INVESTMENTS to 1.5 ° C – a level at which the risks and impacts of climate change are much lower . According to the Intergovernmental Panel on Climate Change ( IPCC ), a 2 ° C temperature increase would exacerbate extreme weather , rising sea levels , diminishing Arctic sea ice , coral bleaching , and the loss of ecosystems . The COP26 summit in Glasgow last year was encouraging as we saw the UK , US and EU set out nearer term targets for carbon emissions reduction targeting the coming decade . Their aim was to show nearer terms targets that they could be judged on but also leadership so that emerging markets would follow . What did follow were the leaders of major emitting countries such as India , Brazil and Vietnam affirm their own targets for emission reduction and for stopping deforestation .
A time for ambition – and action Transformational action can no longer be postponed . The UN estimated in 2019 that global emissions must fall by 7 % a year on average from 2020 to 2030 to get on track to achieve the 1.5 ° C goal . By 2050 , we must achieve net zero greenhouse gas emissions worldwide . Meeting this challenge demands deep and far-reaching reductions in emissions across all aspects of the economy . Looking at the primary sources of greenhouse gases , we can see where solutions can have the greatest impact . There are some elements of the climate equation – reducing food waste and flying less often , for instance – that we can address individually through decisions in our daily lives . Lifestyle choices can only cut emissions so far , though . As the world population continues to grow , sustainable solutions need to be found .
Altering the course of climate change demands that we find and embrace alternative energy sources and more efficient ways of producing goods and services . This will require vast investment . The International Energy Agency estimates that around US $ 1.3 trillion a year needs to be invested if UN Sustainable Development Goal 7 – affordable and clean energy for all – is to be achieved by 2030 .
Investing in the solutions With growing recognition of the urgency of the challenge , we believe there are compelling long-term opportunities for companies that are actively accelerating the shift to a low carbon economy . These companies might be “ pioneers ” – whose products or services have a transformational effect on combatting climate change – “ leaders ” – which spearhead and mainstream sustainability in their sectors – or “ enablers ” – which provide the tools for others to deliver climate solutions . We can look at three key areas where companies can have a positive impact in the fight against climate change . The first is where activities or innovations directly cut greenhouse gas emissions . Alternative energy is an obvious sector for investment . Replacing carbon-intensive fossil fuels with green electricity , harnessed from the wind and sun , would make the single biggest contribution to meeting global climate goals . Less obvious investment candidates , perhaps , are components and systems that improve energy efficiency , thereby reducing emissions . The second group of impactful companies are those whose solutions make industry and transportation – which account for 35 % of emissions combined – less polluting . This may include companies whose technologies underpin the future of mobility or energy storage . Then there is also the power we all have to keep waste to a minimum and recycle the products we use in everyday life . The concept of a ‘ circular economy ’ where we reduce , reuse and recycle everyday products to avoid the carbon emissions of them going to landfill and from the requirement to produce virgin materials . There are many companies now that have a ‘ closed loop ’ business model where they collect waste and then repurpose it for re-use . In most cases this is a cheaper alternative and provides for a strong business advantage .
Addressing the challenge Now that we have clear goals to reach net zero in 2050 , we can see the risks of inaction are mounting . We need to understand how investments impact – and are impacted by – the risks and opportunities associated with climate change . Where companies do not act , they will not only expose themselves – and their investors – to possible financial losses , but they will miss the opportunities for success that lie in tackling this challenge . As Mark Carney , former governor of the Bank of England , said the transition to net zero is “ creating the greatest commercial opportunity of our age ”. It is estimated that over the coming decades the UK is going to need £ 1.5trn and the EU € 10trn (£ 8.55trn ) to start hitting their long-term carbon targets 1 . With government coffers depleted post the pandemic stimulus , the commercial sectors will have a vitally important role to play . There does not need to be a trade-off between profits and the planet . Where companies can successfully deliver solutions that mitigate climate change , their shareholders can aspire to achieve sustainable financial returns and contribute to a demonstrably positive impact for the planet and its people .
1 https :// on . ft . com / 2Qj4HsI
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