The Paris COP 21 agreement, staying ‘well within’ the 2C threshold, sends a strong signal to the world that we need to plan for a low-carbon (and, ultimately, net-zero) future. One of the conditions is for member countries to submit ever more ambitious emissions reduction plans every five years, ensuring country-level accountability. According to Mark Carney, Governor of the Bank of England, this accountability will increasingly extend to companies as well.
Carney chaired an event at the recent Paris COP where he advised investors to start asking businesses: “What’s your strategy for ‘net zero’?” ‘Net zero’ being the future scenario of virtually zero carbon emissions that is needed to prevent more than the internationally agreed 2C limit of global warming.
Carney’s challenge places the onus on business to formulate strategies that grapple with a post-fossil fuel era. It was also announced that a new Financial Stability Board task force would be set up with the aim of helping investors to judge how companies are managing climate change risks. As a result, companies that fail to articulate strategies in-line with commitments made in Paris could start to stand out as long-term investment risks.
A few leading companies are already rising to the challenge. They are reporting on how their business strategies are evolving to deal with the risks, as well as capitalise on the opportunities of a zero carbon future.
Mark Wilson, CEO of Aviva, the British insurer, presented his company’s strategic response to climate change earlier this year, in his speech “Paris: a giant leap for humanity”. The accompanying report outlined five carbon pillars for action in areas where Aviva has greatest influence. It has described the actions as “not at odds with business or investment” but a “business imperative”.
Novozymes, a global biotech company, has incorporated the aims of halting climate change and helping boost food security for the world’s hungry as part of its core business plan. Through its biological enzyme solutions used in household care products and agricultural processes, the company reportedly saves 60 million tons of CO2 from entering the atmosphere. It has set itself the goal of 100 million tons annually by 2020.
These are just some examples of companies trying to take advantage of shifting expectations and changing market conditions. Their ranks will swell as more begin to recognise the business imperative of planning in-line with commitments made at this year’s COP 21. As others follow their lead, perhaps more companies will be able to provide a clear answer to Carney’s question: “What’s your strategy for ‘net zero’?”