My ERM colleagues and I are looking forward to Climate Week NYC to exchange, discover, and develop ideas on how to reach a just, low-carbon future.
The 2024 Climate Week theme is “It’s time.” We agree, sharing a sense of urgency and sensing opportunity. ERM’s view is that it is time to step up – to do more and to do it faster to embed sustainability in business operations and improve climate-related performance.
We have our work cut out for us. Society must simultaneously mitigate climate change and nature loss and navigate their profound social implications. We just experienced the warmest 12 months in 125,000 years, and climate impacts affecting the economy and society, like weather-related disasters, are getting worse even while we allow greenhouse gas emissions to keep rising.
Decarbonization of business and the economy must accelerate. Multiple headwinds exist, from geopolitical struggles, economic challenges, and competitive pressures to constrained corporate resources, including budgets and competency gaps.
While significant, those things also underscore the importance of integrating sustainability and climate strategies into the core of how business operates and differentiates itself in the market. That is what will allow sustainability investments to boost corporate performance overall and help companies overcome the obstacles those headwinds present.
So, what solutions should the companies, NGOs, and governments gathering for Climate Week focus on? Here are two areas where I hope we make progress in New York.
1) Moving from incremental to bold corporate decarbonization and beyond
In the last decade, companies have set sustainability goals and started making incremental changes to decarbonize their operations and improve both nature-related and social performance outcomes. But incremental change is no longer enough; it’s time for companies to convert goals into decisive on-the-ground implementation. This is in the private sector’s own interest: the deepening climate crisis not only has devastating impacts on society; it also hurts business operations and profitability.
Even for the most robust organizations, operationalizing sustainability goals will test their capacity and commitment. Decarbonizing and improving your company's nature and social impacts means doing it across the entire value chain, which, as many companies are starting to realize, is dauntingly complex.
At the same time, value chains are rich in opportunities to cut costs, improve energy and material efficiency, discover new markets, or strengthen brand reputation. But nobody will get far alone. Organizations that partner effectively with others have the greatest chance to deliver climate, nature and equity goals successfully.
Many companies are struggling with the same questions while trying to coordinate comprehensive action with business partners. What should new sustainability-driven relationships with suppliers, communities, and others look like? How can you shift cultures, redirect commercial priorities, or convince investors?
The answers to such questions depend on putting sustainability at the very center of corporate strategies and operating models in ways that help companies differentiate and win in the marketplace. This will mean catering to consumers interested in new technologies that are more sustainable, like EV buyers who charge their vehicles at home using their own solar energy, supply chain restructuring to promote recycling and develop circular models wherever possible, wrestling energy consumption to a minimum to cut carbon and save money, and developing new revenue models built on sustainability innovation efforts. In truth, it will mean all those things and more as every sector and business finds its own way to contribute to the decarbonization challenge.
2) Increasing private capital flows into low-carbon investments and natural-climate solutions
Besides bold corporate action, abundant private capital flows into low-carbon investments and natural-climate solutions are a critical driver of the transition to a just, low-carbon economy. However, companies often find it challenging to secure funding to support viable decarbonization and low-carbon infrastructure opportunities.
Several interconnected factors hold back investments in low-carbon and natural-climate solutions. On the public side, no government has fully succeeded in creating a predictable environment that would open the floodgates for private low-carbon and natural climate investments.
Different regions are trying different ways, from emphasizing regulation and mandatory disclosures in Europe and focusing on financial incentives to unleash low-carbon market forces in the United States to system-wide planning in Asia.
However, no region has found the perfect combination of regulations, incentives, and engagement with the private sector yet. One important reason is that the policy preferences in many regions are constrained by historical and political default settings, limiting their effectiveness.
Climate Week NYC is a great platform for sharing lessons and experiences and stitching together innovative ways to unlock the private capital flows needed to transition to the just, low-carbon economy imagined.
The power of collaboration
Despite obvious challenges, there is more reason to be optimistic than pessimistic. More companies and investors are waking up to the tremendous commercial opportunities of a just, low-carbon future. Policymakers are getting better at creating the right environment to let private capital do its work. Most importantly, everybody at Climate Week NYC is energized by the same goal: stepping up to accelerate a just, low-carbon economy aligned with the Paris Agreement. I look forward to being part of it.
