Many of our planet’s most influential leaders have long held businesspeople in high regard. So, as leading voices from both the public and private sector convene in Davos for the World Economic Forum (WEF) tomorrow to trade ideas and insights, they need to look no further than WEF’s latest annual Global Risks Report to see just how much is at stake if our society fails to aggressively address the climate crisis.
The report is based upon the views of more than 1,000 members of the WEF network as to the most pressing global risks faced by the world. This year, environmental risks – extreme weather, natural disasters, and an inadequate response to mitigate and adapt to climate change – comprise three of the top five risks in terms of impact, as well as three of the top five that are most likely to occur.
Environmental risks have been rising up the WEF agenda in recent years. Never before, however, have they featured so prominently. If ‘water crisis’ is also included, eight of the 10 slots are taken by environmental concerns.
The business community cannot avoid the harsh realities of our changing climate.
As WEF notes: “We have been pushing our planet to the brink and the damage is becoming increasingly clear.”
This may be news to those who choose to ignore the perils of climate change. It is, fortunately, not news to the business community. While many politicians choose to ignore or disregard scientific evidence, business has no choice but to accept objective reality, and respond to a changing climate and to the inevitable emergence of the low-carbon economy.
Businesses must plan for climate costs – and solutions
The business community cannot avoid the harsh realities of our changing climate. It faces the disruption and costs incurred by the extreme weather events that are only becoming more frequent, and more intense, as the world warms.
It also recognises that – regardless of bumps in the road – the long-term direction of travel is towards a decarbonised global economy. Business needs to invest for the long-term, and those investments are increasingly in low-carbon carbon assets, and in markets of the future that will be dominated by consumers who care about sustainability. It is not a surprise that climate leaders in the business world are stepping up their climate change efforts, both to limit climate-related risks and to make their contribution to emissions reduction. For example, many key WWF partners and those aligning to science based targets, and following warnings from the Bank of England and the G20’s Financial Stability Board about the significant financial risk of climate change.
Private companies make decisions based on the economics. And, when it comes to the economics of energy, clean is increasingly beating dirty. Renewable energy is out-competing fossil fuels, even before the environmental and public health costs associated with the latter are taken into account. By the end of next decade, electric cars are likely to be cheaper to buy and to run that their petrol and diesel equivalents.
Where business meets politics
Business and politics do not, of course, operate independently of one another. Regulations and policy create the playing field on which business operates. Through lobbying and campaign contributions, business influences politics.
It is incumbent on business, then, to use its influence to encourage policies that will speed the low-carbon transition. Domestically, business leaders need to send the message that the low-carbon economy is good for business. This will give policy certainty, help guide investment decisions, reduce costs, and provide employment and opportunities for innovation and competitive advantage.
It must also be mindful of the social contract. The energy transition will create losers as well as winners. Governments have a duty to support and re-train those workers whose livelihoods depend on fossil fuels; business must do more to help them into new careers.
2018 is time for governments to step up
Business must also do more to encourage greater ambition among government. 2018 is the time for governments to step up, as we sprint towards 2020 and the implementation of the Paris Agreement. Current national commitments are not adequate to protect the climate: governments need to be shown that the private sector can deliver the innovation, the technology and the know-how to meet tighter and more ambitious climate targets – targets that will help avoid the human, economic and environmental costs we face if global warming is unchecked.
Manuel Pulgar-Vidal is the leader of WWF’s global climate and energy programme. He is based in Berlin. Mpulgarvidal@wwfint.org