Code Red

Five Takeaways from Climate Science for Business

The new report from the Intergovernmental Panel on Climate Change (IPCC)1 confirms in unequivocal terms what we have largely known for many years: the changes in sea, land and atmospheric temperatures are caused by human action and the outlook is alarming. The report’s one ray of hope is that if we act with bold strokes immediately, we can avoid the worst and set a recovery path.

“There is one key takeaway from the AR6 WG1 and that is: we know enough.” 2
Dr Joeri Rogelj, Director of Research(AR6 WG1 Chapter 5 lead author)Grantham Institute for Climate Change, Imperial College London

Key implications for business

1. Nowhere to run to, nowhere to hide

Companies now need to get seriously transparent about reporting climate related issues that affect their business. Their investors will set this scientific report alongside the news footage of wildfires and floods destroying lives across all five continents of our planet. This comes along with more and more government announcements on net-zero targets. Climate risk is known, material and actionable.

This month’s report represents only one third of the full IPCC Assessment Report 6 (AR6). We can expect more hard-hitting facts when Working Group II reports in February 2022 charged with assessing impacts, adaptation and vulnerability, and Working Group III reports on mitigation of climate change in March 2022.

The two forthcoming components of the IPCC’s latest review of evidence are likely to add further kicks in the backside to any who are trying to dodge, delay or deviate from the implications of climate change.

An opinion column in the Guardian by climate scientist Prof Simon Lewis is titled: “Let’s say it without flinching: the fossil fuel industry is destroying our future.”3

2. Offset your offset ambitions

Net-zero is a contested term, and compensating with purchase of “carbon-avoidance” offsets is being called into question from many quarters.

Even in the area of real carbon removal from nature-based activities, controversies exist. A new Oxfam report4suggests that carbon removal using the nature-based solution of tree planting would be required on a scale which would use so much land, food security in developing countries might be put under threat. We know that peatland, mangroves, sea grass and seaweed also rank among the nature-based solutions for carbon removal, but the lesson is clear: reducing emissions from your operations and value chain comes first, while offsetting is the option of last resort.

The IPCC Working Group III report on mitigation of climate change will be our most authoritative review of carbon removal options as part of a climate action strategy.

It is likely that this March 2022 report will look more closely at the value of offsets and will have something to say about the wishful thinking on how GHG removal can balance out GHG emissions reduction on a large scale. Companies delaying action on serious emissions reduction, banking on techno-fixes and large-scale compensatory measures and offsets may need to be prepared for the sobering impact of the science – that emissions reductions must come first.

3. Adapt to survive

Investors, lenders and insurers -- whether or not they goline-by-line through the 3,000 pages of the full IPCC report -- should now understand that climate change hasjust moved further up the ‘likelihood’ and ‘impact’ scales on their risk matrices.

One startling finding from the report is that, even if we follow the most optimistic scenario involving immediate ramped up climate action, we are likely to see a temperature increase of 1.5 degrees by 2040. This signals that business must take climate adaptation far more seriously, examining the impact of weather extremes on their core business, their supply chains, their markets, and the wellbeing of their employees.

The G7 Finance Ministers meeting in June called upon “financial firms to manage the financial risks of climate change using the same risk management standards as applied to other financial risks.” 5

Banks, investors and insurers will in turn be seeking more accurate assessment of their principle climate-related risks from investments, loans and insurance policies.

Developments in more comprehensive climate risk reporting requirements have accelerated in the past year, and the IPCC report will doubtlessly increase the momentum on this.

4. Carbon negative is the new net-zero

Companies need to work out ways to align with global goals and keep within global carbon budgets, or they will be seen as part of a very big problem. Governments will provide some of the pressure on this, as they seek the support of business in the achievement of their national net-zero targets.

To this end, the report provides evidence-based underpinning for governments to introduce more far-reaching regulations on emissions, energy use and energy efficiency.

In the case of a company like Microsoft, the IT company plans to go carbon negative by 20306, meaning they become part of the global solution, not just less of a problem.

The report also provides ammunition for media and activists to call out laggards and green-washers in the corporate world.

5. Don’t give up

As well as the probability of hitting 1.5 degree temperature rises in the next couple of decades, the IPCC finds that many changes due to past and future greenhouse gas emissions are irreversible for centuries to millennia, especially changes in the ocean, ice sheets and global sea level.

The report also finds that overall global heating can be reversed in a matter of decades with the right level of ambition. This cannot be done without YOU, the corporate owners, decision makers and stakeholders.

So the message is clear: don’t give up, act up!


1 “Climate Change 2021: The Physical Science Basis.” AR 6. IPCC. 2021.

2 “Scientists React: What are the new insights from the IPCC’s WG1 report?”. Carbon Brief. 2021.

3 Lewis, S. 2021. “Let’s Say it Without Flinching: The fossil fuel industry is destroying our future.” The Guardian. 10 August 2021.

4 “Tightening the net: the implications of net zero climate targets for land and food equity”. 3 Aug 2021. Oxfam International.

5 HM Treasury. 2021. G7 Finance Ministers and Central Bank Governors Communique. 5 June 2021.

6 “Microsoft will be carbon negative by 2030”. Brad Smith, President. 16 Jan 2020. Microsoft Blog.

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