Too often in the past, the business community has been accused of ignoring the climate crisis. At best, the private sector has been seen as too slow in embracing new initiatives which would reduce greenhouse gas emissions and help reverse the most dangerous effects of climate change.
But it's now increasingly clear that business must be pivotal in bridging what the world's leading climate scientists tell us is necessary to limit global warming to +2°C and what action national governments are pledging to take.
Without further business involvement, the agreement expected from COP21, the United Nations' Climate Conference in Paris at the end of the year, could be insufficient.
Governments from around the world are beginning to announce their Intended Nationally Determined Contributions (INDCs) - the actions they intend to take to stave off the climate crisis. Whilst these are more ambitious than many expected, there remains a significant gap between emissions reductions that scientists say are required and emissions reductions that would result from these actions. Ban Ki-Moon called a Special Climate Summit last September in New York where he urged civil society, business and cities to take concerted action to close this gap.
There is now widespread consensus within the business community that decarbonation of society is compatible with continued economic growth and human development, as they see commercial opportunities emerging from the transition to a low carbon economy.
Many businesses are now taking direct action themselves to demonstrate that it's not all talk, such as:
- Setting carbon emission reduction targets in line with science and calling for a global long-term goal to stimulate low carbon investment;
- Implementing energy efficiency measures to reduce energy consumptions and related CO2 emissions;
- Procuring a significant share of their power from renewable sources to drive decarbonation of the power sector; and
- Calling for an effective price on carbon to send the right signals to the market and drive low carbon decision making.
Of course, some sectors may lose out, but even the fossil fuel industry understands that if it takes action early enough and anticipates the transition, it too can become a winner in a reoriented economy.
But increasingly, business is reaching the limit of what it can do on its own. Most are now looking to work with governments and international policy-makers to define smart, ambitious climate policy that creates markets and drives investment.
Electric or hybrid vehicles remain more expensive than diesel or petrol cars for the time being; but they have clear environmental advantages and smart policies can stimulate their markets. Disruptive innovations are key, especially to make energy use smarter, and policies can stimulate them. Energy efficiency in existing buildings relies in most cases on cost efficient measures that deliver many direct and indirect benefits, but it is unlikely to happen unless owners are compelled to do it when they refurbish buildings. Solar or wind power plants were once more expensive and risky than coal, but are now able to compete with conventional power options in many parts of the world - stimulated by growth in countries where policies recognize the damage coal does to the environment. Where policies have included carbon pricing, the economy has decarbonized faster than in other countries.
The challenge remains immense. Year after year, we need to shift approximately 10% of the world total investment to new energy sources and to energy efficient assets. But it is achievable with appropriate guidelines and regulations from governments to gear the world economy along this new course, providing these policies have sufficient credibility to support the business case for ambitious action.
There is willingness to act, collectively and in partnership with policymakers on these frameworks. This is why major business networks from across the world have gathered forces and together invite the policy makers of the world to join in this dialogue at the Business & Climate Summit in Paris, on May 20-21, the key business milestone on the road to COP21. It is only by coming together and showing that a majority of business is now on this side that we can shift direction, respect the +2°C limit and create the new, prosperous low-carbon economy of the future.
NB: This piece was originally published in French in Le Monde.