On 20th March, the Intergovernmental Panel on Climate Change (IPCC) released the fourth and final instalment of the sixth assessment report (AR6), which combines the key findings of the preceding three main sections.
The report confirms that the world is not on track to achieve either of the Paris Agreement’s temperature pathways – 1.5C and 2C – even if delivered in full.
Instead, stated policies are likely to result in a 2.8C trajectory, which the IPCC has warned would put up to 3.3 billion livelihoods at risk due to increasing risks such as coastal flooding and food and water insecurity. The report further states that at this level of warming, many places will not be “liveable”.
The findings of the report have important implications for businesses, and Groundreport.in has outlined key warnings issued in the IPCC report and how businesses can respond to accelerate decarbonisation and improve long-term resiliency against a changing climate.
Five ways in which the report could impact businesses:
First and foremost, businesses need to acknowledge that climate change is a systemic risk, and a failure to respond proactively could result in financial losses. Companies must integrate climate risks and opportunities into their business strategy, supply chains, and investment portfolios.
Revise decarbonisation targets: IPCC report
The IPCC report emphasizes the need for immediate and drastic action to reduce carbon emissions. Businesses, particularly those in high-emitting sectors such as energy, transportation, and manufacturing, will face increasing pressure to take action to reduce their carbon footprint.
This could lead to increased regulatory scrutiny, as well as demands from consumers and investors for more sustainable practices. UN urges acceleration of climate action, potentially pushing net-zero targets forward to 2040, as per the latest IPCC report.
The Science Based Targets initiative has already updated its guidance, and other companies may also need to raise their targets to meet short and medium-term science-based goals.
The IPCC report could serve as a timely springboard for companies with net-zero commitments, yet to determine steps to achieve them.
Many corporates have signed up to the United Nation’s Race to Zero initiative, which commits them to achieve net-zero carbon emissions.
Adaptation key for businesses post-IPCC report
The IPCC report highlights the need for climate adaptation measures and resilient development, but also emphasizes the importance of drawing down carbon emissions through nature-based and human-made solutions.
The report recommends moving towards net-negative emissions in the long-term and conserving approximately 30-50% of the Earth’s land, freshwater, and oceans.
While businesses have started to focus on climate resilience, more private sector involvement and investment is needed, as the global economy could lose $8 trillion per year by 2050 due to environment-related shocks.
Many businesses have already started to take action. For example, some are incorporating climate risk assessments into their decision-making processes, while others are collaborating with suppliers to reduce their carbon footprint. But the IPCC report suggests that more needs to be done, and businesses need to prioritize adaptation as much as they prioritize reducing emissions.
Unlocking private finance critical for climate action
The IPCC is calling for a significant increase in funding for emissions reduction projects, particularly in the global south, and suggests a mix of public and private finance is needed.
However, private sector investment remains insufficient, and more political clarity is needed to prioritize areas for investment.
The UK is developing a green finance taxonomy to define which activities are ‘green’, but the public sector cannot finance transformation alone, and private finance needs to align with efforts to transition to net-zero emissions and climate-resilient economies by 2050.
Call for businesses to support ambitious govt policies
The IPCC report highlights the need for stronger government action on climate change, including ambitious net-zero targets and increased climate finance. However, progress can be hindered by anti-climate lobbying from high-carbon sectors.
Businesses have a responsibility to advocate for ambitious climate policies, using their collective voice and influence to speed up progress.
The Action Declaration on Climate Policy Engagement, supported by over 50 firms representing $900bn of revenue, aims to do just that.
Additionally, investor networks have launched a new standard to prevent corporates from lobbying against climate action.
The ‘Global Standard on Responsible Climate Lobbying’ requires investors to disclose their participation in climate-related lobbying, including annual payments and board/committee representation.
It is important for the business community to use the findings from the IPCC report to influence policy decisions for the better.
Foundational report for future climate action
IPCC’s new report aims to make climate science more accessible to policymakers before COP28, updating recommendations and making bolder calls to action based on the latest global trends.
It serves as a final warning to stay within the 1.5C limit of the Paris Agreement and will shape climate policies and discussions for years to come.
Businesses should take note of the report’s key warnings and estimates to gain buy-in and contribute to the response to the climate crisis.
For more information on the latest IPCC report and its implications for climate action, be sure to follow Groundreport.in.
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