Despite the impressive growth in renewable energy in the last few years, the global energy system has remained unchanged. In 1994, about 80% of the global primary energy supply came from fossil fuels; this figure has remained unchanged in 2019. The number of the energy poor has also remained constant: about 2.8 billion people still use polluting solid fuels to cook food. This has happened largely because countries have failed to take leadership on climate issues, and UNFCCC doesn’t have the tools to drive fast global collective action to combat the climate crisis.
The IPCC’s special report makes it clear that to limit warming at 1.5°C, CO2 emissions will have to be reduced by 45% by 2030 from 2010 levels and reach net-zero by 2050. This means that we just have a decade to turn around the energy system and cut emissions drastically. Can the UNFCCC alone deliver on this? Can we solely rely on governments to deliver 1.5°C? The answer, unfortunately, is no to both questions. It is now clear that without sincere commitments from corporations, we will not be able to meet our climate goals.
The world’s top corporations have more economic prowess than governments. They also are responsible for the lion’s share of greenhouse gas (GHG) emissions. Corporations, therefore, are part of the problem, but they are also the solution. Consider these facts:
- Just 100 companies have been responsible for 71% of the global GHG emissions since 1988, the year IPCC was established.
- More than two-thirds of the richest 100 entities on the planet are corporations, not governments. In fact, the revenue of the top 10 corporations is higher than the revenue of the bottom 196 governments combined.
Corporations, therefore, have the resources to transform their businesses into zero carbon by investing in renewable and other zero-carbon technologies and by developing products and services with small carbon footprints. The question is: will they do it voluntarily, or should there be mandatory regulations for it?
There are indications that larger corporations are moving towards decarbonisation because they consider climate change as a grave threat to their business continuity and survivability. For example, a quarter of Fortune Global 500 companies have made a public commitment to become carbon neutral by 2030 or meet a science-based emission reduction target.
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It is also a fact that business needs clear rules and regulations for a level playing field. We do not want a world where some corporations freeride, while others become uncompetitive. So, regulations will have an important role to play to push the laggards to climate action. But here also we should recognise the limitations; regulations are generally the least common denominator.
Chandra Bhushan is the CEO of the International Forum for Environment,
Sustainability & Technology (iFOREST).
I, therefore, believe that both voluntary action and regulations will not be sufficient; we will have to change the charter of corporations to make climate change a fiduciary duty of the board of directors and hold them accountable for polluting the climate. This is the only way to make companies commit sincerely to climate goals.
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By Chandra Bhushan