We can. We will. That was the powerful message that came out of Climate Week in New York - recognizing we are still not on track to deliver a just transition to meet the Paris Agreement.
Climate Week brought together thousands of business executives, government representatives, investors and NGOs who are committed to accelerating the decarbonization of the global economy and all that will involve. A team of ERM experts and senior leaders, including myself, were among the attendees, speaking on key topics, contributing to debates, and collaborating with clients and partners to accelerate action.
There was a lot to take in during Climate Week with hundreds of different events and discussions. Our team has pulled together a summary of the key insights and actions we believe business leaders and investors must now take, in order to reach the 2030 targets.
During 2023, we’ve seen the hottest day ever, sea ice shrink to record levels, growing climate-related inequality and exponential growth in clean energy as outlined in the IEA’s new Net Zero Roadmap. As Peter Bakker, President of the World Business Council for Sustainable Development, told an ERM and KKR-hosted event, we need to go further than ‘we can, we will’. It’s now a case of ‘we must’.
Tom Reichert, Group CEO
Top 5 takeaways from Climate Week 2023
Action on decarbonization is accelerating rapidly. The transition to a lower-carbon economy has entered the fast lane with increased focus on opportunities and solutions. Exponential growth in clean energy is helping to drive down costs and power up performance – the cost of solar is a prime example. At the same time workers and communities want to be engaged in the decisions we as business and society are making as we transition to a lower-carbon future. Climate Week highlighted that complying with an increasingly complex landscape of regulations and disclosure requirements is diverting resources and attention away from initiatives that boost performance and progress.
Despite the credibility challenges currently affecting voluntary carbon markets, attendees recognized their critical role in achieving net zero. By engaging now, businesses will be able to maximize the potential of voluntary carbon markets and natural climate solutions while also delivering for communities. Greater demand will help the sector scale and mature faster, boosting credibility.
Nature needs to be part of the solution. Conserved or restored habitats can play a critical role in mitigating and stabilizing climate change. Leaders are still evaluating what this means for their business goals and ESG commitments. Nature Hub sessions at the event were over-subscribed demonstrating a desire for greater action and a need for better information. The prominence of nature on the climate change landscape was underlined by the Taskforce on Nature-related Financial Disclosures (TNFD) publishing its final recommendations for how companies report on nature-related impacts and dependencies. This focus is set to continue at COP28 as governments and organizations seek to find new ways to preserve and protect habitats while maximizing the benefits of nature on people’s lives. Nature needs to be integrated into your climate strategy - with a focus on people as we cannot operate in silos. All the current scenarios for 1.5°C of global warming assume that nature remains stable – yet new losses are happening every day.
Water resilience is attracting more attention. There’s been a steadily growing drip of concern about water resilience as droughts and floods threaten economic and social mayhem. Climate Week demonstrated this is turning into a tidal wave. Water resilience is rapidly becoming a major challenge politically, economically, and socially for governments, businesses, and communities. We’re already seeing more pointed questions from investors and more open discussions with leaders. These discussions need to consider not just the impact on business operations but also livelihoods, local communities and natural ecosystems. Investors must now use water resilience responses to evaluate a company’s overall resilience and its long-term ability to deliver on its goals.
Investor expectations are intensifying. The questions are tougher. The scope is broader. It’s not just carbon emissions in the performance and disclosure spotlight; investors also want to know how companies are limiting social impacts, preserving water supplies, and protecting natural habitats. In the past where investors have led, regulators have followed. Taking the time now to deepen disclosure capabilities will help strengthen future compliance and ESG efforts - especially as more wide-ranging standards and regulations are introduced. Disclosure isn’t just about ticking the compliance box; it’s an opportunity to track progress and address any performance gaps. A shift in requirements can help shine a light on processes or impacts that have previously been overl. Tackling changes in an integrated way will help businesses achieve their ESG targets and regulatory obligations more rapidly and efficiently.
Sustainability data is the new currency. Richer insights, faster decisions, better outcomes. Robust data has become critical for carbon accounting. Now nature, water and social data are moving to center stage. Instead of just capturing data to support disclosure and compliance, organizations are looking at how they can unlock intelligence to optimize operations, equip executives with actionable insight, and attract capital. As the focus on water, nature and people sharpens, organizations need to be ready to scale up their data collection, integration and visualization capabilities. That also means scaling up their teams, skills and tools to ensure data is not just an operational resource but a strategic asset that can be harnessed to drive better performance.
Climate Week reinforced the fact that decarbonization is just the start. Conserving water, protecting nature, delivering a just transition to a lower carbon economy: these are now critical steps on the global pathway to net zero.
COP28 will provide governments, organizations and campaigners with an opportunity to build on the commitments made during Climate Week 2023. Commitments are a great start, but these need to be backed up with action – and expertise.
Through our unique combination of strategic transformation and technical delivery capabilities, ERM partners with clients to operationalize sustainability at pace and scale. By partnering with ESG experts, organizations can stay ahead of what lies ahead – whether it’s new regulations, technologies or trends.
The impact of action – and inaction - on people needs to be a constant consideration. Higher temperatures, water scarcity, loss of biodiversity and inequality won’t just harm our planet but also the lives billions of people now and for generations to come.
If you would like to hear more about our Climate Week insights or discuss ESG challenges and opportunities in the build-up to COP28, please contact the team.