It could be called enlightened self-interest, given the expected long term impacts of climate change on the economy. But in a world where individual advantage is often pursued at the expense of collective common sense, some of the world’s biggest businesses deserve genuine credit for walking the talk and doing what is necessary to meet the goals set out in the Paris Agreement.
Science-based target setting is a growing movement, with around 250 major corporates signed up to a global initiative pledging to reduce their own carbon emissions in line with the pathways required to keep global warming well below 2°C above pre-industrial levels.
However, even amongst these leaders that are objectively doing their fair share of the heavy lifting, there are now some that are stepping up and seriously considering how they can go even further and faster.
As part of its 100 percent renewable commitment with the RE100 campaign, Tesco has this week become the first global corporate to reveal that its own operational climate change targets are modelled on a 1.5°C degree trajectory.
This ambitious move has been made possible because the Paris Agreement – somewhat unexpectedly – incorporated an aspirational high bar of limiting global warming to no more than 1.5°C. This is a level that substantially reduces the risk of some of the most dangerous impacts of climate change, particularly for vulnerable developing countries and small island states.
The research on scenarios that will achieve this pathway is still limited, because few predicted it would be politically realistic. But with warming already surpassing 1°C above pre-industrial levels, there is little time to just sit back and wait for the findings from the urgently commissioned special report on the topic from the Intergovernmental Panel on Climate Change due next year. One thing we definitely know today is that window for delivering this more challenging target is rapidly closing.
Under most models a rapid global acceleration of current efforts to reduce emissions will be required by 2020 in order to keep within touching distance of staying on a 1.5°C pathway. And unfortunately, despite a more positive approach than expected from some key players, such as China and India, the backsliding from the Trump administration makes this possibility seem ever more remote.
So why is Tesco setting such a high ambition target? After all, many businesses would consider it a disadvantage to push their sustainability performance too far ahead of their competitors, especially when imminent reputational and regulatory risks are low. There are three main reasons for this.
Firstly, it is significant that the company is headquartered in the UK. Britain was the first country in the world to introduce national climate change legislation, which came into force in 2008. This set a clear pathway for national emissions reduction, backed up by legally binding five-year carbon budgets now approved out to 2032.
This policy certainty within the company’s largest market has shaped strategic thinking, engaging management at the very highest levels with the practical steps involved in becoming a low carbon business. And over the past decade continuous emissions reduction has gradually become embedded into Tesco’s culture and internal processes.
Constantly improving environmental performance has become a business-as-usual activity across all departments. This has driven cost savings and delivered very real improvements in operational efficiency, giving confidence that bold sustainability targets can unlock innovation and new commercial opportunities.
Secondly, there has been a tipping point in the costs and deployment of renewables. Tesco uses a huge amount of electricity, consuming just under 1 percent of the UK total. So because it is able to see a clear pathway towards enough zero carbon electricity being available at competitive prices, the company can commit to purchasing 100 percent renewables.
Finally, it is a matter of showing leadership and raising the ambitions of others.
A 1.5°C target is in many ways the same as a 2°C target, but in fast forward: it involves doing the same things, only sooner. In very simple terms, for most sectors it means becoming a zero carbon business before 2050, rather than before 2060. But despite their best endeavours, all businesses will realistically need some external factors to come into play to achieve long term climate goals.
Governments have a key role to play in areas such as putting a price on carbon emissions, changing regulatory frameworks and building new low carbon infrastructure. The private sector also needs to drive technology innovation and cost reduction in key areas, for example through developing affordable clean transportation options, especially in heavy goods vehicles.
If global corporates of Tesco’s size and scale go public with 1.5°C targets, this can move markets and change the conversation. It can give legislators confidence that they will not be knocking business success by pushing through stronger regulations. And it can unlock investment into developing new low carbon products and services, persuading industries and financiers that there will be an eager market.
The growing number of large businesses taking a science-based approach to climate change are becoming a bastion of enlightened self-interest in an increasingly irrational and reactionary world. This is why high ambition targets are so important. And although Tesco are first to reveal a 1.5°C goal, behind the scenes there are a number of other global companies following closely behind.
After all, corporates understand and accept that climate change and climate damage are not in a linear relationship. The consequences of 4°C of warming are not just twice as a bad as at 2°C – they are a lot, lot worse. So whether or not we actually achieve our goals climate change, aiming high gives us the best possible chance of not falling too far short.
Find out more about setting science-based targets