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Business case for climate action grows as IPCC intensifies warnings

Why We Wrote This

The Intergovernmental Panel on Climate Change's sobering new climate report reiterates in dire terms the need for a full-court press of climate action. Corporations are starting to heed those calls.

Seth Wenig/AP
Business leaders from around the globe joined economists, policymakers, and representatives of civil society for the One Planet Summit in New York on Sept. 26, 2018.

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The message delivered Monday by the Intergovernmental Panel on Climate Change was clear: Every sector of the world's economy is needed if we have any hope of limiting global warming to 1.5 degrees C above preindustrial levels. While previous calls to action have focused on government-imposed legislation, a growing number of corporations are taking pledges of their own to reduce their contributions to climate change. Of course, no one is pitching corporate action alone as the solution. And indeed the corporations are taking action partly under pressure from governments, consumers, and environmental groups. But their rising urgency also stems from what many see as a simple business calculation: A healthier planet means bigger market opportunities, and a less-hospitable planet the reverse. “We succeed when those around us succeed,” says Kevin Rabinovitch, global vice president of sustainability at Mars Inc., the candy company based in McLean, Va. “You can’t run a successful business in a failing economy or a failing environment.” This goes hand in hand, he says, with the moral argument that caring for the environment is “the right thing to do.”

A new global report from scientists amounts to an urgent call for the world to act more quickly and forcefully to counter fast-rising threats from climate change.

The report from the Intergovernmental Panel on Climate Change Monday said humanity’s window for action is quickly closing, if the goal of holding global warming to 1.5 degrees C above preindustrial averages is to be met. And the report emphasized the benefits of aiming for that target, rather than allowing temperatures to rise 2 degrees C or more due to the buildup of heat-trapping gases in the atmosphere.

For coral reefs, for example, that half a degree could be the difference between a huge decline and a near-total loss of those ecosystems, the report estimated. Two degrees of warming would thrust an additional 489 million people into conditions of water scarcity, double the increase expected for a 1.5 degree threshold.

Of course, while this latest IPCC report frames the challenge in some fresh ways, such urgent calls to action have happened before. One of the challenges is that a dire forecast alone, even when coupled with careful scientific explanations, can sometimes spark feelings of fear, resentment, or helplessness rather than concerted action. But this time, even as the report prompted social-media reactions of “we’re doomed” or “we’re cooked,” other shifts may give a nudge toward hope and engagement.

Technological advances, such as breakthroughs in solar energy and electric-vehicle batteries, are making the reduction of fossil-fuel emissions look more feasible. And, from droughts and wildfires to storms and floods, the “lived experience” of many people in the past few years is making action look more necessary.

The scenario outlined by the IPCC is "sobering" says Mindy Lubber of Boston-based Ceres, a nonprofit that encourages and tracks corporate actions on sustainability. 

Although the Trump administration in the United States symbolizes an apparent slowdown in government action on climate, the private sector may be a better barometer of where humanity is headed. And, although they have a long way to go, over the past year corporations have actually been stepping up the pace of their voluntary efforts to address climate change. The new report may if anything amplify that trend.

“Business and financial players understand that climate is an economic and business risk as well as opportunity,” says Ms. Lubber. “Things that we never thought possible five years ago, certainly we're seeing those changes.”

Almost one-fifth of Fortune Global 500 firms are now committed to the use of science-based targets for reducing their greenhouse-gas emissions. And they’re signing on at a pace that’s 39 percent faster this year than in 2017.

A business imperative?

No one is pitching corporate action alone as the solution. And indeed the corporations are taking action partly under pressure from governments, consumers, and environmental groups. But their rising urgency also stems from what many see as simple business calculation: A healthier planet means bigger market opportunities; and a less-hospitable planet, the reverse.

“We succeed when those around us succeed,” says Kevin Rabinovitch, global vice president of sustainability at Mars Inc., the candy company based in McLean, Va. “You can’t run a successful business in a failing economy or a failing environment.”

This goes hand-in-hand, he says, with the moral argument: Caring for the environment is “doing the right thing.”

His comments show how, for corporations, climate action increasingly intertwines the realms of risk-management, business strategy, and the more philanthropic “social responsibility” efforts.

