The Business Case for Low-Carbon Leadership

Following the release of Corporate Citizenship's research paper entitled ‘The Low-Carbon Company: Mastering the low-carbon economy’, Associate Director Yohan Hill argues for more corporate leadership in propelling the urgent shift to a low-carbon economy.

With 2014 set to be the warmest year on record based on global average temperatures –0.68°C higher than the 20th Century average according to the US National Oceanic and Atmospheric Administration (NOAA) – and  the month of October also the warmest on record (at 0.74°C above the 20th century average), it’s worth reflecting on a few important points.

1. We are currently locked-in to climate change.

The above-average temperatures currently being experienced are in fact linked to emissions that were generated over the last hundred plus years, due to the long-term accumulation of greenhouse gases in the earth’s atmosphere. The UN IPCC’s Fifth Assessment Report recently re-affirmed that link.

The fact that we’re dealing with long timescales creates some unique constraints. The first is that there is little that can be done now to avoid warming even further. The World Bank warns in its recent Turn Down the Heat report that past and projected emissions have “locked in” warming of close to 1.5°C (almost double the average rise experienced to date). The second is that our actions (or inaction) today will have long-term consequences. If nothing changes, we’re on track to exceed a 1.5°C temperature rise by mid-century and “4°C or more by the time today’s teenagers are in their 80s,” according to the World Bank.

These are serious numbers. The world has already begun to experience the impact on property, crops and coastlines of rising sea levels, increased flood risk and more unpredictable weather patterns from less than 1°C of warming. It is hard to imagine the impact of what a 4°C rise would bring. Chuck Hagel, the former US Secretary of Defense recently described climate change as a “threat multiplier”, exacerbating challenges such as infectious disease and terrorism. As warming moves past 2°C, we face what the World Bank calls “a frightening world of increased risks and global instability”.

2. There is an urgent need for a change of trajectory.

Given the current direction and rate of travel, anything less than urgent and focused effort in response to the challenges being faced will be inadequate. That sense of urgency seems to be somewhat lacking at the international level so far, although there are signs of movement based on the new emissions reductions commitments recently announced by the European Union, United States and China – and the UN COP 20 climate negotiations currently being held in Peru.

These, of course, come ahead of the UN Climate Change conference in Paris next year, where a global deal is expected. That deal will need to deliver big changes if we are to get to grips with the scale of the challenge.

3. Business can play an important role in effecting change.

Corporate Citizenship’s recent report, the Low-Carbon Company, highlights the important role of businesses in making some urgent and focused effort of their own to address climate change.  By demonstrating what is possible through a range of voluntary initiatives, companies can effect change at speeds and in ways that governments cannot. One example highlighted in our report is the Walt Disney Company, which has set an internal carbon price and a long-term goal of zero net greenhouse gas emissions, with an interim goal of reducing net emissions by 50% from 2012 levels by 2020. This kind of commitment is very much in line with the scale of the challenge, and sets an example that other companies should and will need to follow, if we are to avoid the worst consequences of climate change.

Our report also highlights the business opportunities created by a shift to the low-carbon economy. Companies who seize the opportunity now to develop low-carbon business models are likely to be the winners in the years ahead, as the world looks to incentivise and reward low-carbon alternatives.

There is therefore a clear business case for companies looking to shift away from carbon-intensive business models. But business leaders need to proactively take the risks and the opportunities associated with climate change on board. Like Disney, it’s possible to demonstrate low-carbon leadership now without compromising commercial success.

Yohan Hill is an Associate Director at Corporate Citizenship and leads on environment and supply chain services. Download your copy of the new paper here - ‘The Low-Carbon Company: Mastering the low-carbon economy’.