The Private Sector and Climate Change

Over the past few decades, climate change has shifted from being considered as a side-line issue to being recognised as a serious development challenge. There have been significant accomplishments during this timeframe – global carbon dioxide emissions have stayed broadly flat for the past three years, for example – but there is still some way to go before we achieve the level of international commitment needed to avoid the forecasted catastrophic climate events.

While temperatures continue to climb – this year’s weather has beaten high temperature records in some regions, and 2014, 2015 and 2016 were the hottest years on record – avoiding dangerous levels of climate change is still considered possible. The authors of a letter published in the journal Nature in June 2017, including former UN climate chief Christiana Figueres and Hans Joachim Schellnhuber of the Intergovernmental Panel on Climate Change, suggest the next three years will be crucial. They calculate that if emissions can be brought permanently lower by 2020, the temperature thresholds leading to runaway irreversible climate change will not be breached.

This will require unprecedented effort and coordination, not only from governments, but also from businesses, citizens and scientists. The Paris Agreement, adopted by 195 countries at the Paris climate conference (COP21) in December 2015, was a starting point. It laid out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C and prompted dialogue and action directed at the issue.

At the 23rd session of the Conference of the Parties (COP23) held in November 2017 in Bonn, Germany, American state bodies, cities and companies that make up more than half of the U.S. economy declared support for the Paris Agreement, in recognition of the importance of climate-change mitigation and adaptation measures.

This kind of private-sector engagement with climate change demonstrates that the business of green economy is opportunistic and valuable to society at large. The American companies supporting the Paris Agreement are undoubtedly driven by revenue, but they also make a clear business case for the return on investment climate change actions make to the bottom line.

There is a growing understanding in the private sector that climate change mitigation and adaptation offers more than business opportunities – it supports business survival. Without action, the effects of climate change will be disastrous and that will impact all of humanity, and a corporate level, businesses bottom lines. If global temperatures jump four degrees by 2100 as projected, droughts, flooding, and storms will wreak financial havoc, affecting businesses of all sizes.

A study by CitiGroup found that excessive warming could shave up to US$72 trillion off the world’s gross domestic product. Climate change leaves no-one untouched – from individuals to businesses, societies and countries.

The private sector played a pivotal role in making the Paris Agreement happen, and it holds the key to maintaining momentum and fostering much-needed progress as we move forward. While it is necessary for world governmental collaboration to build and populate the policy framework, the private sector is an equally important piece of the climate change puzzle.