The UN climate science body1 note that for the highest ambition goal of the Paris Agreement, namely to limit temperature rises to 1.5°C, the world needs to achieve net zero emissions by 2050. The net zero concept matters because it is a straightforward way to measure progress on keeping temperature rises under control. If emissions are going up while carbon sinks are going down, the net zero outcome will take longer, and the planet will get hotter.
The transition to net-zero emissions is bringing about a transformation of unprecedented scope and pace. New regulations, laws and policies means that businesses are adapting to avoid early retirement of assets and regulatory fines and are reducing emissions, as well as identifying whether to purchase carbon credits to offset emissions. In addition, with a shift in supply and demand for sustainable products and services underway, responding to the trends early could give business a competitive advantage as consumers look to support businesses which are having a positive impact on climate change. As crucial leaders of the economy, CEOs have a critical role to play in driving the race to net zero – within their own businesses, among their peers, along their value chains, and in relation to the broader ecosystem of investors and governments.
This article by the World Economic Forum, supported by HSBC, addresses key opportunities and risks as a result of climate change such as high capital stock turnover, competitive advantage through early action and brand recognition. This article also provides supporting recommendations and acts as a practical guideline on how CEOs can get on board with the transition.