After the Bombshell IPCC Report, the Private Sector Can Close the Gap on Decarbonization

The latest report from the Intergovernmental Panel on Climate Change (IPCC) outlines the widespread impacts and risks of climate change. The findings are grim: Global surface temperature has risen 1.1 degree Celsius above pre-industrial levels, and greenhouse gas emissions have continued their upward trajectory. Global governments are failing to meet their commitments to curb emissions, and current nationally determined contributions (NDCs) have the world on track to shoot past 1.5 degrees within the 21st century, making it far more difficult to limit warming to below 2 degrees.

As civil society fails to curb emissions and avoid the most catastrophic outcomes of the climate crisis, the private sector has an opportunity to drastically decrease emissions and lead the way to a decarbonized world.

TriplePundit spoke with Steve Varley, global vice chair for sustainability at the big-four accounting firm EY, about the ways the private sector can help change the current climate trajectory and create long-term sustainable value.

“The IPCC report is not the first time that we've heard a claxon and seen the red flashing lights in a report done by eminent and prestigious scientists on the climate emergency," Varley said. "We are not acting appropriately in business or government in response to the report. Capitalism can be a powerful agent, and if we can help stakeholders create value by becoming more sustainable, then the world will be more sustainable. The private sector can help close the gap on climate response when national governments are struggling to meet the expectations of a 1.5-degree pathway.” 

The fight against climate change and the road to COP28

The latest IPCC report is framing the global conversation leading up to the U.N. COP28 climate talks in December. Current NDCs — the formal term for country commitments to reduce emissions — put the world on track to see temperature increases between 2.2 and 2.4 degrees Celsius. And some governments are failing to implement their current emissions reductions strategies.

 “We should be tracking how countries improve their NDCs, if at all, on the way to COP28, especially for the G20," Varley said, referring to the Group of 20 of the world's largest economies. "I am encouraged by where the U.K. is getting to, but all eyes are on the United States, India, China and Saudi Arabia. We need to move from pledges and promises to progress and performances.” 

At the COP27 climate talks last year, the Joe Biden administration acknowledged that the public sector could not provide adequate financing to fund the transition to a decarbonized economy. A senior advisor to President Biden noted that the world needs the private sector to help unlock trillions of dollars of climate finance needed to avert the worst effects of the climate crisis, but currently, only a small fraction is available.

“As governments shrink away from meeting their commitments on their NDCs, now is the time for the private sector to step forward," Varley noted. "For those parts of the world where there is a trust gap between civil society and business, this is our opportunity to walk the talk and show how we are decarbonizing at scale. We should come to COP28 with evidence to civil society how we are closing the gap and decarbonizing our businesses.”

Where do businesses go from here? 

The business case for sustainability is increasingly apparent for the private sector, and there are several ways that companies can create value for stakeholders and engage the public. “Sustainability is the defining challenge for businesses and business leaders over the next decade, and we need to address it proportionately," Varley said. "Capitalism can, on occasion, wreak havoc on the world, but if we bring the power of the private sector as a change agent to the world, we can make the planet more sustainable. To do that, we have to encourage the creation and protection of value.” 

Additionally, the IPCC report needs to be made more available to folks outside of the sustainability sectors. “The private sector needs to translate the IPCC report into everyday descriptions so that civil society can better understand how not dealing with climate change will  impact their lives and the lives of their children," Varley told us. 

The world is running out of time to act, and the next few years are critical. Governments must continue to support policies that allow for the flow of climate finance. “It’s difficult when politics does not support the climate change agenda, but the private sector is embracing and responding to the climate emergency,” he said.

“There is a quote that I like, that is often attributed to Napoleon: ‘The job of a leader is to establish reality and then give hope,’" he continued. "COP28 can establish realistic optimism and realistic hope. I am optimistic, because I see the great work in many companies around the world to decarbonize. Businesses can start the movement to overtake governments’ efforts to decarbonize at a national scale and close the gap.” The IPCC report notes that at current rates of implementation, adaptation gaps will continue to grow and that an influx of climate finance is necessary to avoid catastrophe. 

Image credit: Roxanne Desgagnés/Unsplash