IPCC’s Code Red for Humanity: Finding your Business’ Pathway to Climate Action
Green transition 11 August 2021 Blythe Chorn
On the back of the IPCC’s alarming new report, Ramboll’s Blythe Chorn reflects on what business can do to illuminate their own pathway in a proper response to help stall global warming.
Earlier this week, the UN’s Intergovernmental Panel on Climate Change (IPCC) released a much anticipated first installment of an updated assessment of the physical science of climate change.
The IPCC findings got extensive media coverage across the globe. For a free and quick summary, the Environmental Defense Fund released this commentary with key findings.
So, what does all this mean for the business community? While little in the report may come as a surprise to those who are already working towards decarbonization, this latest assessment shows an unprecedented level of climate change happening already, some of which is already irreversible in the near term.
A true code red alert. But, the report also gives us hope that, if we can reach net zero emissions in due time, we will see an almost immediate stabilization of temperatures.
Find a pathway for response
As a sustainability professional serving clients in the US - employed in a Danish company with a historic stronghold in the Nordics - I fully appreciate how companies’ maturity towards sustainability and climate action vary globally, and even within the US.
No matter your company’s current level of engagement in climate change mitigation, there are steps that businesses can begin taking today in response this assessment to find their own green transition pathway. A pathway that hopefully plays its small part in IPCC’s most optimistic Shared Socioeconomic Pathway (SSP1-1.9).
Getting started: 3 immediate steps
For the those new to climate change mitigation, there are three key steps to begin to take immediately to set your businesses on a path to decarbonization:
1) Figure out your footprint
Understanding your company’s current Scope 1, 2, and 3 emissions is critical to building any kind of realistic decarbonization strategy.
Measuring where in your company’s operations and value chain greenhouse gas emissions are created from energy use, waste, and agriculture activities will give you insight into where the biggest hotspots are so that you can focus your efforts on the most significant emissions reduction opportunities.
2) Find the business value
Sustainability efforts have, for many companies, been seen as a distraction from running a profitable business operation. While that perception is changing quickly due to growing investor pressure, increasing climate regulations, and escalating customer demands, it can still be easy to write off decarbonization as ‘too expensive’ or ‘too removed from the P&L’.
Identifying opportunities to reduce your company’s footprint that can also demonstrate immediate or short-term business value – through, for example, cost reductions from reduced energy use, new revenue streams from recycling rather than disposing of waste materials, or improved margins from increased product transportation efficiency – will help build momentum for investment in decarbonization efforts.
3) Develop a fitting approach to goal setting
Presently, science-based targets for reducing greenhouse gas emissions – and particularly net zero targets – are seen as the gold standard for companies leading on climate change in the US.
However, we encourage companies not to fall into the ‘one size fits all’ trap – or example, while net zero targets are often appropriate for companies facing external investor pressure, privately held companies without that pressure can sometimes make more progress towards decarbonization by selling offsets from their carbon reduction successes.
Long-term progress on decarbonization depends on identifying your company’s business drivers for sustainability and setting targets that are aligned with those drivers – be they net zero targets, offset revenue targets, or other metrics that will drive investment in decarbonization.
Getting ahead: 3 advanced steps
For those that have been working towards decarbonization in their businesses for many years, the IPCC report may feel depressing, as though we are not progressing fast enough or that our efforts to date have been futile.
But, there are still so many opportunities that sustainability leaders have to help turn the tide, many of which you can get started on immediately:
1) Align decarbonization and political lobbying activities
The need to coordinate sustainability and political lobbying is not new – CDP has asked about alignment for years – but the need has become an imperative given the urgency of the climate crisis. In the last decade in the US, with the shifting political appetite for climate action, we have seen corporate sustainability leaders step out in front of government regulation time and time again to voluntarily exceed the policy requirements for decarbonization.
However, these efforts undertaken by one part of the business often masked efforts underway in other parts of the business to lobby for ongoing looseness in climate regulations. Scrutiny of this ‘speaking out of both sides of your mouth’ is picking up fast – and it is just bad business to undermine your company’s own investments in decarbonization.
To make meaningful strides towards decarbonization, companies need to invest internally and with their value chain, and push governments to do the same.
2) Put the data you have to good use
As described above, greenhouse gas footprints – as well as lifecycle analyses that help determine emissions hotspots for a specific product or service –are critical to understanding current performance and opportunities to mitigate climate impacts.
But, to truly drive decarbonization, these data must be used as a tool to drive business decision making. For example, what good is it knowing that one product input has a higher GHG footprint than another if that insight isn’t integrated into the product design process?
While it can be complicated to design the processes and incentivize the behavior to consider climate impacts throughout business decision making, the first step is simply to map how decisions get made in the parts of your business that have the biggest emissions impact – be it the product material inputs, the datacenter, the facility, etc. – to know where data can enable more climate friendly decisions.
3) Consider carbon as an asset
Obviously, we know from this IPCC report and decades of climate science that it is the abundance of carbon – and other greenhouse gas emissions – in the atmosphere that is driving climate change.
But, with the rise of net-zero goals mentioned above, and companies’ anticipated reliance on carbon offsets to meet them, there is opportunity to flip our decarbonization paradigm to begin to think of sequestered carbon and emissions reductions as assets on the balance sheet.
Doing so will allow us to evaluate the real value of these assets against the business as usual scenario and potentially uncover opportunities to generate new revenue streams, transform business models, and help mitigate climate change.
As one commentator summarized, the IPCC report, ‘the Earth rewards good behavior’. May I add in conclusion, so do shareholders, investors, customers, employees, and essentially all a company’s key stakeholders.
Regardless of your company’s sustainability maturity, market, technology stack, investment pool, or current capabilities, swift and tireless climate action will be rewarded. Now go do.
About the author
Based in Denver, USA, Blythe Chorn is Ramboll Management Consulting’s new Market Director for Strategic Sustainability Consulting.
Blythe has been working in the field for years with a long spell at Deloitte advising Fortune 500 companies and prior to that several years at BSR (Business for Social Responsibility) where she advised global clients in the realms of supply chain sustainability and ESG reporting.
Ramboll at COP26
Ramboll is participating at COP26 and sharing insights to support governments and businesses in taking climate action to decarbonise, adapt and drive sustainable change.
Learn more about Ramboll’s participation at COP26 and affiliated events in Glasgow, and find out where to meet Ramboll at COP26.
Enabling a green economy where economic development does not compromise the future
The “EU Taxonomy Regulation” will require most European financial institutions and non-financial companies to outline the environmental sustainability of their economic activities. Given that the first EU Taxonomy disclosures are due by the end of 2021 and throughout 2022 it is important to act now.
The “EU Taxonomy Regulation” will require most European financial institutions and non-financial companies to outline the environmental sustainability of their economic activities. With less than a year to go, it is high time to align say two Ramboll experts. This article gives you five reasons why.
Climate Clarity: Understanding the difference between Net-Zero, Carbon Neutrality, and Science-based Targets
With more companies making climate commitments, it is getting harder to tell the difference and evaluate the leaders from the laggards. This article explores key terminology and helps you gain clarity on climate commitments like Net-Zero, Carbon Neutrality and Science-Based Targets.