Businesses need strong climate policy as they aim for net-zero 

Comment: Corporate leaders across the world are calling on governments to support their efforts by providing clear, ambitious plans to cut emissions

Cop25, the stage is set for governments to make decisive moves to cut emissions (Photo: UNFCCC)


As the UN’s annual climate talks get underway in Madrid, business is watching closely.

Climate change is now a material risk for companies. Extreme weather is affecting supply chains, investors are increasingly scrutinising companies’ plans to minimise climate risk and customers are striving to cut their carbon footprint. 

The businesses that are taking action on climate are helping accelerate the transition to zero-carbon and seizing the opportunities on offer.

They are also standing up to call on governments to set bolder, long-term policies on climate. Earlier this year, in the UK, 120+ businesses called on the UK government to legislate for net-zero, giving the then prime minister Theresa May the confidence to commit to long-term ambition.

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This week in Japan 126 companies in sent an open letter to relevant ministers calling Japanese government to raise its ambition to align with the Paris Agreement. 

And in the US 75+ businesses called on congress to pass meaningful climate legislation, including carbon pricing.

Why does business care? Because strong climate policies give companies and their stakeholders the clarity and confidence they need to invest at scale in low-carbon options. In addition, companies with ambitious emissions reduction targets need to be able to decarbonise their value chains – which requires strong policy action to fully decarbonise the economy. private sector.  

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To give a sense of the level of business ambition, there are now well over a hundred companies committed to set climate targets across their operations and value chains aligned with limiting global temperature rise to 1.5C above pre-industrial levels and reaching net-zero emissions by no later than 2050. This is a powerful signal that business stands ready to support governments stepping up their action on climate. 

Harry Verhaar, head of global and government affairs of Signify lighting and Anirban Ghosh, CSO of Mahindra Group both recognise the urgency of the challenge and the great need for business and government to collaborate.

“We are only visitors to this planet for our lifetime, and it’s our moral obligation to pass on a healthy Planet Earth to the next generation. That’s why I call upon fellow executives, cities and governments to join us as we create integrated policies and actions that will help us to limit global warming to only 1.5C degrees,” said Verhaar. 

Ghosh added: “Business-government collaboration is vital to achieve a 1.5C future. Government ambition and business ambition create a mutually reinforcing ambition loop that accelerates progress exponentially. Governments must create a favourable ecosystem where innovation can occur and corporates must seize the opportunity to give consumers viable alternatives to lead a low carbon way of life.”  

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Michael Fletcher, retail chief commercial officer at the British supermarket chain Co-operative Group Limited (the Co-op) explained that it isn’t enough for businesses to act alone.

“We’re proud to be the first UK retailer to pledge to meet the UN’s target to limit global temperature rise to 1.5C and reach net-zero emissions by no later than 2050. By making this commitment we’ll change every aspect of our future decision making. As a first step, we have already set science-based targets aligned to a 1.5C pathway, but we need everyone to do the same, so we can avert an emergency for future generations together.

“It’s going to need a great deal of co-operation and clear policy to achieve this. Political will and legislation is vital to create a level playing field and make ambitious climate action the norm and not the exception. This is absolutely necessary to allow all businesses to drastically reduce the greenhouse gases for which we’re responsible. We can get there, but not if we don’t act urgently and work together.

“We set targets and take action on the basis that if everyone does the same, we can avert an emergency for future generations. This won’t happen if others do not follow the lead. Clear policy is vital to create a level playing field and make ambitious climate action the norm and not the exception.” 

David Yates, executive general manager, sustainability, from Australian real estate company Dexus said that clear, long-term government policies provide business with the certainty needed to invest in the transition to a zero-carbon economy.

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“Policies that stabilise energy prices and set preferences for low carbon fuel sources and end-use technologies are essential for businesses that seek to build robust business cases for adopting ‘beyond business-as-usual’ solutions for renewable energy and energy efficiency projects. 

“Specific policies would include those that a) foster demand for energy efficient buildings by promoting disclosure of energy performance and associated occupancy cost benefits, and b) that raise minimum building performance standards and c) incentivise or support landlords to invest in developments or retrofits to meet new minimum standards.” 

Feike Sijbesma CEO of the Dutch multinational company Royal DSM said action is more urgent than ever and that carbon pricing is key for their company, and for the world, to achieve the Paris Agreement goals.

“It is critical that policymakers step up and urgently commit to implement the key policies needed to embed climate action into our financial system, i.e. via carbon pricing. This is the way to unlock the potential from investors and companies from the private sector to support zero-emissions innovations.”

Gabrielle Ginér, head of environmental sustainability, BT explained that the demand signals that business generates should be recognised and acted upon:

“BT was one of the first companies in the world to set a science-based target aligned to a 1.5 degree pathway, and we have a target to be a net zero emissions business by 2045. Setting net zero targets sends important demand signals for innovation and investment prioritising growing the green economy. We support the UK’s net zero leadership and hope that other companies and countries will join us in accelerating climate action.”  

Jen Austin is policy director of the We Mean Business coalition  

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