Corporates urged to be more ambitious on climate action

State of Climate Action report from World Economic Forum (WEF) and Boston Consulting Group (BCG) says companies need to do much more to meet climate goals

With COP28 on the horizon, the latest report from the World Economic Forum makes for sobering reading – with fingers being pointed at corporations failing to properly address climate change targets.

Produced in conjunction with Boston Consulting Group (BCG), The State of Climate Action says that a major course correction needs to take place to retain any chance of meeting the 1.5°C target agreed in Paris in 2015.

According to the report, humanity is still far from solving its biggest challenge, following years of insufficient action. It says that global emissions must decrease by 7% per year until 2030 to have any hope of achieving the original goal.

“To better understand what that entails, this paper brings a complementary perspective to the global stocktake initiated by the UN – adding a comprehensive view across nations, corporates, technologies and financing,” says WEF. 

“It offers an honest assessment of where climate action is falling short – and what is required to succeed.”

To stay below 1.5C, emissions need to come down by 7% per year, but they are increasing by 1.5%

The report points to four major dimensions where progress is insufficient.

Countries

Although progress has been made, key countries still stretch their ambitions for too long, commit to slow progress this decade, or struggle to implement the plans they have set out.

Only a third of global emissions are covered by a net-zero target for 2050 and only 20% are committed to action this decade. 

Technologies

We cannot over-rely on technology for a solution. Technologies currently viable or on the horizon will still only achieve half of the emissions reductions required. 

Financing

More than half of climate funding needs are still not being met, with critical gaps in early technologies and infrastructure. The climate funding gap is twice as large in developing economies as developed ones.

Companies

While the number of companies committing to science-based targets has grown considerably, many large corporations – especially those outside Western countries – have not set targets.

If they have, then they are woefully inadequate. 

The report says less than 20% of the world’s top 1,000 companies have targets aligned with a 1.5°C pathway – and almost 40% had no net-zero commitment. Based on the Net Zero Tracker, fewer than 10% have comprehensive public transition plans.

Fewer than 20% of the top 1000 companies have set 1.5C science-based targets

In conclusion, WEF says that if the decarbonisation trajectory does not change, adaptation will not be enough to cope. Whether 1.5°C remains an achievable goal or not, every tenth of a degree matters. There is therefore no choice but to dramatically increase mitigation efforts.

From the corporate perspective, management teams and board members have a responsibility, says WEF, to ensure sufficient focus on climate impacts and action. WEF says more companies need to invest in harder solutions that require more financial trade-offs and investments.

READ the full report.

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