IPCC Report: Key Climate Change Implications for Businesses

What every organization and CEO needs to know.

By Annachiara Torciano

UN’s Intergovernmental Panel on Climate Change (IPCC) outlines alarming trends in global climate and a new urgency for governments, businesses and communities around the world to accelerate the transition to clean energy.

The IPCC report states that even if nations started sharply cutting emissions today, global warming is likely to rise around 1.5 degrees Celsius within the next two decades. Without action, this reality will have lasting effects on both businesses and humanity.

What every organization needs to know about the IPCC report:

Under a very low emission scenario, temperatures will rise
1.5 Celsius by 2040 and 1.6 Celsius by 2060.

Climate change is not a challenge for the far-away future.

It is happening today, faster than we thought — and we have very little time to act decisively. IPCC’s report shows that global temperatures have warmed by 1.1 degrees Celsius and weather extremes are already causing damage. Scientists have made the link between climate change and extreme weather events even more explicit.

Without urgent action, things will get worse.

We are already seeing global impacts. Under a very low emission scenario, temperatures will rise 1.5 Celsius by 2040 and 1.6 Celsius by 2060. This warming and subsequent impacts are not just occurring in mid- and low-income countries. Heatwaves, wildfires, droughts and floods are set to become more common across Europe, North America and elsewhere.

This is not just about our planet — it’s about ensuring people and communities thrive.

Justice and equity are rightly becoming key elements of the climate narrative. As a global community, the report illustrates the urgent need to address the climate crisis while helping communities everywhere adapt to our changing climate.

What this means for business

Fund managers overseeing $43 trillion in assets have pledged
to meet net zero emission targets by 2050.

This can’t wait until 2050. The next few years are critical and businesses need to act with urgency. All businesses will face the impacts of a planet that is heating up faster than previously forecast. Challenges will include disrupted supply chains, higher financial costs and increased regulation, but this situation also presents an opportunity for all companies to transform their businesses and help respond to the needs of all stakeholders.

Finance is mobilizing and will expect action. Fund managers overseeing $43 trillion in assets have pledged to meet net zero emission targets by 2050. They expect corporations to take concrete steps to innovate for our future.

People — and public opinion — care about climate change. The UN Peoples’ Climate Vote — the largest public opinion survey ever conducted — makes this very clear. Addressing climate demonstrates corporate values and a company’s commitment to a sustainable, long-term future.

Four ways companies can take action immediately

Considering the IPCC report and new thinking emerging on business and climate change, actions are imperative — starting with the Board and the CEO.

Here are four ways:

Set short-term targets, ideally linked to sales.

Many large companies have set net-zero emissions targets for 2050. It’s time to focus on setting short-term targets and deliver on them. No CEO or Board can be accountable today for action in 2030 or 2050. Ask your management teams and heads of business units: How are we going to be part of the climate solution in society and be a profitable business in the future? Align the company’s purpose, business strategy and management targets around this.

Accept short-term costs.

Research demonstrates that implementing sustainable business practices can be profitable, but there are short-term costs. With your management team, investors and Board, take a hard look at these short-term costs, as well as the costs of delayed action that may arise from lawsuits, financial costs and lost assets, disruptions due to extreme weather and climate impacts. Showing that you’re willing to make short-term investments to secure a profitable, sustainable business for the future and help solve the climate crisis will tell your key stakeholders what kind of company you are.

Move to a whole new level of transparency on carbon.

Regulation is increasing and investors will expect you to report on carbon just as you do on profit. Many companies are expanding their carbon reporting beyond their operations to also include their entire value chains (known as Scope 3 emissions). Look carefully at emerging risks, such as carbon offsets and pollutants with high global-warming impact, such as methane and black soot.

Seize the opportunity to inspire hope.

People, vision and commitment will make the difference. The IPCC news is bleak and the challenges we face are extraordinary. But there are solutions. CEOs can connect with their employees, customers, governments and partners to inspire hope and action.

The IPCC report is the gold standard of research on the science of climate change from one of the most authoritative organizations on global warming. Two hundred thirty-four scientists from more than 60 countries contributed, distilling 14,000 scientific papers and 195 governments have affirmed that the findings are summarized accurately.

Annachiara Torciano

Author

EVP Sustainability, Prime & Weber Shandwick

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