Big-time companies disclosing their emission level and finding solutions for limiting the emission is absolutely required in terms of the urgency in tackling the ever increasing temperature rise globally
By Salam Rajesh
The discussions on achieving “net zero” has dominated conversations in the several global forums in recent years, with the topic grabbing the headlines during 2021 at the COP26 in Glasgow, Scotland. At Glasgow, large corporations and financial institutions pledged to bring their greenhouse gas emissions as close to zero as possible by the distant deadline of 2050.
Joel Makower, founder-chairperson of GreenBiz Group, has a hard hitting reflection on the topic, saying that “achieving net zero is not just a simple matter of setting targets. Companies must lay out clear pathways to reach those goals, and they need to act with urgency”.
Reflecting on the 15th annual edition of the State of Green Business 2022, Joel says that the “impacts of a changing climate are upon us as storms, droughts, wildfires, heat waves and other weather phenomena become more frequent and extreme. They impact lives and livelihoods, of course, but also economies – disrupting supply chains, upending communities that are home to facilities and employees, and putting critical facilities and infrastructure at risk”.
Dealing with this heated subject, the State of Green Business 2022 report is of the firm opinion that ‘The world needs to attain net-zero emissions by 2050 to limit global warming to no more than 1.5 degrees Celsius above the pre-industrial levels to avert some of the worst impacts of climate change. The U.N.’s Intergovernmental Panel on Climate Change (IPCC) has found that net human-caused carbon dioxide emissions would need to fall by about 45 percent from 2010 levels by 2030 in order to have any hope of achieving net-zero emissions by 2050’.
With the same breathe, the report says that ‘Climate change could have huge financial costs for corporations that don’t act now. Almost 80 percent of the S&P Global 1200, which includes the world’s largest companies, will be exposed to moderate-to-high physical risks from climate change by 2050, according to S&P Global Trucost data. That’s under a moderate climate scenario that assumes strong mitigation actions to reduce emissions to half of current levels by 2080. This scenario is likely to result in warming of over 2 degrees Celsius by 2100, overshooting the goals of the 2015 Paris Agreement’.
The S&P Global Trucost’s data (December 2021) wherein a graphic profile outlines the ‘State of Net Zero: Taking the Temperature’ scenario indicates that there is a 13 percent decline in carbon emissions since 2016, and 6 percent since 2019. To achieve the target set at Paris, the report says 38 percent of companies are either set or committed to setting a science-based climate target by 2021, up from 1 percent in 2016.
Hitting hard on companies’ profiles on their commitments in addressing climate emergency, the graphic outline indicates that 84 percent of carbon emissions are concealed in company supply chain activities, on the average, with most emissions found in product use. 80 percent of companies disclosed carbon emissions, up 22 percent since 2016. The report indicates that 10 percent of company earnings are at risk from carbon pricing by 2025 while 78 percent of companies face moderate to high physical climate risk by 2050.
The S&P Global Platts Analytics (December 2021) observed that approximately 80 percent of today’s direct carbon dioxide emissions from energy combustion are covered by some long-term net-zero decarbonization target and while 70 countries are adopting some form of net-zero pledge, either as a proposal, a stated policy or national law, the data however shows that there are major shortfalls in the expected execution of country-level net-zero targets. And, companies are moving slowly, the report says.
The European Union in 2018 launched its Sustainable Finance Action Plan which led to the creation of a broad package of rules to be followed by companies and this is significantly changing the sustainability landscape. An outcome is the EU green taxonomy, which is a dictionary of sustainable activities designed to steer companies as they adapt their business strategies to climate change, and as a follow-up several countries are developing their own taxonomies.
The State of Green Business 2022 report indicates that there is growing momentum for making voluntary disclosure frameworks mandatory, such as the Task Force on Climate-related Financial Disclosures, or TCFD. A strong signal for compulsory TCFD disclosure came in June 2021 when the G7 group of countries said they backed the idea.
Starting April 2022, the TCFD would become mandatory for more than 1,300 of the largest UK-registered companies and financial institutions, the report stated. While the EU has not officially adopted the TCFD for its 27 member states, it is undertaking a reform of its Non-Financial Reporting Directive.
The Green Business report stated that calls for consistent climate disclosures prompted the creation of an International Sustainability Standards Board in November 2021, and against this backdrop, the number of companies disclosing emissions was rising. The data available indicated that from 2016 to 2020, there was a 16 percent increase in the number of major global companies with full or partial emissions disclosure.
Big-time companies disclosing their emission level and finding solutions for limiting the emission is absolutely required in terms of the urgency in tackling the ever increasing temperature rise globally, which is reportedly conjuring up extreme weather and climate conditions, and phenomena, across the continents.
The failures of past agreements to limit global temperature rise, as with the Aichi Targets, is fuelling renewed vigour in finding the means to check carbon emissions, primarily resulting from fossil fuel burning on large scale measure. The headache in dealing with the issue is compounded by a corresponding large scale depletion of forest lands, peatlands and grasslands for commercial exploitation by companies such as for oil palm plantations, cattle rearing or for mining and oil exploration.
The worrying factor, as the report hints at, is that even after a year of the United Nations warning that the world community is facing a “code red” for humanity, with potential dangers of climate catastrophe in the present times and in future, progress by the world’s largest companies in reaching net-zero emissions remains rather slow. This, in its totality, is bad news for the world community in addressing climate mitigation and adaptation goals.
(The writer is a media professional working on environmental issues. He can be reached at [email protected])