Climate Week presented a two-front push for nations to take action on climate change. The moral case was emphatically made by a record-setting, 400,000-person march through Manhattan. What followed was a similarly unprecedented barrage from investor groups and corporations to convince world leaders that there’s also a compelling economic case for taking steps against global warming.
The business presence last week was particularly striking because of its breadth and heft, and because of its extension well beyond the so-called “green bubble” that surrounds companies, investors and advocacy groups who embraced the cause long ago.
Signatories representing $26 trillion in investment funds called on world leaders to enact strong policies, cut fossil fuel subsidies and make polluters pay for the effects of their emissions. There were commitments and pledges from the likes of General Motors, food makers Mars Inc. and Nestle, and consumer products giant Unilever. And a string of corporate CEOs joined early-adopters like Ikea Group in supporting renewable energy and citing proof that companies and countries can tackle climate change and prosper at the same time.
“More and more businesses are coming forward and saying look, we can do this. We can cut energy use, we can become more efficient, and we can provide solutions—and this represents an enormous biz opportunity,” said Paul Simpson, chief executive officer of London based CDP, a company that collects corporate climate change data on behalf of shareholders. “That’s not a completely new message, but I think there are far more companies on board with saying it, and that’s really a fundamental shift.”
Certainly, there is plenty of reason to distrust the pronouncements. There’s a long history of companies engaging in greenwashing by applying a veneer of environmental goodness to get a public relations boost. What’s more, it’s clear that some company pledges are driven by pragmatism, while others are at least partly the result of boycotts or pressure from outside groups to change destructive practices.
Whatever the reason, there were signs of a shift among companies that have the largest role in worsening climate change by profiting from the felling of carbon-ingesting trees, or letting greenhouse gases escape as part of their operations.
Two dozen palm oil companies and traders added their names to the pledge to help halt the advance of deforestation by 2020. And several oil and gas companies broke rank from the industry’s largest companies by agreeing to change their drilling and production practices to count and cut their emissions of methane, a potent greenhouse gas.
Such corporate commitments are increasingly demonstrable and many of them now include verification measures. More than 5,000 companies now formally disclose details about emissions and actions on climate change to CDP. The company analyzes and grades performance on behalf of pension funds, Goldman Sachs, BlackRock and others that together control $90 trillion in assets.
Further, many company executives were pledging to use their muscle to convince others to follow their lead, said Eliot Metzger, senior associate at the World Resources Institute. “That conveys a deeper commitment, and that they really do see the risk and they really do see the opportunity.”
Those messages were part of a week-long show of force that included the marchers, faith leaders, public officials and others. All of them were there to rally support for a global agreement among nations that would include deep cuts in fossil fuel emissions as well as reliable commitments to renewable energy and low-carbon economies.
The focal point was the Sept. 23 United Nations Climate Summit and the more than 100 world leaders who converged on New York to attend it. The event was meant to galvanize climate treaty negotiators as they lay out a draft agreement and their own climate commitments in the 15 months before final negotiations take place in Paris in December 2015.
In the years since the UN Framework Convention on Climate Change began the push for a comprehensive climate treaty, researchers have refined the science of global warming and the current and future dangers have become increasingly clear. In previous negotiations, nations pledged to reduce carbon emissions and agreed to limit warming to 2 degrees above pre-industrial levels—a conservative benchmark thought to offer the world a chance of avoiding catastrophic effects.
But concrete action within many nations has been either too slow or nonexistent. Governments and companies have long linked the use of coal, oil and natural gas with economic growth and prosperity, and many world leaders therefore view the push for emissions cuts as a call for deprivation.
Metzger of the World Resources Institute said that’s what made last week’s blitz from business so important.
“There were a lot of heads of state leading up to this [summit] that were very curious about what companies were going to say because they needed talking points for their speeches…so they could say, look, this isn’t going to kill jobs, this is something that a lot of companies are behind, and this is, in a lot of cases, good for the economy,” Metzger said.
He paraphrased comments from Ikea CEO Peter Agnefjall, who urged an audience of government leaders to act boldly on climate change, reassuring them, “You take that ambitious step, and we’ll be there to support you. We’ll be there behind you.”
