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A Three-Step Guide For How Big Brands Tackle Climate Change

November 3, 2017 Comments

Reading Time: 4 minutes

Since the Paris Climate Agreement, there’s been an upswell of companies actively taking charge to reduce emissions and prepare for climate impacts.

Groups like the We Mean Business Coalition, RE100, and EV100 help businesses monitor emissions, set goals, and take action.

It’s exciting and inspirational to see brands around the world increasing efficiency, cleaning up supply chains, and innovating around climate action to collaboratively build a low carbon future.

The CDP, a climate change reporting and analysis organization, recently released the second annual Picking Up The Pace study to showcase corporate climate progress. 1073 companies voluntarily submitted emissions data, 68 percent have set climate targets for 2020 and 20 percent set targets for 2030 or later, which is a substantial increase from the 2016 report. The increasingly common long-term perspective is a sign that businesses are stepping up to the challenge to reduce climate change, rather than playing lip service to the cause.

What’s more, there’s been a 61 percent increase in the adoption of science-based emissions targets since last year. Science-based targets are vital to reducing global emissions below the dangerous 2 degree celsius threshold. The authors note that the commitments presented in the report would get the sample companies 31 percent of the way to meeting the 2 degree target by 2030, which closed the gap by 6 percent since the last report.

Although there’s still a long way to go before the private sector reaches sustainable levels of greenhouse gas emissions, more than 95 percent of surveyed companies say they are weaving climate change into business strategy, have business leaders directly involved in climate change projects, and are working with policymakers to mitigate emissions and adapt to impacts.

Ultimately, climate action is fast becoming an integral part of doing business in today’s world. Brands that lead the way not only help build a better world, but also distinguish themselves as purpose driven leaders paving the road towards sustainability.

Here are a few lessons from some of the report’s top performing companies on how to tackle climate change within your organization:

Implement an internal price on carbon:

One of the biggest challenges that climate policy advocates face is putting a price on carbon. In brief, carbon pricing would internalize the negative externalities associated with greenhouse gas emissions, effectively requiring emitters to pay for their fair share to clean up our atmosphere.

While there are regional markets such as RGGI and the California Cap and Trade have instigated localized action, there is yet to be a U.S. national, let alone global, price on carbon.  Pricing carbon emissions is essential to accurately assessing the cost of reducing emissions and combining internal emissions targets with science-based goals.

An example of a company leading the way in climate action with a voluntary internal carbon pricing is AkzoNobel.  The Netherland’s chemical manufacturing behemoth is utilizing carbon pricing to influence investment decisions and supplier inputs.

The brand incorporates an internal price on carbon into IRR assessments for new investments, which influence decisions such as incorporating afterburners into new coating plants.

AkzoNobel also uses shadow carbon pricing when sourcing materials and electricity from suppliers. The cost of carbon is incorporated into the overall cost and the chemical company will make purchasing decisions based on the lowest cost to their business and society.

As AkzoNobel’s Director of Sustainability, André Veneman, said, “sustainability is not an abstract concept to be considered in isolation, It’s about the transition to sustainable business, focused on longer-term value creation.”

Ultimately, using an internal price on carbon intertwines your finances with your emissions.

Collaborate with competitors:

While it may seem counterintuitive, collaborating with competitors working towards the same goal can accelerate innovation and reduce R&D costs.

We are seeing some great collaboration in the automobile industry around electric vehicles.

For example, Nissan is partnering with Renault and Mitsubishi to compile battery design strategy, logistics, and shared platforms. Nissan believes The Alliance will cut the costs of manufacturing, transportation and advance the market.

The automaker is also partnering with BMW, Volkswagen and the Trans-European Transportation Network to deploy battery charging stations throughout europe.

“The aim of the project is to accelerate the growth of EV charging infrastructure, seen as a key enabler towards making zero-emission mobility a market reality,” a Nissan represented told CDP.

Essentially, partnering with other companies working towards a similar goal can scale your progress and cut costs in the long run.

Incorporate climate risk into decision-making:

While reducing greenhouse gas emissions is crucial to maintaining a livable planet and fertile business environment, minimizing the risk that climate-related shocks and pressures can have on your business is also important.

Corporate resiliency ensures that key inputs to your supply chain are prepared for fluctuations in climate. Already, extreme heat threatens to reduce working hours for companies that rely on outdoor physical labor.

A brand doing a great job of considering climate risk in business operations is Aviva. The insurance company assess doom scenarios from 4 to 6 degrees warming that would disrupt the company’s ability to cover loses and works with companies to monitor risk.

To help increase climate risk transparency, Aviva’s Chief Sustainability Officer, Steve Waygood serves as a board member on the Task Force for Climate-Related Disclosure (TCRD). His goal is to get more companies and governments to use the TCRD’s criteria to assess climate risk, which will then inform investors and operators.

Ultimately, it’s important to know how your company is vulnerable to climate impacts and build resiliency into supply chains.

Conscious corporate leaders are making a stand to advance climate action. This means setting long-term science-based climate targets, pricing carbon into decision- making, collaborating with others to advance innovation and reducing climate risk exposure in investments and supply chains.

 

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Title image via iStock user Magnus Lindberg

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