Contrary to the private sector’s conventional stance on regulations, we have seen a surge in businesses calling out for more regulations on the world stage. Aiming at the attention generated around the G20 and COP26, hundreds of businesses will be looking for increased climate policy ambition following the “code red for humanity” warning from the last IPCC report.
In fact, over 600 companies operating across the G20 nations in September urged governments to redirect public spending towards keeping the 1.5ºC climate goal within reach.
The businesses, representing over USD 2.5 trillion in revenue and employing more than 8.5 million people worldwide, signed an open letter to the G20 leaders. The signatories, which included Unilever, Netflix, Volvo Cars, Iberdrola, and Natura&Co, spanned sectors from power and transport to fashion and construction.
It is because the science is very clear. To limit global warming to 1.5ºC, they know the world needs to collectively halve global emissions by 2030. This is the decisive decade for climate.
Halving emissions in the next eight years globally will be challenging, but there are many solutions available today that will put the world on track. However, public policies and fiscal frameworks are often not advancing at the right pace to achieve it.
Hence, the hundreds of businesses that signed the letter, many of which are already taking action aligned with limiting warming to 1.5ºC, will be watching closely for government signals on climate action that will support their own ongoing efforts to transform their businesses and rapidly reduce emissions.
Some will be looking to see whether their calls for policies like investment in electric vehicles (EVs) infrastructure, ending coal financing, and support for renewables, or meaningful carbon prices, have been heard.
Others will be following the debate on reporting, noting whether other countries are following the G7’s endorsement of mandatory climate-related financial disclosure back in June.
Going all in
Every signal that governments give now on climate is crucial. The policies that follow these signals will define how fast businesses can go “all in.”
For businesses all over the world, regardless of size or sector, going all in means bringing their entire workforce along by embedding their climate plans in the company plans and incentives scheme. It also requires working with their supply chain to embed these same values.
In practice, going all in means working towards science-based targets aligned with limiting global temperature rise to 1.5ºC. To achieve these targets, businesses are investing in scaling up existing technologies like using renewable power across their operations and switching to electric fleets. In doing so they are contributing to help both renewable and EV technologies to surge up the s-curve of growth at the pace required to halve emissions this decade.
Simultaneously, they are innovating and working with their suppliers or customers to create demand signals that will lead to the development of low-carbon solutions that don’t yet exist and will be required in the 2030s. And, vitally, they are calling on governments to set the policies that will create a supportive environment for them and their peers to go faster.
Among those companies going all in are Levi Strauss & Co. They are already sourcing 76% renewable electricity across their owned and operated facilities en route to 100% by 2025. And Siemens, whose 50,000-strong global vehicle fleet will be 100% electrified by 2030. Unilever, meanwhile, is investing in hydrogen innovation to help decarbonize its factories alongside working towards a deforestation-free supply chain by 2030.
This level of voluntary corporate action is impressive. But it’s not enough to successfully halve global emissions by 2030. For that we need governments to also go all in and raise their ambition, which will create the right economic conditions and policy frameworks for all businesses to act.
There are some absolute must-haves for governments. In the power sector, it requires ending coal financing, phasing out fossil fuel subsidies, and investing in energy efficiency and a smart grid infrastructure to integrate massive amounts of renewable energy. While for transport, more stringent emission standards for all road vehicles, the promotion of fuel efficiency, and the shift from cars and trucks to low-emission transport modes remain critical. Commitments to 100% sales of zero-emission vehicles (ZEVs) by 2035 for new light-duty vehicles and investments in infrastructure for reliable and seamless EV charging for all are also essential.
Where solutions don’t yet exist to decarbonize sectors like heavy industry, food, and agriculture, governments have a key role in incentivizing the wave of transformative innovation needed to find them. Now’s the time to cut the incentives that are currently still making it worthwhile to continue with those polluting business activities or unsustainable farming practices that, if they continue beyond this decade, will take us away from a resilient, safe, and secure future.
With government backing for halving global emissions by 2030 – which ensures that national plans are aligned with 1.5ºC – businesses will move faster. Mandatory reporting alongside the right financial frameworks and the removal of subsidies for fossil fuels will make clear that investing in low-carbon technologies is the right way to go.
The right government signals from the G20 and at COP26 followed up with the right policy framework will provide the certainty needed to generate a spiral of positive climate action in the business community.