That kind of message, Metzger said, “helps a lot for those heads of state who feel like they’re putting their neck out there with industry if they’re going to regulate carbon or put a price on carbon.”
It didn’t hurt to feature an appearance by Apple Chief Executive Tim Cook, who holds rock star status among electronics consumers and happens to run the world’s most valuable company. Many noted that his presence was particularly significant because Apple was almost simultaneously launching sales of its new iPhone.
“You always make time for the [things] that are truly important, and this is truly important for our company, for our planet, our employees, our customers—everyone,” Cook said. On the issue of climate change, he added, “the time for inaction has passed.”
Apple owns a massive solar farm and 94 percent of the energy used in its data centers and corporate operations comes from renewable sources. What the company gets in return is secure power at a stable and predictable price. Cook said the company is now working on improving the operations of its manufacturers and suppliers.
The important thing is “not accepting that there’s a trade-off between the economy and the environment…what we’ve found is that both are doable,” he said. “If you innovate and you set the bar high, you will find a way to do both—and you must do both because the long-term consequences of not addressing climate are huge.”
Mindy Lubber, president of Ceres, a Boston-based non-profit that brings together networks of investors on corporate sustainability issues, summarized the week this way: “More than ever before, the business community was loud and clear about the urgency for climate action, making strong commitments to reduce their own impact while advocating for strong national and global policies to tackle climate change.” Taken together, she added, “This is a huge step forward.”
Here’s a snapshot of the business-related activity during this year’s Climate Week.
Global Investor Statement on Climate Change. The statement, signed by 348 global institutional investors representing $24 trillion in assets, urges governments to forge an ambitious climate agreement in 2015 and increase support for low-carbon policies and technologies in ways that can be relied upon over the long term. In addition, the statement calls on leaders to remove fossil fuel subsidies, and create “stable, reliable and economically meaningful” carbon pricing. The coalition cites the risks from today’s “gaps, weaknesses and delays in climate change and clean energy policies,” and pledges to work with companies in their investment portfolios to improve reporting and performance on climate change issues. The group published a report outlining the actions being taken by financial institutions to support climate change efforts.
Support for carbon pricing. A statement of support for the World Bank’s initiative for imposing a price on carbon in every country, backed by more than 1,000 businesses, as well as 73 countries and 11 states and provinces. It does not include the United States. A summary of carbon disclosures from CDP showed that 150 companies are using carbon pricing to drive decisions about investments in projects that reduce greenhouse gases.
We Mean Business Coalition. The umbrella group, a partnership of organizations and investor coalitions, was formed “to amplify the business voice, catalyze bold climate action by all and promote smart policy.” The people involved believe the world must shift to a low-carbon economy, and want to highlight the economic opportunities the transition provides. To that end, the group highlighted the achievements of Apple and others during climate week and released a report that lays out recommended actions for businesses and government leaders.
RE 100. An initiative whose backers pledge to derive 100 percent of their company’s power from renewable sources by 2020. The group includes the likes of Swiss Re, BT, and Philips. Supporters pledged to recruit at least 75 other companies to the cause.
New Climate Economy report. A 72-page report that outlines the economic risks of climate change, the transformation that’s needed and the steps that developing countries and others can take to restructure their economies. It includes a 10-point Global Action Plan, and was produced by the Global Commission on the Economy and the Climate, led by former President of Mexico Felipe Calderon, in partnership with a host of policy and environmental groups.
CDP S&P 500 Climate Change Report. The 2014 version of CDP’s annual report on climate action highlighted the relationship between climate action and profitability. CDP found that companies that lead rankings for climate action and disclosure also deliver 67 percent higher returns on equity, on average, than companies that are not disclosing. The report also found that corporate emission reduction projects are delivering a 33 percent return on investment, on average—which is far higher than the average corporate return on investment.
Fossil fuel divestment. The Rockefeller Brothers Foundation, which derived much of its historical wealth from oil, pledged to divest its funds of fossil fuel investments.
Green investments. Several events highlighted the estimate that moving to a low-carbon energy system will require $1 trillion per year of low-carbon energy investments over what was already planned. Recently, the $188 billion California State Teachers’ Retirement System (CALSTRS) said it would raise its investment in clean energy and technology to $3.7 billion from $1.4 billion over the next five years. It could increase that to $9.5 billion with certain policy changes.