The transition to the low-carbon economy is underway, spurred by the 2015 Paris Agreement and the adoption of the Sustainable Development Goals. Many countries have already ratified the Agreement, and there are sound hopes that it will come into force before the end of 2016.
Smart businesses around the world aren’t waiting. Influential global companies have begun taking advantage of the opportunities - they are using renewable energy, deploying innovative low-carbon technologies, sustainably sourcing resources, working on innovative and transformative solutions, and more.
Every area of industry will be impacted by climate change. And because necessity is the mother of invention, business knows what that means. In the new climate reality, businesses that can innovate and take advantage of the low-carbon transition will be the ones that secure a sustainable future.
This reality makes sustainable development and climate change two sides of the same coin. Business has a key role to play in addressing the challenges of climate change. It is the world’s most powerful economic force, and it is responsible for the majority of spending, wealth creation and investment. Where business goes, others will follow.
Innovative initiatives from business are part of the global shift that will open the floodgates to large-scale opportunities that can combat climate change and change the lives of millions around the world. Companies around the world, have a huge opportunity to join these initiatives and bring their expertise to bear, especially those in China, who represent more than a billion people and where the government is hosting this G20 meeting.
One such global initiative is the Low Carbon Technology Partnerships Initiative (LCTPi). LCTPi is a ground-breaking collaboration led by the World Business Council for Sustainable Development, to accelerate the development of low-carbon technologies and scale up their deployment.
More than 150 businesses and 70 NGOs, government bodies, cities and other partners from around the world are collaborating to deliver transformational solutions to the climate challenge. They cover eight different areas including low-carbon transport fuels, forests, energy efficiency in buildings, renewable energy, low carbon freight, chemicals, cement, and climate smart agriculture.
For example, one key outcome of LCTPi is below50; a global collaboration that brings together the entire value-chain for sustainable fuels – that is, fuels that produce at least 50% less CO2 emissions than conventional fossil fuels. Below50 is accelerating the shift by scaling up the global market for sustainable fuels to unlock the economic benefits – it is a huge growth opportunity that is expected to double to over $185 billion in the next five years.
In the post-Paris world, LCTPi demonstrates the importance of collaboration. The 150 companies and 70 partners are collaborating to deliver transformational solutions to the climate challenge that could never be delivered by a single company acting on its own.
An independent impact analysis by PwC shows that the LCTPi plans could deliver up to 65 percent of the emissions reduction necessary to stop the world from warming beyond 2ᵒC.
Scaling up new and existing technologies will also mean redirecting trillions of green investment dollars. To this effect, LCTPi could stimulate between $5 and 10 trillion of investment into the low-carbon economy while creating between 25 and 45 million jobs around the world each year.
And this is just one of many initiatives operating around the world. A recent report by We Mean Business, titled The Business End of Climate, shows how bold climate action, supported by smart policy, can keep the temperature rise below 2°C.
The report looks at five initiatives that companies have joined as part of their efforts to address climate change: Science-Based Targets, EP100, RE100, Zero Deforestation and LCTPi.
The analysis shows what would happen if these five initiatives achieved their most ambitious plans. Effectively a “business-determined contribution”, the report shows that by 2030, business will cut its GHG emissions by 3.7 billion metric tonnes of CO2 equivalent a year. That’s half a tonne of CO2 for every man, woman and child on the planet, every year.
The report goes further, estimating that if all relevant companies that could join the initiatives actually signed up to them, the total impact on emissions could go as far as 10 billion tonnes every year. Imagine the further potential if Chinese companies – who are currently under-represented in these initiatives – were to bring their leadership and expertise to the table.
Analysis like this shows that business is the best implementation partner for governments around the world as they strive to hit their climate targets. National and local governments can and should turn to business to help turn their climate commitments into tangible actions.
Business can do a lot on its own, but the element of partnership is vital. 10 billion tonnes a year is significant, but it does not go far enough. Neither business nor government can achieve the needed emissions reduction by acting independently.
Success will depend equally on governments playing their part at the local and national level. Every country will need to tailor their policies to match their unique national contexts and requirements. Governments will also need to work together across the globe, to address this inherently global challenge.
The proposed financial commitments of the COP 21 agreement must be efficiently and effectively mobilised and private sector funds must be leveraged in order to fully finance the required transformation. An estimated $90 trillion is needed over the next 15 years. That is $5 trillion per year - more than half of China’s annual GDP - that must be directed towards the low-carbon economy.
Now is the time to turn ambition into implementation. Companies, including Chinese businesses, must join the global initiatives. Financiers must unlock the capital that will drive solutions, and governments and business must work together to help these initiatives achieve their reduction targets.
If we all work together, between today and 2020 we can significantly bend the curve of global emissions downwards - even before the Agreement is expected to come into effect.
This article was originally written for the G20 meeting in Hangzhou, China