September 25, 2019

Climate Week: Zero-carbon transition is gaining momentum but must accelerate

We Mean Business coalition

The transition to a zero-carbon economy is achievable, will bring significant benefits and has already begun, but the governments of the world must come forward with clear bold policies needed to further accelerate action.

That was the clear message from the growing number of forward-looking businesses committed to bold climate action at the UN Climate Summit and Climate Week NYC.

CEOs of many of the 1,000 companies committed through the We Mean Business coalition partners’ initiatives showed up in person in New York to demonstrate the role business can play in delivering the transition to a zero-carbon economy.

The summit saw companies stepping up in response to the latest science and committing to set climate targets across operations and value chains aligned with limiting global temperature rise to 1.5°C above pre-industrial levels, and reaching net-zero emissions by no later than 2050.

This included companies from a variety of sectors, including heavy emitting sectors, and from a variety of countries, with a commitment to ensure that the zero-carbon transition is just and doesn’t leave anyone behind.

To date, 87 major companies — with a combined market capitalization of over US$2.3 trillion and annual direct emissions equivalent to 73 coal-fired power plants — have now signed the Business Ambition for 1.5°C Pledge.

They are responding to a call-to-action issued in June by a group of business, civil society and UN leaders, the companies collectively represent over 4.2 million employees from 28 sectors and are headquartered in 27 countries.

These ambitious companies include multinational home-furnishings group Inter IKEA Group, leading renewable energy provider Ørsted, cloud computing company Salesforce.com, consumer goods giant Unilever and commercial vehicle manufacturer Scania.

At Climate Week, IKEA demonstrated progress on its renewable energy targets. The company announced it will generate more renewable energy before the end of 2019 than the energy its stores use, which is ahead of its 2020 target.

Mars announced an increase to its climate ambition – to further cut emissions from its operations in line with the key aim of the Paris Agreement to limit global warming to 1.5°C, as part of its new #PledgeForPlanet initiative. Mars is also calling on all its suppliers to also step up by setting science-based targets, signing on to The Climate Group’s RE100, and other climate initiatives.

The number of companies signed up to The Climate Group’s RE100 surpassed 200 members at Climate Week, driving demand for 220 TWh of renewable electricity demand annually – almost enough to power Indonesia.

Henrik Poulsen, the CEO of renewable energy pioneer Ørsted said at the event: “The renewable energy technologies that we need to fundamentally transform the energy system and radically reduce emissions are at our disposal – and they’re cost-efficient.”

Alan Jope, CEO of Unilever, highlighted the company’s recent achievement of reaching 100% renewable electricity across five continents.

While Eric Rondolat, CEO of Signify, called on all countries to commit to net-zero emissions by 2050 and all companies to achieve that by 2030. The company is committed to the World Green Building Council’s initiative to have all the buildings that it is using to be carbon neutral by 2030. In addition to that, Signify is also joining The Climate Group’s EV100 initiative to operate a 100% electric and hybrid lease fleet by 2030.

Rondolat also called upon more companies and countries to join the Three Percent Club. This group of governments and organizations is committed to driving an increase of 3% energy efficiency each year using existing, cost-effective technologies and policy instruments.

Meanwhile, the Just Transition and Decent Jobs Pledge has been taken by nine major companies from the energy and industrial sectors, including Iberdrola and Ørsted. In total, these companies have committed to ensuring over 230,000 directly employed workers across their businesses have green as well as fair, decent and inclusive jobs. They’ve also extended this commitment to the millions of workers in their supply chains and contractors, magnifying the creation of decent green jobs.

The progress comes as the We Mean Business coalition celebrates five years since its inception, with Ceres President Mindy Lubber and IKEA Foundation CEO Per Heggenes taking to the stage at Climate Week to celebrate the achievements but also recognise the need to accelerate progress further.

Heggenes said that the IKEA Foundation ‘placed a huge bet’ on the coalition back in 2014, and recognised that business is a vital part of the solution to climate change.

On the investment front, Allianz CEO Oliver Bäte committed to fully transition its investment portfolios to net-zero GHG emissions by 2050 as part of an alliance of the world’s largest pension funds and insurers responsible for directing more than $2.4 trillion in investments.

Ahead of the summit, a record 515 institutional investors managing $35 trillion in assets urged governments worldwide to step up action to tackle climate change and achieve the Paris Agreement’s goals.

The Global Investor Statement to Governments on Climate Change, developed by the seven Founding Partners of The Investor Agenda, calls on governments to phase out thermal coal power worldwide, put a meaningful price on carbon pollution, end government subsidies for fossil fuels, and update and strengthen nationally-determined contributions to meet the emissions reduction goal of the Paris Agreement no later than 2020.

In terms of policy announcements, Slovakian president Zuzana Čaputová says her country has made a “politically unthinkable decision” to close its coal mines as the country joined the Powering Past Coal Alliance on Sunday. Slovakia will end subsidies for its coal mines in 2023 and aim for carbon neutrality by 2050.

South Africa said that it will step up its Nationally Determined Contribution next year, finalising its ‘Just Transition Plan, including defining a vision compatible with the 1.5 degree Paris temperature goal’.

The Powering Past Coal Alliance now counts 91 members, including 32 national governments, 25 subnational governments and 34 businesses. New joiners also include Puerto Rico and Germany.

Germany’s Chancellor Angela Merkel confirmed the country’s latest commitments to cut emissions 55% by 2030 and reach carbon neutrality by 2050, along with new carbon pricing measures.

Russia has finally given definitive approval to Paris Agreement, even though the country will not technically ratify the climate accord. And Greece is committed to phasing out its lignite coal power plants.

However the need to accelerate progress further was powerfully underlined by climate activist Greta Thunburg, who accused world leaders of failing to take sufficient action on climate change.

Jen Austin, Policy Director of the We Mean Business coalition, highlighted the need for policy makers to answer the growing calls for urgent action: “Heads of state from the largest economies and largest emitters, whose leadership is desperately needed, mostly stayed the course today – recounting steps they’ve taken recently or saying nothing at all.”

“The year ahead will be critical to closing the gap. Businesses must put their money where their mouth is, back their commitments with action and support for stronger policies, and governments must step up to set a clear path to net-zero emissions, leading the way to a healthier, cleaner future.”