodies like the SBTi and We Mean Business, but by the IPCC’s further papers on biodiversity, land use and oceans.
Each of these studies provided further damning detail on the precise ways in which 2C would disrupt humanity, and, therefore, further fuel for the climate strike movement’s fire.
Amid this backdrop of science increasingly providing the foundations to changing public demands – and with many national Governments having set net-zero targets considering the IPCC’s initial report – the consumer and policy incentives for businesses already leading on sustainability to commit to 1.5C are firm. They have little to lose and much to gain.
But, as we are all acutely aware, a 1.5C world can only be achieved if everyone is pointing in the same direction – both in ambition and in action. This got me asking what the motivation for universal action will be for the laggard businesses, the 50% yet to set any emissions targets.
Robinson argued in her speech that this motivation will be climate justice; the alignment of decarbonisation with social improvements that benefit the most marginalised and disadvantaged. But frankly, I doubt that any business not moved by the IPCC’s findings on human health, wellbeing and, ultimately, survival, will be moved by social justice.
What we do know they are motivated by is money.
This where perhaps the most interesting part of the IPCC report’s impact on business comes into play. Before the report was published, just five large finance firms – ING, BBVA, BNP Paribas, Standard Chartered and Société Générale – had pledged to align their portfolios with the Paris Agreement, all of them opting for the 2C pathway. Now, investors with $2.4trn in collective assets under management and 130 banks are committed to 1.5C.
Businesses keen to stay ahead of the curve in terms of holistic sustainability have already set 1.5C targets or committed to do so. Whether driven by policy changes or a desire to remain socially relevant to society in the long-term, the carbon impact will be the same. And for companies unmoved by either of those aspects, it won’t be long until their investors are nipping at their heels.
The danger in waiting for the financial sector to be so vehemently against your business model before acting, however, is that any action thereafter will certainly be too little too late to be considered “leadership”, and probably too little for survival.
What was considered leading by investors, policymakers and the general public just over a year ago is now considered lagging. And, with pressure coming at businesses from all angles, the stage is set for a true ‘survival of the fittest’ situation, in which leadership will not only be redefined more rapidly than ever before, but in which only the genuine leaders stand a chance.
As those from island states, developing nations and indigenous communities stated during the Paris Agreement debates, any organisation needs “1.5 to stay alive”. Those who don’t play a part in the delivery of this future simply won’t be around to benefit from it.