As global leaders gather in Davos this week businesses and investors are being urged to put themselves first—by accelerating their action on climate change.
A new report from the World Economic Forum (WEF) and Boston Consulting Group titled, The Net Zero Challenge highlights the business imperative of tackling climate change.
All 20-plus CEOs and 14 climate experts interviewed for the report highlighted the need to accelerate climate action—both as a moral imperative and as a business opportunity.
The report examines ways in which climate action can be seen as a source of competitive advantage for companies for example as a means of reducing costs by increasing efficiency, fulfilling the needs of increasingly climate-conscious customers, and attracting the best possible talent.
“Climate action is still too often perceived as a cost or a tradeoff with other priorities,” said Michel Fredeau, a BCG senior partner and leader of the firm’s work in climate and the environment. “It should be viewed as an opportunity for businesses, countries, and individuals to create an advantage in building a better, more sustainable world.”
The report argues companies in all sectors can reduce their emission intensity at little or no cost by accelerating the switch to renewable energy, improving energy and process efficiency in their own operations, and leveraging their buying power to ensure that their suppliers decarbonise.
These moves will futureproof businesses against growing external pressure from the public, regulators and investors, the report argues.
In terms of risk and opportunity, the report states that businesses should be accelerating efforts to reduce the carbon intensity of their operations and that of their supply chains, to manage their climate-related investment risks, and to innovate to refocus their business models for growth in a decarbonised world.
The report notes there has been little unified action on reducing emissions in the four years since world leaders signed on to the Paris Climate Agreement and argues companies must innovate to realise opportunities from low-carbon business models.
“A Paris-compatible pathway implies a significant, sometimes existential, transformation for many companies. Innovation is needed, and many businesses can look for growth in new markets for lower-carbon products and services,” said Cornelius Pieper, a BCG partner and coleader of the firm’s Center for Climate Action.
The report also calls for accelerated unilateral policy action from governments to set the context needed for companies to decarbonize, such as by implementing carbon pricing and other sector-specific regulations and incentives.