Climate action is one of the most pressing global issues of our generation. According to Secretary-General of the United Nations, António Guterres …“Nearly two in three Americans aged 18-24 support the notion that US companies should be doing more to tackle climate change.” The figures amount to nearly 64% of Americans within this age group. Public concern regarding the environment, however, is not exclusive to younger people. Environmental problems such as hotter days, air pollution, waste disposal, water pollution, red tide, and many more are leading to devastating impacts on human health.
As such, people across all demographics and ages are nervous about the environment, and rightly so. The clear public interest regarding the situation is evidenced by rapidly shifting market trends alongside evolving consumer demand. Changes are being called for universally by a socially aware generation pushing for improvements from within the business landscape at large.
Throughout Climate Week NYC businesses of all sizes collaborated to demonstrate a clear commitment to climate action. Those involved included 87 multinational companies with a combined financial clout of $2.3trn. BT, Levi Strauss & Co, Sodexo, and Unilever were among some of the more prominent names to back the “Climate Action is Our Business” campaign. Still, many small family-run businesses were also involved.
These companies did not just protest, they made a commitment to improving their business practices, announcing stringent climate targets for their entire value chains with the intention of:
- Limiting the global temperature rise to 1.5C
- Reaching net-zero emissions by no later than 2050
These self-imposed regulations are in response to growing evidence highlighting that the modern consumer expects businesses to do more than sell them products and services. Research by Cone Communications echoed this sentiment, finding 63% of Americans are hopeful that in the absence of government regulation, businesses will take the lead to drive social and environmental change.
As we edge closer towards 2020, government bodies across the world will have no choice but to respond to increasing pressure fueled by environmental, social, and economic fears. What does the forecasted government response look like now?
What Are the Regulations Set to Look Like?
Social pressure from consumers, changing market trends, and the stipulations laid out in the 2015 Paris Agreement have led many experts to conclude new governing regulations and policies informed by environmental factors are extremely likely to occur. They are forecast to be in motion as early as the mid-2020s. The great news is the implementation of such policies could help make significant progress toward keeping warming below 1.5 degrees Celsius. During the transitional period, organizations of all sizes need to consider the broader financial implications of stricter market place regulations sooner rather than later.
According to the authors behind the Inevitable Policy Response (IPR):
“The question for investors now is not if governments will act, but when they will do so, what policies they will use and where the impact will be felt. The IPR project forecasts a response by 2025 that will be forceful, abrupt, and disorderly because of the delay.”
The Inevitable Policy Response (IPR)
The research and predictions behind the IPR were put together mainly by Principles for Responsible Investment (the PRI), with help from Vivid Economics and Energy Transition Advisors. The PRI is an independent body supported by but not a part of the United Nations. The PRI’s Forecast Policy Scenario details government regulations that are likely to be in place up to 2050 and how such policy shifts will impact the economy and financial markets.
Some key policy areas as forecast by the IPR (Inevitable Policy Response) include:
- Coal phase-outs: meaning a steady decline of coal-fired power generation after 2030
- ICE (internal combustion engine) sales ban: meaning a very low stock of ICE vehicles globally by 2050
- Carbon pricing implemented: meaning US$40-60/tCO2 prices by 2030 for first movers
- CCS (carbon capture and storage) and industry decarbonization: Limited CCS uptake with some cities pledging to decarbonize all buildings by 2050
- Zero carbon power: implying a significant increase in renewable energy demand globally
- Land use-based greenhouse gas removal: meaning improved forestry and nature-based solutions for mitigating carbon emissions
- Energy efficiency: meaning performance standards, utility obligation programs, financial, and behavioral incentives will be increased and refined
Preparing Your Business for the Market Shift
You can start to prepare your business by familiarizing yourself with the data laid out by the IPR. The intention of the IPR is to assist investors, governments, and businesses to account for these changes ahead of time. Thus far businesses and stakeholders have made decisions based on existing policies rather than those likely to be in place when global governments inevitably respond in force to environmental issues. Ensure your business stays abreast of the latest forecast and policy developments, including where the impact will likely be felt by checking in with PRI updates here and joining with Useful Views.
According to the PRI organizations that hope to stay ahead in light of forecast policy changes should follow suit with the commitment made by the 87 multinational companies throughout Climate Week NYC. Strive to include practical examples of how you will positively contribute to the goals laid out in the Paris Agreement within your business strategy and daily operations. Businesses of all sizes should evaluate their value chains to help to limit the global temperature rise to 1.5C and reach net-zero emissions by no later than 2050.
During Climate Week NYC, Helen Clarkson, CEO of The Climate Group reiterated the importance of reducing emissions stating:
“We need to halve emissions by 2030. The 2020s need to be the Climate Decade.”
Helen Clarkson, Climate Week NYC
Already $22.89 trillion of assets are now linked to responsible investment strategies globally and this trend is set to continue. Meaning it is highly likely corporate stakeholders will be at the forefront of this push as going green becomes the most financially viable option, yielding the best ROI and protecting the reputation of the company brand. Preempt this by demonstrating your commitment to improved business practices that reflect environmental factors. Consider including the Paris Agreement goals as part of the KPIs that drive your company.
There are many accessible and affordable ways to stay ahead of the curve when it comes to climate impact. Start to investigate low-cost green alternatives as a priority to prepare for a global shift to a low carbon economy. Improve energy efficiency with power-saving alternatives to decrease total electricity use, introduce a carpooling scheme to reduce emissions and go paperless. The best protective mechanism is to act sooner rather than later to protect and enhance the value of your business. Delay in action could prove costly for both investors and corporations.
If you would like to know how Useful Views’ competitive philanthropy strategy could help to improve your business, connect with us today!