To avoid catastrophic climate change, the world needs to reduce to 'net zero' emissions of greenhouse gases within the next three decades. This is the message from climate science, and it is one that business has woken up to. Indeed, in a survey of over 300 multinational companies, two-thirds said the latest report by the UN's authority on climate change, the IPCC, had influenced their company to raise its ambition.
But more than the science–our research helps confirm that climate change is impacting business now. Seven in ten companies say availability of inputs is being curtailed owing to climate-related events. Adding those who have experienced rising costs of supplies, and the share witnessing climate-related supply chain disruptions rises to almost nine in ten. For more than six in ten companies, climate change is also having a direct impact on their operations.
The critical question is whether it will be enough. The bulk of many companies' emissions occur in the supply chain–indirectly, in how inputs are sourced and shipped, and how products are used and then discarded. For now, most companies are targeting emissions from their own operations, but there is growing focus by leading companies, investors and advocacy groups on value chain emissions.
This means that even smaller companies need to prepare for net zero. Yet our survey indicates that ambition drops in line with company size. Smaller companies face greater financing constraints and may lack the knowledge and tools to measure their impact and achieve deep reductions. All the more important that policies, too, are aligned. Executives urge governments to set the right standards and incentives, and put a price on carbon to encourage faster progress–something an overwhelming majority are in favor of. Though an increasing number of countries are setting net zero goals, the world is still far from where it needs to be. Now that the business case is clear, it is surely time for all players to act.