Business is picking up the pace ahead of the Paris climate summit

Last week 12 Australian companies committed to strong measures to tackle climate change at the Australian Climate Leadership Summit in Sydney. Many of these companies are household names, including the National Australia Bank, Westpac, AGL and Origin.

The announcement followed the peak bodies’ statement in June pledging their support to the global goal of limiting climate change to less than 2°C above pre-industrial levels, and acknowledging that this will require most countries, including Australia, eventually to reduce net emissions to zero or below.

The commitment by these companies is consistent with ClimateWorks Australia’s research with ANU and CSIRO that shows Australia can substantially reduce greenhouse gas emissions – to net zero by 2050 – while still growing the economy.

These announcements signal the momentum of business action on climate change is increasing in the lead-up to the Paris conference. It also sends a signal to the Australian Government that even greater emissions reductions are possible.

Businesses leading the way

In Australia and around the world, many businesses are adapting to the challenges of climate change and moving towards a low carbon economy. These businesses are making the shift from seeing climate change mitigation as a cost, to seeing it as an opportunity.

Partly this is been driven by businesses wanting to mitigate risk, rising energy costs and respond to stakeholders' concerns about climate change. Yet, the Paris climate process has also been a catalyst for many new groups of businesses taking action.

One such action group, We Mean Business started just 14 months ago asking businesses to sign up to its seven pledges including adopting a science-based target, putting a price on carbon, and purchasing 100% of electricity from renewable sources.

To date, over 250 companies and 144 investors have signed up to more than 600 commitments to tackle climate change. These companies represent US$5.7 trillion in total revenue and US$19.5 trillion in assets under management.

About 40 Australian companies have signed on to key climate commitments, including Australia’s largest energy retailer, Origin Energy, which signed up to all seven of the commitments.

Over 20 large multinational companies including Goldman Sachs, H&M, IKEA, Nike, Mars, Nestle, Unilever and Swiss have joined the RE100 initiative and have committed to going 100% renewable.

Pledges are compiled by the United Nations' NAZCA platform, which registers all commitments to climate action by companies, cities, subnational regions and investors to address climate change. To date, more than 900 cities, 100 regions, 1,700 companies and 400 investors around the world have pledged over 6,500 commitments to reduce emissions.

In a similar vein, a group of international business leaders, running some of the world’s largest companies, established The B Team to push for a better way of doing business that takes account of the wellbeing of people and the planet.

The organisation recently called on governments to commit to a global goal of net zero emissions by 2050 and will shortly be announcing companies pledging to be net zero companies.

Putting words into action

Progressive companies have begun setting ambitious emissions reduction targets, reporting emissions and shifting to low carbon technologies. Others are turning ideas into reality and delivering practical solutions on the ground.

For example, construction company SOM sculptured the 309-metre-tall Pearl River Tower in China so it directs wind to in-built turbines that generate energy for the building.

Car and battery company Tesla is set on developing a mass market for electric vehicles. There is already a solar plane travelling around the world.

Energy giant AGL announced it will close down its coal-fired power stations in 2050 (still too slow but a strong first step from the sector), Shell is stopping drilling for oil in the Artic, and Australia’s major banks are also making overarching commitments to limit global warming to 2℃.

Deeper cuts possible

There is no doubt the momentum is building for businesses to go “green”. So too is the ability to do it, thanks to rapid advancements in technology. Businesses are putting themselves in the spotlight and willing to be held accountable to their shareholders for their environmental management.

However, Australia cannot just rely on business action if we are to achieve the substantial emissions reductions needed to avoid dangerous climate change. Leading businesses are making these pledges in good faith but they are only voluntary and not yet universal.

In addition, practical measures being adopted by businesses to reduce emissions are still in the early stages and there needs to be an acceleration of actions to reach even our 2030 emissions reduction target.

To beat the ticking carbon budget clock, the pace of business progress needs a policy nudge. A suite of policy and regulation is still needed to accelerate business efforts and ensure broad coverage of emissions reductions across the entire economy.

The real contribution these pledges can make is to show the Australian government what can be achieved. The ramping up of business action on climate change should give the government confidence it can achieve more emissions reductions and set policies that aim considerably higher than the current targets.

Anna Skarbek is CEO of ClimateWorks which receives funding from The Myer Foundation and Monash University, and has undertaken projects funded by various federal and state government departments and agencies, peak industry bodies, corporations and philanthropic foundations.