The world’s largest companies are recognizing and reacting to the risks and opportunities presented by climate change. Business leaders, public sector figures and international NGOs convened in New York last month for Climate Week, to discuss the challenges and opportunities of climate change, with a focus on committing to renewable energy, slashing food waste and investing in innovation.
Committing to renewables
The private sector accounts for around half the world’s electricity consumption, contributing considerably to climate change.1 If companies wish to remain profitable, business as usual is not an option. This is not a matter of weathering the storm. The Schroders Economic Team reports that ‘global growth will be hindered by rising operational costs as global temperatures rise’. However, despite recent inaction or detrimental action from government administrations such as that in the USA, climate savvy business leaders are taking up the challenge of climate change.
Market leaders from various industries are taking a proactive approach to reduce their environmental impact, increase efficiency and lower operating costs. During the event, organised by non-profit organization The Climate Group, global financial institutions Citi and JP Morgan Chase & Co. announced that they will be joining RE100 - ‘a collaborative, global initiative uniting more than 100 influential businesses committed to 100% renewable electricity, working to massively increase demand for - and delivery of - renewable energy’, which currently boasts 111 member organisations. Citi and JP Morgan Chase & Co.’s recent pledges follow pledges by Estée Lauder, Kellogg and several other companies announcing they were joining the RE100 campaign, and the momentum is continuing to build. As Mark Kebner, CEO, The Climate Group enthused, “We are now on the road to a low carbon economy…that’ll happen not only because it’s desirable, but because it’s viable and financially attractive.”
Collaborating for a common good
The clothing industry is expected to incur large costs from climate change due to its reliance on widespread value chains, many of which are in the Asia Pacific region. The Schroders report indicates that since most Asian countries are either vulnerable or very vulnerable to climate change, companies operating in the region or relying on supply chains within it may face increased disruption and costs, exemplified by events such as the 2011 flooding in Thailand. However, companies are proactively seeking ways to mitigate against potentially disastrous global temperature rises.
The World Resources Institute (WRI) reported during Climate Week that top apparel companies have committed to set emissions reduction targets through the Science Based Targets initiative. Companies including Nike Inc., Gap Inc. and Levi Strauss & Co., joined companies like H&M, Marks and Spencer and Walmart in committing to set emission reduction targets consistent with global efforts to limit global warming to well below two degrees Celsius.
“By joining the Science Based Targets initiative, these companies are positioning themselves as leaders in the apparel sector,” said Cynthia Cummis, WRI’s Director of Private Sector Climate Mitigation and member of the Science Based Targets initiative steering committee. “The fashion industry is known for innovation and these companies are using that spirit to tackle climate change. For apparel brands, up to 90 percent of emissions come from the value chain, and companies share many of the same suppliers, so setting ambitious value chain targets will open up a great deal of opportunity for collaboration, innovation and efficiency across the industry.”2
Focusing on food waste
Globally, about one third of food produced for human consumption is lost or wasted between the supply chain and household consumption.3 According to the FAO, this waste generates 8 per cent of anthropogenic GHG emissions per year – if it were a country it would be the third largest emitter behind China and the US.
Figure 1. Per capita food losses and waste, at consumption and pre-consumptions stages, in different regions. Source: fao.org
During Climate Week, Champions 12.3 and The Consumer Goods Forum (CGF) – a network of 400 of the biggest consumer goods companies across 70 countries – approved a Call to Action to standardize food date labels worldwide by 2020.4 The CGF Board of Directors unanimously adopted the Call to Action, supported companies like Tesco, Kellogg, Walmart, Campbell Soup, Bimbo, Pick n Pay, Nestlé, Carrefour and Unilever. The Call to Action says retailers and food producers should take three important steps to simplify date labels and reduce food waste by 2020:
- Only one label at a time
- Choice of two labels: one expiration date for perishable items (e.g. "Use by") and one food quality indicator for non-perishable items (e.g., "Best if used by"). The exact wording will be tailored to regional context
- Provide consumer education to better understand what date labels mean
This Call to Action can help reduce food waste at the household level, and complement actions that may protect against the worst effects of climate change on food production.
Investing in innovation
The Climate Group reports that ‘the transport sector is the fastest-growing contributor to climate change, accounting for 23% of global energy-related greenhouse gas (GHG) emissions.’ They used Climate Week to launch EV100, a campaign designed to fast-track the uptake of electric vehicles (EV) and infrastructure. Since businesses own over half of all registered vehicles on the road, it is crucial that they lead the shift to electric vehicles. The campaign, along with RE100, is part of a growing collective of corporate leadership initiatives that ‘address the key components of a future-proofed, low carbon business model.’ Members, including Baidu, HP, IKEA Group, PG&E, and Unilever have committed to swapping their large diesel/petrol vehicle fleets to electric vehicle fleets and/or installing electric battery charging infrastructure by 2030.
Helen Clarkson, CEO of the Climate Group said, “EV100 will use companies’ collective global buying power and influence on employees and customers to build demand and cut costs. [Members] see the business logic in leading a faster transition and addressing local air quality issues in their markets. They are setting a competitive challenge to the auto industry to deliver more EVs, sooner and at lower cost.”
Wang Lu, Vice President of Baidu said: “We are delighted to be the first Chinese company to join EV100. As one of the world’s leading IT companies, we are inspired to create a better future for all through technology innovation, and are committed to sustainability across our business operations. We have already made significant progress in promoting low carbon electromobility. We hope that other Chinese companies will follow our lead.”5
Taking the lead
Tackling a vast and complex issue like climate change requires strong leadership, and business leaders the world over are showing their commitment to addressing the problem for the sake of their shareholders, stakeholders and the planet. The surge in companies signing up to global initiatives echoes the actions of the CEOs of 30 large companies who in May of this year issued an open letter to President Trump urging him to stay in the Paris Climate Agreement. The contents of the letter explicitly state that aligning business operations with the Paris Agreement:
- Strengthens their competitiveness in global markets
- Benefits…manufacturing as they modernize to new, more efficient technologies
- Supports investment by setting clear goals which enable long-term planning
- Expands global and domestic markets for clean, energy-efficient technologies which will generate jobs and economic growth
- Encourages market-based solutions and innovation to achieve emissions reductions at low cost
On the first day of Climate Week, Futerra and The Climate Group launched Climate Optimism, a new public campaign to focus on the positive, optimistic aspects of climate change and our ability to address it. The campaign’s manifesto states, "We must, we can and we will solve climate change." To meet the challenge, climate change commitmentsborn of strong leadership in the private sector must be matched with concrete action. Inaction will be costly, not only in terms of the environment, but also for business leaders. In an interview filmed during Climate Week NYC, William Theisen, Director of EcoAct, warned that, “People are already moving forward, they are already seeing the benefits of taking action in terms of climate change and being more sustainable. If [businesses] are not taking action now…they are going to be left behind – and they are just going to have to invest more to try to catch up later.”
Image source: www.climatenetwork.org