What The United Nation’s IPCC Report Means To Business
The IPCC has sent a “code red” to policy makers with its latest report on climate change. But it’s business leaders, not policy makers, who can act most swiftly and effectively. Here’s how.
Back in the mid-’90s, when stories true and untrue first started circulating around the Internet, one apocryphal story of a radio conversation between a U.S. naval ship and Canadian coastal authorities became particularly popular. It went like this:
Canadians: Please divert your course 15 degrees the South to avoid a collision.
Americans: This is the Captain of a US Navy ship. Recommend you divert your course 15 degrees the North to avoid a collision.
Canadians: Negative. You will have to divert your course 15 degrees to the South to avoid a collision.
Americans: This is the aircraft carrier USS Lincoln, the second-largest ship in the U.S. fleet. We are accompanied by three destroyers and three cruisers. I demand that YOU divert YOUR course 15 degrees North, or measures will be taken to ensure the safety of this ship.
Canadians: This is a lighthouse. Over.
On August 9, the United Nations report about climate change made it clear that humanity is on the path of disaster, and that the planet cannot and will not divert its position.
The IPCC report should be targeting business, not just policy makers
On that date, the Intergovernmental Panel on Climate Change (IPCC), the UN agency responsible for assessing climate change, issued a dire message to policy makers. It sounded the “code red for humanity,” predicting, with high confidence, that global warming will exceed the 1.5°C (2.7°F) Paris targets, maybe even as early as 2030.
What’s odd is that the IPCC targets policy makers-even though business has played a major role in creating the climate crisis and is best positioned to fix it.
Too few commentators are talking about what the IPCC report means for business. Let’s fix that.
How the IPCC report is relevant to business
The key message in the IPCC report is that the world has warmed by approximately 1°C (1.96°F) since the end of the 1800s, and that increase will likely exceed 1.5° in the next 10–20 years.
For many, 1.5°C is a small number-and not an alarming one, especially if they don’t enjoy winters. After all, a rise of 1 degree over a span of more than 100 years isn’t much. And a mere half a degree warmer than where we are now doesn’t seem like a big deal.
But it is. That’s not because of the average rise in temperature, but because of the changes triggered at the ends of the temperature range. These extreme ends will not be just fractions of a percentage higher than they were: they are likely to shatter records and set off a cascade of events that take us past ecological tipping points.
You know that tipping point phenomenon in rush hour, when just a few more cars stop the whole flow of traffic. Or the feeling when your boss asks you to do just one more thing at a point where you have no more bandwidth.
Everywhere, there will be more extreme hot, dry, or wet weather-and sometimes all three in consecutive order-as we reach those thresholds.
The hottest temperature ever recorded in Canada was 49.6°C (121.3°F), on June 29, 2021, in Lytton, B.C. That beat the previous record of 45°C (113.0°F), set in 1937, by 4.6°C (8.3°F )-far more than the 1°C higher average temperature. What’s more, just days later the town was ravaged by a wildfire that burned 90% of it to the ground.
Just in case you think that the records are only being set in Canada, this year is also marked by the hottest verifiable temperature on Earth in Death Valley in California at 54.4°C (129.9°F), and the hottest European record at 48.8°C (119.8°F).
These massive temperature fluctuations are directly related to extreme weather events (e.g. heat waves, floods, droughts). What’s more, these extreme temperatures (as well as the steady slow temperature increases) increase both the costs and risks to business. That means higher costs for insuring and replacing infrastructure, greater likelihood of supply chains and services being disrupted, and more fluctuations in the demand of goods and services.
Where climate change was once a distant and seemingly irrelevant business issue, it now presents urgent and material risks.
Climate change is becoming such salient to shareholders and asset managers that businesses everywhere are committing to net-zero carbon emissions. These businesses include captains of industry such as Microsoft, Google, Facebook, Amazon, Apple, Walmart, and Dow. Even climate denier Exxon is considering setting net-zero carbon targets.
How business can respond to “code red”
Businesses create greenhouse-gas emissions in two major ways. First, they create, sell, and use physical products in normal business functions. Second, they use energy in running their business.
The more that carbon-by way of oil, gas, and coal-is taken out of the ground to produce these physical products and energy, the more the carbon moves into the atmosphere. The massive amount of carbon that took millennia to form is being unlocked in just a few decades.
So the answer to the climate crisis is somewhat simple: businesses need to reduce the physical material and energy they produce and use.
Although the answer may be simple, the execution is not. The purpose of business is to generate profit, which inherently requires it to use and sell more product and energy, which contradicts its need to keep carbon in the ground.
So, what is a business to do?
It means rethinking how business is done. This is not simply about building efficiencies and lowering outputs: it’s about changing how business is done, and with whom. The costs will be higher in the short term, but it will spark innovations that will not only avert planetary disaster, but also build business resilience.
Here are some ways you can do this with your business.
1. Replace your fossil-fuel-generated energy with renewable energy. Changing the source of energy often requires finding a new energy provider or installing your own renewable energy sources. Be sure to not only consider energy used in production or commercial processes, but also the energy used in the transportation of employees and the movement of your product.
2. Use less stuff in your business. An easy way to reduce your use of material product is to focus on your waste, not your inputs. Focusing on waste stimulates product, process, and packaging innovations.
3. Transform the products you sell into services. If you are in the business of selling consumer goods, consider transforming those goods into services. For example, instead of selling computers, consider leasing them. Not only will you generate an income stream, there is income earned in repair services.
4. Source from companies committed to net zero. By procuring your inputs-for either your industrial or commercial processes-from suppliers who commit to carbon targets, you have a better story to tell your customers and contribute to changing the system production and consumption.
The IPCC report is written for policy makers, but the climate disaster can only be diverted if business is involved in the discussion and the action.
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Originally published at https://www.forbes.com.
