Why decarbonization needs to move from talk to action


Why decarbonisation needs to move from talk to action

For most companies, a net-zero commitment is a hollow promise

The science on climate change is clear: to avoid the most catastrophic effects of global warming, we must limit the increase in global average temperatures to well below 2°C compared with pre-industrial levels. The sobering reality is that we have most likely missed the boat already, and are heading towards a scalding future that it could be hard or impossible to adapt to; 50-degree summers in Portugal could very well become the norm.

It's time to invest in the future

So why is just setting a net-zero/science-based target, without understanding how it will be achieved, no longer sufficient? By acting now (and not waiting to see what technologically magical solutions 2050 will conjure), we stand at least some chance of limiting the impacts of climate change. No company can justify waiting and watching anymore; the stakes are too high. Investors, customers, regulators, and employees are demanding change, and climate activists are pushing hard to keep companies honest on their climate commitments. The carrots and the sticks are both in motion, but are companies seizing this opportunity to future-proof their operations?

For most companies, a net-zero commitment is still a hollow promise, albeit a very public one. The most well-intentioned of companies are lagging behind on setting interim targets, and on understanding the operational implications of their commitment, their future emissions-reduction projections, and the capital investments they will need even up to 2030. This is concerning – not just for the world, but also for the companies themselves, and their shareholders.

If the world acts quickly enough to achieve net-zero emissions by the middle of this century – benefits to the climate aside – the resulting transformation could fuel stronger economic growth in the years up to 2070. In fact, such a transition could increase the size of the global economy by US$43 trillion in net-present-value terms between now and 2070, according to a new Deloitte report: The Turning Point: A Global Summary.

Yes, there are challenges; yes, it will take an enormous effort; and yes, it will, in the short term, most likely affect the bottom line, as companies transition to a lower-carbon operating model. But if there was ever a time to invest in the future, this is it.

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