The Decarbonization Imperative: An Executive Primer explores six climate uncertainties shaping the future and driving corporate decarbonization and six essential responses that companies need to pursue to navigate the transition to net zero.
The private sector is accelerating decarbonization efforts, in part by setting aggressive climate commitments. Greater ambition should be welcomed given the scale of the climate crisis. However, doubts are emerging over whether these commitments will produce the decarbonization required to achieve the ambitions enshrined in the Paris Agreement. To improve performance and deliver on their promises, companies will need to rethink their business approach.
Six uncertainties define the environment in which companies must do this recalibrating. These uncertainties will be familiar to many readers, although their intricacies and interconnections may not be. As such, this primer explores the six in combination to help companies better respond to them.
- Financial Risk & Opportunity: Companies must broaden their knowledge of climate-related financial risks and the opportunities that the net zero transition presents.
- Shareholders: Shareholders continue to drive decarbonization, however, they themselves now face climate and broader ESG critiques.
- Stakeholders: With stakeholders increasingly demanding climate action, companies are exposed to both greenwashing and greenhushing risks.
- Policy: New polices and regulations require corporate response, but still do not do enough to enable and accelerate action to the level required to achieve global climate goals.
- Geopolitics: While disruptive geopolitical events will boost fossil fuel demand in the short-term, they will accelerate the energy transition in the long-term.
- Technology: As low carbon technologies advance ever-more rapidly, companies must integrate them into operations and quicken the pace at which they develop new solutions.
Because uncertainty complicates action, companies must prepare themselves to navigate unpredictability as they decarbonize. This primer helps with navigation by presenting a blueprint for climate action across six essential response areas.
By adopting this blueprint and its recommendations, companies will be better equipped to implement comprehensive and effective decarbonization plans that will support the low carbon energy transition and improve their own performance. Adoption will not be easy given the enormous scale of transformation required for the economy and individual businesses, but companies must act, both to address climate change broadly and to help ensure their own future success in a marketplace set to be transformed by the transition to a net zero economy.