The race to net-zero carbon emissions in the 2040s is picking up pace, driven by businesses and investors who see the advantages of getting ahead — and the risks of being left behind. The coronavirus pandemic and the ensuing economic crisis have only sharpened their determination to do what they can to avert global threats, and to build the resilience needed to mitigate their effects.
This private sector leadership is giving policymakers the confidence to raise national targets and set enabling policies, which then allow businesses, investors and local governments to go further again. The resulting “ambition loop” drives exponential change.
But committing to full decarbonisation in the 2040s is just the first necessary step. It’s the equivalent of plugging a destination into a GPS. You won’t get there unless you plot a route and start the journey.
Commitments must therefore come with a road map based on what the science says is needed, signposted with interim targets and regular progress reports. And the science says we first need to halve global greenhouse gas emissions between 2020 and 2030, while also conserving and regenerating nature.
More and more businesses and investors are taking that first step, which is welcome and to be encouraged.
As of March, at least a fifth of the world’s 2,000 largest public companies had committed to reaching net zero emissions, representing annual sales of nearly $14tn, according to the Energy and Climate Intelligence Unit and the University of Oxford.
They include businesses from heavy emitting sectors such as car manufacturing, airlines, electricity generation, heavy industry and food and agriculture. For some, the path to net zero emissions is only just becoming clear and requires investment in innovation, research and development to drive faster growth in solutions during the 2020s.
Yet many of those 2,000 businesses still need to set out plans and interim targets for fulfilling their commitments and halving emissions this decade. Only a quarter of them meet the criteria for robust climate action goals as set by the UN’s Race to Zero campaign, which mobilises businesses, investors, cities and regions behind credible commitments to zero emissions before mid-century.
These criteria require members to present a plan for achieving their goals within a year of joining the Race to Zero, and to report on progress every year. They also specify that companies prioritise reducing emissions, rather than offsetting them with tree-planting or carbon capture technology. They state that reductions must cover the full scope of a business’s direct and indirect emissions, from its own operations to energy supply, transport and distribution, use of products and the rest of the value chain. And they make clear there is now no science-based route for oil and gas companies to join — because the race to zero is a race away from fossil fuels.
This is how we slash emissions. But climate action is also about building resilience for the people whose health, homes and livelihoods are most at risk from the climate crisis now.
The UN’s Race to Resilience is uniting the private sector and local governments behind these efforts. A number of the companies in the FT list of Europe’s Climate Leaders are already in the Race to Zero. They are backing their success in cutting emissions so far with clear plans to go further and faster, and — crucially — to work with their peers and carry their whole sector along.
Among them is fashion retailer H&M Group. It aims to reduce more greenhouse gases than its entire value chain emits by 2040, from cotton farms, to customers’ washing machines, to recycling bins.
To do that, H&M is investing in new ways to manufacture its products, such as making fabrics from citrus peel and old fishing nets, and collaborating on climate action across the fashion industry.
Power company Orsted, similarly, has transformed from Danish Oil and Natural Gas to one of the world’s largest renewable energy companies. It aims to be carbon-neutral across its energy generation and company operations by 2025, to halve its indirect emissions by 2032 and to reach net zero by 2040. To help — and encourage — its peers to follow, Orsted recently released a report on what it has done over the past decade and the lessons it has learnt.
Volvo Group, meanwhile, is driving the development of fossil fuel-free transport systems as part of its efforts to reach net zero emissions in the 2040s, including electric vehicles, alternative fuels and hydrogen. Volvo’s own line-up of cars will be fully electric by 2030.
These are just a few examples of the many businesses and investors forging breakthroughs in climate action. They recognise the opportunity to turbo-charge our recovery from Covid-19. Research by climate consultancy Systemiq shows that this transformation can create more than 35m net new jobs by 2030. Investing $1.8tn this decade in resilience projects — such as early warning systems and mangrove protection — could generate $7.1tn in net benefits, according to the Global Commission on Adaptation, an expert group comprising business and political leaders.
This growing, economy-wide momentum makes me optimistic that we will create a healthier and more resilient future. We have taken the decisive first step, setting the destination. Now we have to start moving — fast.
Nigel Topping is the UN high-level champion for climate action for the UK’s COP26 climate summit in November
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