Climate change is inevitable and we are already seeing the impacts, from extreme weather events to longer term climatic shifts. These changes are seen through the severe wildfire season in Australia and North America in 2020, the rising sea levels in west Africa taking away people’s homes and livelihoods, drought in southern Africa wreaking havoc on crops and food security, the 2020 floods in Asia caused by the region’s altered seasonal monsoons destroying communities, and 2020 being one of the years with the highest temperatures recorded in modern times. Emissions in the atmosphere are long-lived, so today we are living with the impacts of activities of generations past and our children will live with the impact of our emissions today. 

Over the last decade, carbon emissions have increased by 1.5% per annum, in a time when to avoid the worst impacts, they were meant to be decreasing. Scientists have demonstrated to “most” governments that man made climate change is real and we have since seen commitments, statements of intent, or pledges, to tackle climate change being made by the public and private sectors alike. 

But the “decade of action” has arrived and we need to act now to ensure that there are fundamental step changes by 2030 to avoid the worst and most irreversible impacts of climate change. Failure to act will fundamentally change the way the planet operates and the way we live — extreme heat, drought, rising seas, flooding and fires will impact food security, urbanisation, migrations, poverty and health. The 2015 Paris Agreement aims to limit global warming to 2 °C, which was revised to a stricter ambition of 1.5 °C on the basis that the impacts on the planet and its people would be ‘manageable’, although we will still need to adapt to life in a new climate.

Key to reaching this goal is decoupling economic growth from carbon emissions and resource use. To achieve this, over 120 countries, 450 cities and 300 businesses have made “net zero commitments — with dates ranging from 2030 to 2050 and the commitments covering approximately 25% of global carbon emissions.

Net zero, as defined by The Science-Based Target (SBTi) initiative, is “a state in which the activities within the value chain of a company result in no net impact on the climate from greenhouse gas emissions. This is achieved by reducing value chain greenhouse gas emissions, in line with 1.5°C pathways and by balancing the impact of any remaining greenhouse gas emissions with an appropriate amount of carbon removals”The SBTi definition of net zero is fast becoming part of a business’ licence to operate, rather than a ‘nice to have’.

Net zero, as defined by The Science-Based Target (SBTi) initiative, is “a state in which the activities within the value chain of a company result in no net impact on the climate from greenhouse gas emissions. This is achieved by reducing value chain greenhouse gas emissions, in line with 1.5°C pathways and by balancing the impact of any remaining greenhouse gas emissions with an appropriate amount of carbon removals”The SBTi definition of net zero is fast becoming part of a business’ licence to operate, rather than a ‘nice to have’.

In the meantime, governments and cities across the world are increasing commitments and regulation around carbon, energy and pollution to encourage companies and individuals to act. And in terms of the two biggest global emitters, US president Joe Biden signaled the US’s intentions to rejoin the Paris Agreement on his first day in office, while China has ambitious commitments round
emissions reduction and giving incentives for renewables making it the largest investor in renewable energy. New Zealand is the first country to make climate risk reporting mandatory for companies in line with the TCFD.

Additionally,155 companies (with a combined market capitalisation of over US$ 2.4 trillion and representing over 5 million employees) have signed a statement urging governments around the world to align their COVID-19 economic aid and
recovery efforts with the latest climate science. In fact, Canada has made reporting climate risks a requirement for companies wishing to receive COVID-19 bailout funds.

A coalition of over 70 pension funds and investment managers representing assets of $16tn have designed a “net zero” framework to cut emissions from their portfolios by 2050. This demonstrates that providers of capital are increasingly moving away from supporting companies or industries that are not transitioning.

Already, consumers and trading partners may choose to not buy from a company due to the carbon intensity of its products. The energy sector, particularly coal and oil, is specifically being targeted with other sectors expected to soon see the same
pressure. This is resulting in the phenomenon of “stranded assets” as these resources no longer have a buyer and hence no value – market capitalization and potentiality the going concern of entities will be impacted.

The EU is putting stringent reporting requirements on companies operating in the region; which will manifest itself in their supply chain requirements. They are also looking to tax imports based on their carbon footprints.

Sustainability can no longer be managed in a silo, nor can organsations focus only on mitigating negative impacts on society and planet. Instead, climate and sustainability are increasingly being built into the core of organisations, reflected
in purposes and missions, managed across operations and crucial to engagement with investors and policymakers alike.

Jayne Mammatt

CSIA

Corporate Secretaries International Association Limited (CSIA) was established in Geneva in 2010 as an association constituted according to article 60 et seq, of the Swiss Civil Code and entered into the commercial register in Switzerland and was relocated and registered as a company limited by guarantee in Hong Kong in 2017.

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