How to make the most of climate change conversations
World leaders and business heads are gathered in Sharm El-Sheikh for the 2022 UN Climate Change Conference this month. The event is widely seen as the first major “implementation COP”. Entities will be asked to walk the talk on their climate-change pledges and to act on prior agreements to limit temperature increases to 1.5°C above pre-industrial levels.
COP27, then, is carpe diem on climate change. We must seize the moment to improve the lives of the estimated 3.3 to 3.6 billion people at risk of catastrophic climate and temperature events.
Without deep and immediate emissions reductions across all sectors, our 1.5°C target is unattainable.
And as the UN’s Intergovernmental Panel on Climate Change says, acting now can halve greenhouse gas emissions by 2030 and put us on track to our goal.
Reframing our approach may help. Climate change carries significant risks – but viewing its impact in that context alone is to miss the woods for the trees. We should be looking at the big picture instead.
A common attitude to hurricanes and droughts is to consider them as isolated occurrences with a one-off impact on the bottom line. In fact, they are part of a trend exacerbated by human-caused climate change, according to an analysis of 504 recent extreme weather events.
Government and business leaders believe the trend will have long-term consequences. They rank climate action failure as the number-one long-term threat to lives and livelihoods, according to a poll conducted for the World Economic Forum’s Global Risks Report 2022.
But climate action success, by contrast, could go a long way to delivering beneficial consequences instead.
At COP27 and beyond, we have an unprecedented opportunity to usher in a green economy.
Growing demand for net-zero offerings would create unprecedented opportunities worth more than $12 trillion of annual sales by 2030, according to projections by McKinsey. The gains would come from new value pools, including in infrastructure, transport, energy, power and buildings.
Government policy is already weighted in favor of net-zero economies. In the US, President Joe Biden’s Inflation Reduction Act provides $369 billion in climate and energy investment, and could create 1,000 new companies. Across the pond, the European Commission’s Global Gateway strategy aims to mobilize euro 300 billion ($292 billion) in sustainable investments around the globe through to 2027. Similar laws have been passed or are in progress in Australia and the UK.
To a greater or lesser degree, this new wave of legislation prioritizes investment in renewable energy, sustainable infrastructure, resilient transport, supply chain and healthcare security.
Now it is up to businesses to respond. We are in the midst of what the UN has called a critical decade of action. With the tight timeline ahead of us, it is our responsibility to work towards making a more equitable, net-zero world a reality.
The size of the task may daunt all but the boldest of heart, but here, we can take inspiration from recent events. The COVID-19 pandemic taught us all that the human race can triumph over adversity in the most challenging circumstances.
If we lead with strategic intent and follow through with unflinching action, we can face up to the challenge – and win.
A three-point strategy can help us unlock sustainable opportunities.
Firstly, approach climate commitments with a business mindset. Businesses worldwide have already pledged to achieve net-zero, and action around those commitments has begun to become visible in the run-up to COP27. Now is the time to recast those commitments into bite-size actionable targets for the next quarter, the next year, the next five years.
In business, we use one-page strategic plans, such as those proposed by management consultants Jim Collins and Verne Harnish, to identify what our goals are, how we want to get there, and where we stand currently. We can employ a similar strategy to identify and target Scope 1, 2 and 3 emissions – and beyond.
Secondly, flatten the curve with immediate action. As the UN IPCC says, now is the time for action. Without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C is beyond reach. The tools to achieve such cuts are already available in the form of existing, proven and competitive technologies, many of which tie back to investments in digitalization and electrification.
For example, data-led digital technologies have proved to corporate leaders at Henkel, BP and other Fortune 500 companies how they can identify pathways to emissions reduction quickly and at scale. As businesses know, change management is a process. We must invest today to see results tomorrow.
Lastly, collaborate to accelerate.
Whether it’s growth hacking or business process outsourcing, partnerships are essential to progress. Forward-thinking companies are already addressing the challenge of Scope 3 emissions by engaging with policymakers and accelerating their efforts to support their supply chain decarbonization, including through cross-company and even cross-industry collaboration models.
In one example, one power leader breaks organizational data silos to share data within a connected industrial economy to promote and consolidate system efficiencies and support the energy transition. Collaboration is a time-tested strategy to unlock business gains; correctly harnessed, it can help deliver net-zero.
We face a watershed moment to align our business models with climate action. More companies are adopting science-based climate targets to achieve more sustainable operations and demonstrate enhanced accountability. Already today about 80 percent of major international companies report on sustainability. This is important progress.
However, this isn’t the same as aligning business strategy to the low-carbon transition or looking for ways to accelerate climate action through core business activities.
We recognize that where we can drive exponential impact is through the products we bring to market and how we support our customers on their decarbonization journey.
Measuring and managing our carbon footprint is an important activity for any company. But as business leaders now is the moment to look beyond and identify how our companies can uniquely contribute to securing a better future for humanity and our planet.
Reframing the conversation around the opportunity ahead of us can bring stakeholders to the table, while supporting sustainability for all. COP27 presents a watershed moment to turn the global tide on climate change, to act on our promises and to deliver a sustainable future for everyone. Can we seize the moment?
• Peter Herweck is the Chief Executive Officer of AVEVA, a FTSE 100 industrial software company.