Countdown to COP26: a message to businesses
Each of us is responsible for our planet and the time to act is now.
From China to Europe, from India to the United States, forest fires are raging, flooding is sweeping through cities, and storms are gaining strength. All over the world, we see examples of extreme weather conditions that scientists have long warned would result from pumping large amounts of carbon out of the atmosphere, as humans have done since the Industrial Revolution.
These effects will increase in strength and ferocity until they threaten to overwhelm us, unless we act now to limit the rise in global temperature in accordance with the Paris Agreement. This is the international treaty on climate change, signed in 2015, in which countries around the world have committed to limiting the rise in global temperatures to well below 2 degrees, aiming for 1.5 degrees.
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As the austere report of the Intergovernmental Panel on Climate Change puts it, that 1.5-degree target is essential. Temperature increases of just half a degree more would see hundreds of millions more affected. But the world has moved too slowly since 2015, and now, to keep 1.5 degrees within reach, we need to halve global emissions by 2030. That means taking action this year, and that makes the Conference of Nations United on the climate in November, the COP26, absolutely critical.
Every country and every part of society must support the Paris Agreement and contribute to its realization. This is why I am proud to be a COP26 Business Leader, supporting the UK Presidency of COP26, showing that business supports a 1.5 degree world and defending the four goals of COP26.
The first is to get the world on the path to reducing emissions until they reach net zero by the middle of this century. This is imperative to keep 1.5 degrees within reach. Countries must come up with net zero commitments and short-term emission reduction targets that put them on track to achieve this.
Second, protect people and nature from the impact of climate change. The climate crisis is already with us and we must act on the very real need for flood defenses, hurricane warning systems and infrastructure capable of withstanding climate extremes.
Third, secure finance for climate action, both public and private. Governments must act, including developed countries, by mobilizing the 100 billion dollars per year that they have promised to developing countries. But it also requires action from the private sector, and this is where the fourth objective comes in: working together.
We need every part of society behind these COP26 goals, to help make the Paris Agreement a reality. In particular, financial institutions and businesses must play their part in reducing global emissions and redirecting capital flowing in the global economy to a 1.5 degree world.
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Such action is not only good for the planet, it is good for the bottom line. Successful businesses look to the future and it is clear that the future of the global economy is green.
Today, 70% of global GDP is covered by net zero targets, up from 30% when the UK took over the presidency of COP26. Each G7 country has a short-term emissions reduction target that will bring them to net zero by 2050. The Net Zero Asset Managers Initiative had 30 signatories representing more than $ 9 billion in assets under management as of December 2020. ; it now has 128 members managing $ 43 billion.
The opportunities offered by the green economy are extraordinary, just as the risk for those who do not evolve with the times is immense. Consider that together, 215 of the world’s largest companies have assessed their climate risks at around $ 1 billion. Yet these same companies have the potential to earn double from the shift to green economies. Legal & General’s own estimate is that $ 130 billion in investment is needed to achieve net zero emissions globally.
Government action can encourage businesses to seize the opportunities offered by the clean economy. Short-term emission reduction commitments give businesses the confidence and clarity they need to invest in our green future. Likewise, business action helps create the conditions governments need to take bold action. On climate, our efforts are mutually supportive – that’s really what we mean by sustainable capitalism.
So, in this vital year, we must all play our part in protecting this planet we share and in maintaining 1.5 degrees of life. This is our moment. There is no second chance. Let’s grab it together. Inaction is not an option.
Alok Sharma, President of COP26 and Minister of State at the Cabinet Office and Michelle Scrimgeour, CEO of Legal & General Investment Management and co-president of COP26 Business Leaders