Stemming climate change? It’s just good for business
If the world’s largest companies live up to the promises they’ve made to slow climate change, together they could reduce emissions by an amount equal to those of Germany.
The corporate pledges gained renewed attention in October after an ominous report by the Intergovernmental Panel on Climate Change, which said that government policies alone won’t ensure the “unprecedented” societal changes needed over the next decade to stem climate change.
That puts the onus on the business sector to clean up a mess it helped create.
To a greater extent than ever before, the best interests of many businesses and those of the planet are aligned.
“We’ve gone from saying, ‘It would be nice to do, but it would cost us,’ to saying, ‘If we don’t do it, we won’t be able to grow, we won’t be able to have tomorrow’s economy,’ ” said Andrew Steer, president of the World Resources Institute. “Business leaders, they realize that.”
As Feike Sijbesma, chief executive of Royal DSM, put it: “We need to future proof ourselves.”
The report said that holding the rise in global temperatures to 2.7 degrees Fahrenheit above pre-industrial levels — set forth by the Paris climate agreement — will require creating entire new industries to remove carbon from the air as well as the overhaul of the vast energy infrastructure that has been built over more than a century.
Historically, corporations have been complicit in the world’s climate problem. One analysis shows that half of the globe’s emissions since 1988 are traceable to just 25 private and state-owned fossil fuel corporations. Many have lobbied against policies that would limit greenhouse-gas emissions. They have done so both directly and through the support of groups that have cast doubt about climate change.
Recently, however, there’s a palpable shift in the way business leaders talk about climate change.
Sijbesma said, “Some of my
investors and banks asked me what do you want to do: Improve the world or make money? I said, ‘Well, both.’ ”
With trillions of dollars at stake, corporations have forged ahead to create sustainable businesses. They are taking steps to lower their carbon footprints and overhaul their supply chains in a race against rising seas and temperatures. Others are trying to come up with the ultimate goal: how to pull carbon dioxide out of the air and use or store it.
From Apple to Walmart, from IKEA to Google, dozens of firms have embraced renewable energy. UPS is shifting toward electric vehicles. Costco has installed solar systems on top of at least 100 of its warehouses, and some locations use solar power in parking lots. Google in 2017 offset all of its of- fice and data center electricity use by adding renewable energy to the grid.
Some of the biggest changes are coming from what companies don’t do. Europe’s largest bank, HSBC, this year stopped funding new coal power plants, oil sands development and Arctic drilling, joining a growing number of investors and lenders to shun ambitious fossil fuel projects.
Making real strides will be expensive. The U.N. report said that hitting the 2.7 degrees Fahrenheit target would cost an average of $3.5 trillion a year through 2050 — almost $1 trillion a year more than the current pledges made by governments in Paris in 2015.
The bulk of the money will have to come from the private sector. Analysts at Bloomberg New Energy Finance estimate that global investment in what’s called “clean energy” came to $138.2 billion in the first six months of 2018, down 1 percent from the same period in 2017. The slippage reflected lower capital costs for photovoltaic projects, with fewer dollars spent per megawatt installed; and a cooling-off in China’s solar boom, the firm said.
Consumer demand and employee expectations are driving some of the investments. Thanks to the falling prices of renewable energy, it can be cheaper to be climate-friendly than not.
Walmart, for example, has installed more than 1.5 million energy-efficient LED light fixtures across more than 6,000 stores, parking lots, distribution centers and corporate offices in 10 countries, driving down lighting costs by hundreds of millions of dollars over the past decade, the company said.
Walmart also exceeded its goal to double the efficiency of its trucking fleet by 2015. Working with equipment manufacturers and others, the retailing giant saved nearly $1 billion and avoided emissions of almost 650,000 metric tons of carbon dioxide in 2015 compared to 2005.
Current pledges by companies who both produce electricity and use it could lead to between 570 and 935 million tons of reduced carbon dioxide equivalent emissions in 2030, according to Angel Hsu, who directs Data-driven Yale. For comparison, the emissions of Germany, the largest emitter in Europe, were 935 million tons in 2016.
But the potential is far greater. Hsu calculates that if major corporate initiatives to reduce emissions can keep enrolling major companies, there could be more than a billion tons of additional gains by 2030.
WRI’S Steer said avoiding that outcome will require marshaling corporate and government resources.
“It’s wonderful what (companies) are doing,” he said. “But we also need governments. They are two blades of a pair of scissors, so to speak. There’s no sense in having just one.”