At the end of 2018 the outlook on global readiness for climate change is not very rosy, but there is still time for business to be a major contributor to climate solutions. While the UN Sustainable Development Goals (SDGs) are diplomatically negotiated agreements, they have not reached the level of laws.
The Good News
There is good news to share in climate economics and related to the cost of doing business. Whereas the SDGs represent political and diplomatic compromise, the economics paint a more optimistic story. There are three drivers that will enable business readiness.
- Costs for solar and wind power have declined – benchmarks for solar fell by 14% and wind by 6%. Although installations in China may be slowing, Spain, California and Queensland, Australia are all aiming for net zero emissions. The story is similar for wind.
- The transportation sector is also a source of good news. Emissions are also being reduced by charging infrastructure and increased automobile lithium battery production have enabled the increased sales of EVs. Clean technologies are now reaching levels of maturity for mass distribution.
- There are financial reasons that businesses are looking to reduce carbon emissions. Increasingly, investors are rewarding businesses that show commitment to ESG (environmental, societal and governance) activities and reward those companies that demonstrate excellence in these areas. Companies now need to disclose potential climate related threats in their financial filings. Failure to do so could result in legal proceedings
The author suggests that six or seven year business cycles are a useful way to look at how these trends will continue. If we look at sectors, LED lighting, for instance has gone from less than 5% of global markets to over 40%. EVs in Norway saw growth starting at 5% to 50%. Opportunities abound!
Given the Intergovernmental Panel on Climate Change Report SR15 and the focus on 2030, we have 2 business cycles to address the climate challenge. It’s up to us to determine at the end of these two cycles whether we’re living on borrowed time because we’ve used up our carbon “budget” or we’ve managed to reverse carbon emissions and create a habitable planet where our grandchildren’s children can thrive. Is your company ready?
We enable change leadership. Sustainability is an area where we see leaders grappling with starting and/or sustaining efforts. Get in touch if your company needs a journey partner to prepare for your next two cycles.
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