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The year ahead in climate action looks bold, promising

Business

Buckle your seatbelts. A year of accelerating climate action has begun as a new administration takes office. Government leaders, investors and companies are all forging plans to slash global greenhouse gas emissions and scale up climate ambition. And, they aim to do so in ways that benefit all people, not just a few.

“The race to net zero is on,” Kristen Lang, senior program director of the Ceres Company Network said during a recent Ceres webinar on sustainable business leadership. She noted that as of last fall 1,500 companies have committed to reach net zero emission by 2050 or sooner – even as major investors pledged the same for their portfolios and the administration set its sights on net zero emissions economy-wide by then.

It’s not a moment too soon. The urgency of the climate crisis was in stark display last year as tens of millions of acres burned up in wildfires, a record 30 hurricanes pummeled the Atlantic and Gulf coasts and global temperatures hit a record high, tying with 2016 and bringing global warming to within striking distance of 1.5 degrees Celsius. It was all a reminder of the diminishing window of time that scientists say we have to slash GHG emissions to zero before the effects of climate change become so catastrophic they’d be irreversible.

Lang and other Ceres experts on the webinar spoke about the sustainability trends they see emerging in 2021. Their overriding message was clear: the climate emergency is finally understood, and if we act quickly, we still have time to do something about it.

President Joe Biden and Vice President Kamala Harris have put mitigating climate change and building back better and more justly from the pandemic-battered economy at the top of their to do list. On day one of taking office, Biden signed a declaration to return the U.S. to the Paris Agreement as well as several executive actions on climate, including ones to reverse the rollbacks on vehicle emissions standards and to revoke the permit for the Keystone XL pipeline.

“The U.S. is back in,” said Anne Kelly, Ceres vice president of government relations, referring to the Paris Agreement. “The Biden administration promises to prioritize federal climate policy,” she continued, “and we have to back Biden.”

Kelly urged company executives and investors to be ready to support the new administration. “When Biden acts it is bipartisan,” she said, and underscored how voters of all political persuasions and businesses from nearly every state favor strong climate action, based on surveys and exit polls.

“President Biden has a mandate from voters and from the general population to act on climate change,” Kelly said. Indeed, Pew Research found shortly before the election that 66% of all voters named climate change as an important factor influencing their choice for president. Kelly expects the U.S. will ratchet up its commitment to the Paris Agreement as other countries have, forecasting a U.S. pledge of a 45% to 50% reduction of emissions by 2030 from a 2005 baseline, up from the original 28% reduction by 2025 pledge made in Paris.

“We are going to be mobilizing businesses to support this president in his actions,” Kelly said, as the administration works towards achieving a net-zero emissions economy by 2050 or sooner, building out green infrastructure and alleviating the disproportionate burden of pollution on marginalized communities.

Yet the change in the air is hardly just from Washington.

“Investors are really focused on this net-zero movement,” said Rev. Kirsten Snow Spalding, senior program director of the Ceres Investor Network. In fast succession, more investors are vowing to align their portfolios with a net-zero emissions economy by 2050 or sooner. In December, 30 global asset managers with a combined $9 trillion in assets under management made that commitment when they launched the Net Zero Asset Managers initiative. That same month, the world’s largest asset manager, BlackRock, announced it would urge 1,000 of its portfolio companies to align their business models with swiftly reducing emissions.

Spalding said the year ahead will bring further ramping up of investor engagement with companies, as Climate Action 100+, the world’s largest investor initiative with 545 global investors managing a combined $52 trillion, begins benchmarking 167 global companies that are among the world’s largest emitters.

All this interest in helping companies tackle climate change is good for companies. Numerous recent financial industry studies determined that companies with positive environmental, social and governance (ESG) metrics are creating value and performing better financially than their industry peers. This research finally puts to bed the persistent misconception that operating sustainably distracts or detracts from strong financial performance, demonstrating that in fact the opposite is true.

So you can bet the private sector will be moving fast in 2021.

Movement that is beginning to be bolstered by regulatory action. Out of the shadows of the last days of the Trump administration came evidence that regulators, too, are finally seeing the inevitable truth about climate risk. The U.S. Federal Reserve in December joined the Network of Central Banks and Supervisors for Greening the Financial System, the global climate club of 75 central banks, after the Fed determined that climate change is a potential threat to the stability of the financial system.

In fact, nowhere in the current “race to net zero” is there room for complacency.

Lang noted that within the flood of net-zero commitments we’re also seeing a lot of confusion with companies defining net zero in different ways and aiming for varying timelines. “With that confusion there is also risk–risk of net-zero becoming the latest trend and seen merely as a communications mechanism, but without accountability,” she warned.

To help companies sort through what exactly it takes to reach Paris-aligned net-zero climate goals and other sustainability targets is why Ceres last fall introduced the Ceres Roadmap 2030. This 10-year action plan lays out a bold vision for companies to help stabilize the climate, protect water and natural resources, and build a just and inclusive economy. To be effective, companies need to set short and medium-term targets to reduce emissions that are based on the latest science–and couple them with longer term investment in carbon removal–or they’ll never reach longer term net-zero goals.

Lastly, there is another very crucial trend emerging from the difficulties of 2020–the interconnectedness of the challenges facing both people and our planet. The pandemic, failing social safety nets, the climate crisis, degrading watersheds and ecosystems and inequities of who gets to breathe clean air are all intertwined.

“If we fail to address one of these issues, it is going to exacerbate every other issue,” said Lang, predicting that sustainable business leadership in the coming decade will be seen in how companies design and implement strategies and solutions at the intersection of social and environmental impact.

Lang observed, “While a defining characteristic of 2020 was extreme disruption, our hope is that 2021 will instead be marked by preparedness, resilience, innovation and true business integration.”

In the year ahead, our elected leaders, investors and companies all have their work cut out for them.

This article was published by Barbara Grady, ceres.org.

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