Governments and Corporates: Driving Each Other Forward on Ambitious Climate Action
Photo credit: Maid Milinkic
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As the world becomes ever more aware of the economic and physical impacts of environmental risks, A List companies are beacons lighting the path for corporates worldwide.

Only with clear and comprehensive disclosure of environmental impacts, risks and opportunities can stakeholders – business, investors and governments alike – move to support more sustainable practices.

Companies have kick-started a process to set science-based targets aligned with the goals of Paris – now it’s time for governments to follow suit by upgrading their national climate plans.

The science is clear. To hold temperature rise to 1.5°C we need to urgently, and rapidly, bend the curve of global emissions.

I believe most of us already feel the urgency, as each year we ourselves now experience the impacts of climate change. As youth all over the world – the future generation and future voters – are calling for bold climate action, we are faced with another clear reminder of what is at stake.

The race is on to prevent dangerous climate change, water risks and deforestation.

We all bear responsibility to ensure sustainable development. To build a world that meets the needs of the present without compromising the ability of future generations to meet their own needs, as established over 20 years ago by the Brundtland Commission.

Incredible progress has been made since then and in the last decade, while I have been devoted to working on corporate responsibility and sustainable development, I’ve observed a substantial shift in terms of business engagement on the matter.

But it’s not enough.

In order to boost ambition and accelerate action among governments and all sectors of society, the UN Secretary-General will convene the UN Climate Action Summit, taking place in September in New York, under the auspices of the UN General Assembly.

At CDP, we focus investors, companies, and cities on taking urgent action to build a truly sustainable economy by measuring and understanding their environmental impact. I am excited to see how September’s summit will help further boost leadership. And the good news is that a vanguard of companies are already showing the way.

Corporate leadership on climate

The 150+ companies on CDP’s latest A List, including household names like Google, L’Oréal, Mitsubishi Electric and Unilever, are blazing a trail on environmental action and transparency.

Take, for example, Indian IT multinational Infosys’ commitment to become carbon neutral by 2020. Investing in solar PV and green energy procurement, it is one of over 160 companies to join the RE100 initiative.

Danish toymaker LEGO, meanwhile, has launched the first LEGO elements made of bioplastics – the first small step in its mission to make all of its iconic bricks from sustainable materials by 2030.

In total, CDP scored over 6,800 companies on their action on climate change, protecting forests and water security – the world’s largest analysis of corporate environmental action.

As the world becomes ever more aware of the economic and physical impacts of environmental risks, A List companies are beacons lighting the path for corporates worldwide.

Stronger transparency to unlock faster business climate action

Yet the latest climate science from the Intergovernmental Panel on Climate Change (IPCC) makes it clear the economy is off track.

The scale of the challenge demands an unprecedented response. It requires the private and public sectors to work together. While many companies are already taking bold environmental action, we need to see this commitment accelerate further.

At CDP, we believe the bedrock of action is transparency.

While ultimately only concrete actions can drive down emissions, without transparency we cannot move quickly towards solutions. It is the foundation that allows solutions to take root.

Only with clear and comprehensive disclosure of environmental impacts, risks and opportunities can stakeholders – business, investors and governments alike – move to support more sustainable practices.

The urgency of climate action is an imperative for all economic actors to disclose and base their decisions on climate-related information.

As Michael Bloomberg, co-chair of the Task Force on Climate-related Financial Disclosures (TCFD) says, “Increasing transparency makes markets more efficient, and economies more stable and resilient.”

And it’s growing more important that companies report in a holistic way, integrating climate data within their annual reporting cycle. The TCFD offers this framework and companies can use CDP’s platform to easily comply with the TCFD requirements, allowing high level decision-makers to consider climate data in their strategic decisions.

That financial heavyweights Michael Bloomberg and Mark Carney are championing the TCFD is helping to push climate action into the boardroom and budget, and not just the CSR and environment departments.

Part of the facilitative role of governments is to create the enabling policy environment for businesses and financial institutions to disclose climate related information.

In many jurisdictions around the globe, corporate non-financial disclosure policies are already in place. The time is ripe for governments to play a stewardship role and create a policy environment that enables the integration of climate-related disclosure in corporate reporting.

Promoting business ambition with science-based targets

When companies report their environmental impacts, the case for ambitious action becomes clear.

Over 540 pioneering companies have joined the Science Based Targets initiative (SBTi), with around 190 of these having already had their carbon-reduction targets approved as being aligned with the Paris Agreement.

Already the gold standard when it comes to corporate climate targets, the SBTi is raising the bar even higher, introducing new technical resources to enable companies to set emissions reduction targets aligned with a 1.5°C pathway.

Science-based targets are fast becoming a new business norm and policymakers can play their stewardship role encouraging further adoption across the global economy.

Governments have the opportunity to upgrade national targets

Companies have kick-started a process to set science-based targets aligned with the goals of Paris – now it’s time for governments to follow suit by upgrading their national climate plans.

The UN Climate Action Summit will come one year before governments need to submit new or updated climate action plans under the Paris Agreement – officially known as Nationally Determined Contributions (NDCs).

Currently, even if all countries implement their existing NDCs, we will still experience 3°C of warming. This is a dangerous overshoot compared to the 2°C line in the sand, let alone the stronger 1.5°C guardrail that the IPCC says is necessary, and still achievable with urgent widescale action.

It’s clear governments need to aim much higher. We need that ambition to be on show at the UN Climate Action Summit.

Setting ambitious NDCs that are aligned with what the science demands will give the private sector the clarity and confidence to invest in the zero-carbon transition and transform their business models accordingly.

Meanwhile, the more leading companies that push forward with ambitious science-based targets, the more this will show governments that the real economy is ready and willing to act.

This dynamic creates positive ‘ambition loops’ – reinforcing feedback loops where bold business leadership supports ambitious national policies that in turn accelerate further business action.

This creates a virtuous circle, unlocking faster progress on national objectives and market opportunities.

Governments and companies must work hand in hand, pushing each other to go further and faster, together.

The author, Pietro Bertazzi, is Global Director of Policy Engagement at CDP. Please get in touch today to learn more about CDP’s policy work.

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