A new movement has begun, with more than 300 companies coming together to lead the fight against climate change.
The need for a low-carbon future has become undeniable, a conclusion supported by the Paris Climate Agreement. The expansion of an unchanged energy system, with anything close to current levels of carbon-dioxide (CO2) intensity, would likely lead to global warming in excess of 4 degrees Celsius by the end of the century — a crisis scientists agree would cause widespread and disastrous ecological problems.
Governments around the world have sensed the urgency of the climate crisis and have accelerated their transitions to cleaner, more sustainable energy sources and practices.
Moreover, the agreement is having an impact that extends far deeper than just updated government regulations. Organizations and businesses have gained a better understanding and a more defined call to action for the mitigation of climate change, and leading companies are now factoring climate change into corporate risk assessments.
At Schneider Electric’s Energy & Sustainability Summit, 82 percent of corporate attendees also reported factoring CO2 impact or resource scarcity into project decisions either some or all of the time.
The World Economic Forum’s Global Risks Report 2016 stated that the top five long-term risks are all sustainability related :
The Paris Agreement’s goal — limiting global temperature rise this century to less than 2 degrees Celsius above pre-industrial levels — has given all of us a clear target. The corporate world can now transition to the next phase in the quest for a healthier planet.
The leading edge of this evolution is a more ambitious initiative called science-based targets (SBTs).
The time has come for businesses to move beyond the question, “What can we do to improve our carbon footprint?” and to answer:
Exactly how much greenhouse gas emissions does our organization need to reduce in order to meet the targets of the Paris Climate Agreement?
How quickly does our organization need to accomplish that reduction?
Answering these questions is the first step toward creating SBTs. In other words, SBTs align your company with the objectives of the Paris Agreement, and act as a mechanism for your company to deliver consistent and meaningful emission reductions year-over-year.
Just as the Paris Climate Agreement provided a unifying point for the nations of the world, the Science Based Target initiative (SBTi) has delivered a unified, measurable standard for corporations to determine their role in this critical mission.
The Science Based Targets initiative
A collaborative effort between CDP, the UN Global Compact, World Resource Institute, and World Wildlife Fund, the Science Based Targets initiative helps corporations establish accurate and verified targets backed by climate science. The goal is to provide a standard framework and guidelines for setting SBTs and to make this a standard business practice by 2020.
As of this writing, more than 320 companies are taking science-based climate action, and 82 companies have approved SBTs with an average of two companies joining the SBTi each week. (Read a more detailed overview of SBTi and related case studies in this white paper.)
Going beyond legislation
Simply put, regulations aren’t enough to solve climate change, and the SBTi is working to make up the difference. While governmental oversight and involvement are certainly part of the solution to climate change, it’s become clear that corporations will need to take more initiative.
The business benefits of science-based targets
Years and maybe even decades back, there were concerns that business growth and sustainability were somehow at odds. But that myth has evaporated. Leading companies have recognized that environmental responsibility is a boon to the bottom line. For example, renewable energy is now cheaper in many areas than traditional brown power. The economy of the future is low carbon, and companies that prepare for that future will quickly gain a competitive advantage.
Increased profitability — Evidence shows that companies demonstrating leadership on climate action are more profitable. A 2014 CDP study of 500 S&P industry leaders found that organizations actively managing and planning for climate change secure an 18 percent higher return on equity or investment versus non-committed peers.
Improved efficiency — Making a clear and bold commitment to reducing carbon emissions often gives rise to greater efficiency as companies find ways to improve processes, reduce raw material inputs, and lower energy consumption.
More innovation — Because SBTs are so ambitious, they act as a transformative lever for change, helping to spur innovation in low-carbon products, technologies, and services.
Greater access to capital — As investors and financial institutions continue to demand moredisclosure on sustainability reporting, SBTs provide greater visibility and assurance of what a company is trying to achieve.
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