A year ago Mars joined the Science Based Targets initiative. At leadership meetings, the company’s carbon-emission footprint is among the metrics on a dashboard, right alongside things like revenues and costs.

The trend among corporations is to enlist in collective and ongoing initiatives, not just to issue one-off press releases. Science Based Targets now has 492 companies committed. Another initiative, “We are still in,” represents US companies and local governments pledging to keep aiming for targets that nations agreed to in the 2015 Paris Agreement, despite President Trump’s pledge to withdraw the US from the accord. And RE100 is a group of firms aiming to rely 100 percent on renewable energy.

“This is a trend that’s been growing steadily,” says Kevin Haley, a manager at Rocky Mountain Institute’s Business Renewables Center, a Boulder, Colo., group that helps businesses move toward renewable energy and lower-emissions strategies. When the center was founded in late 2014, only about five companies had done large-scale renewables procurement, says Mr. Haley. Now that number is over 70. And more than 150 have taken the RE100 pledge to go to 100 percent renewable energy. (For more examples, see sidebar at bottom of the story.)

Steven Majoros, marketing director for General Motors’ Chevrolet division, says the firm’s participation in a new promotion of electric vehicles isn’t just about fitting in with a green-oriented state government in California. It’s about a wider vision of the business model that will resonate with consumers.

“We have clearly gone on record with our ‘zero, zero, zero’ long game strategy,” including zero greenhouse-gas emissions alongside the goals of eliminating fatal crashes and congestion from motorized transportation, he said during a telephone news conference last week.

“At the end of the day it does come down to creating market demand,” he adds, “to make sure people can see themselves with us on [this] journey.”

A global problem demands concerted effort

If the world is to achieve the 1.5-degree goal, or even hold warming to 2 degrees, the private sector will inevitably have to play a big role, say environmental experts and others. That’s because business accounts for such a large share of economic activity, and can be a fount of innovation. Meanwhile, many say government has a vital role in setting societal objectives, at a time when scientists say speed and scale are critical. 

The new IPCC report suggests that, to hit the 1.5-degree goal without any initial overshoot, the world will need to reach net-zero emissions by 2050, say analysts at the World Resources Institute in Washington.

“Without engagement of the private sector in this, governments will fail,” predicts Mr.  Rabinovitch at Mars. “And without government engagement the private sector will fail.”

A key goal, whether for government policymakers or for businesses, is not just to address the risks of a warming planet but also to do it in a way that allows humans to prosper.

So, for Caroline Krajewski, who heads corporate social-responsibility efforts at The Kraft Heinz Company, the goal of reducing emissions sits side-by-side with the company’s philanthropic efforts to feed malnourished children in India – a step that could not only reduce hunger but boosts that nation’s economic future by helping more people succeed in school.

And now the firm is working to set targets to reduce carbon dioxide emissions beyond its own factories.

“We found out that the majority of our carbon emissions were actually coming from our supply chains,” Ms. Krajewski says. “We’re in the very early stages, [but we’re] eager to build that strategy.”

Staff writer Amanda Paulson contributed to this story from Boulder, Colo.

Notable examples of corporate action:

  • Retailer Target is among the leaders in moving toward 100-percent renewable energy, adding rooftop arrays on hundreds of its stores and investing in a Kansas wind farm.
  • Food company Kraft Heinz moved to address deforestation last year by joining a broader effort to ensure that palm-oil supplies can be traced to locations with sustainable harvesting. Its palm oil is now all certified sustainable.
  • Mars, a partner with Fairtrade International and the Rainforest Alliance on similar issues, last month said “the cocoa supply chain of today does not deliver on [the company's stated] ambitions.” It launched a $1 billion effort that includes using GPS to monitor forests in the supply chain.
  • With Big Oil long a laggard on climate change, this week ExxonMobil said it would devote $1 million to lobbying for a US carbon tax or other incentives to reduce greenhouse emissions, adding money to what had been lukewarm support for the idea.
  • Automaker General Motors just joined environmental groups to launch a California ad campaign pitching the benefits of electric cars and to overcome perceptions of the vehicles as green but costly or range-bound.

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