Momentum is building in the private sector to curb climate change now more than ever. Investors worldwide have pledged to eliminate greenhouse gas emissions from $600bn in assets under management. Hundreds of companies have committed to reduce emissions, use more renewable energy and put a price on carbon. Decades of progress have brought us to this point, made even more concrete by the Paris Agreement in December.
If the Paris Agreement is to succeed in stabilizing the climate, the private sector must increase ambition beyond current practices. The 1,000 largest companies alone are responsible for one-fifth of total global greenhouse gas emissions. Many companies have been working on environmental sustainability for years, but emissions from the corporate sector are still growing. So how will we know if each company is doing its part to solve the climate problem?
First, it’s important to set the right targets, and use the best science available to inform these targets. This changes the conversation from a discussion about how much a company could reduce emissions to how much it must reduce emissions to help avoid the most damaging effects of climate change.
Before taking aim, though, each company needs to know the size of its carbon footprint. The practice of carbon footprinting is already commonplace, thanks to the GHG Protocol Corporate Standard which provides an internationally-consistent approach for companies to measure their emissions. This standard was published by World Resources Institute and the World Business Council for Sustainable Development in 2001.
At the time, I was managing the US Environmental Protection Agency’s (EPA) Climate Leaders program, working with companies to measure emissions using the GHG Protocol and to set emissions reduction targets. We focused on large multi-national companies with the biggest carbon footprints, and by the close of the program in 2010 (as the agency moved towards mandatory reporting), more than 200 companies were onboard.
To get EPA’s approval, companies had to offer targets that went beyond the expected “business as usual” improvements. At the time, these companies setting targets were ahead of their peers – after all, measuring corporate greenhouse gas emissions was a new voluntary practice and cutting emissions was not required.
But most businesses set targets by looking at what could be done through available low-cost energy efficiency opportunities and other reduction activities with a quick payback, such as swapping long-lasting LED lighting for electricity-gulping incandescent bulbs. So while companies may creep away from carbon, they still depend on it. And although most companies are genuinely committed to cutting emissions – not least because their stakeholders hold them accountable for it – they are wary of failing to meet their targets if they aim too high.
The good news is greater ambition can lead to innovation. Even in those early days, some companies did set stretch targets. SC Johnson, for example, developed an ambitious emissions-cutting goal with little idea of how they would meet it. Working with a landfill near one of the company’s largest facilities, they used landfill gas to directly power their operations, cutting emissions by 17 percent and saving $1m per year. Their early ambitious target empowered the energy team to make this innovative project happen.
Today, it’s common for companies to set emissions targets. In 2014, 1,372 companies reported greenhouse gas targets to CDP’s global climate registry, the most widely used corporate reporting registry on climate impacts. But most still take a cautious approach that leads to only incremental improvements, even as the science on climate change becomes more compelling.
Since the days of EPA’s Climate Leaders initiative, target-setting practices have generally stayed the same, which fails to encourage innovation or stem the climate crisis. We now know we must cut global greenhouse gas emissions up to 70 percent by 2050 to limit global warming to less than 2 degrees C (3.6 degrees F), the amount of warming deemed safe by the international community. And economists have indicated that failing to deal with a changing climate will bring long term, negative economic impacts.
More and more corporations are heeding this call and setting science-based targets, which represent a company’s share of the global carbon budget: the amount of carbon the world can collectively emit while hoping to stay on a 2 degree C path. To figure this out, companies can choose among various methods, including one that divides the carbon budget among different sectors, taking into account each sector’s growth projections and unique opportunities to cut carbon emissions.
Science-based targets was a popular topic in the run-up to the Paris climate summit, and by the close of the conference 114 companies had publicly committed to this approach, and 10 companies announced their targets. Dell committed to reduce greenhouse gas emissions from their facilities and logistics operations by 50 percent from 2010 levels by 2020; the computer giant also committed to reduce the energy intensity of their product portfolio by 80 percent from 2011 levels by 2020. Meanwhile, consumer foods leader General Mills committed to reduce absolute emissions 28 percent across their entire value chain – from farm to fork to landfill – by 2025, using a 2010 base-year.
Such targets are not yet standard practice, but eventually all companies will need to accept planetary boundaries – the limits in which humans can operate safely – if they are to continue doing business. This principle also applies to other critical environmental like water and land use.
There is no halfway to avoiding environmental catastrophe. Science-based targets demonstrate that companies can and will welcome environmental science as a guide for long term sustainability. What’s important now is to change the discussion from what companies think they can do, to what they must do to usher in a prosperous, low-carbon future.