The times they are a-changin'
Posted on 18th November 2020 at 09:33
For those who were around at the time, are dyed-in-the-wool Bob Dylan fans, or simply have this in their iconic numbers playlist, the Nobel Laureate’s seminal song from 1962 has particular resonance today.
Written in response to the rising tensions in the many political initiatives and events of the 1960's, such as the civil rights movement, the cold war, the space race, and of course the infamous Vietnam War, Dylan wrote one of the most influential and popular songs of all time. Fast forward nearly 60 years, and we find ourselves in an era of rising tensions with a global pandemic, a rapidly changing climate, extinction rates off the scale and social inequality jostling for pole position.
How can these conflicting but equally pressing demands ever be resolved? We now have the Paris Agreement to address global warming, and the Sustainable Development Goals (SDGs) providing global targets giving us a blueprint to achieve a better and more sustainable future for all by 2030. Which is a highly significant date, as thanks to numerous eminent scientific bodies and in particular the work of the Intergovernmental Panel on Climate Change (IPCC), we know that the next 10 years has to be the decade of action. We have to align with the Paris Agreement and bring global temperatures down to well below 2 degrees of warming above pre-industrial temperatures if we are to avoid a dangerous tipping point. The SDGs address the global challenges we face across 17 specific goals including poverty, inequality, climate change, environmental degradation, peace and justice. But I would argue just one of these – goal 13 – needs tackling above all others. Goal 13 addresses Climate Action. Get this one right and there will be a waterfall effect cascading down to set in motion the solutions to the other 16.
The focus of the world’s economies post-Covid19 will be on recovery. And fast. The key is to ensure that it’s a green one. And with the SDGs (incorporating the Paris Agreement) we have the roadmap. What’s more, it’s not that we don’t have the financial resources available; currently the world has assets worth around $380 trillion in the financial system – that’s the sum of all the balance sheets from banks, all the pension funds, insurance funds, and central banks – so there’s no lack of resources. The problem is that, at the moment, most of that funding is absolutely not SDG or Paris-aligned. So, we need to create change – change in the process of capital allocation. A team of climate experts recently simulated the costs of global cooperative action under a variety of scenarios. Writing in Nature Communications, they forecast the planet could gain $336-422 trillion (£270-£338 trillion) by 2100, if action is rapidly taken to keep warming to 2C and 1.5C respectively. On the other hand, the cost of failing to meet Paris Agreement targets could cost some $600-700 trillion, and keep us on target for a catastrophic 3-4 degrees of warming by the end of the century.
Covid has taught us the hard way that we need to transform our economies, to become more inclusive and resilient. Crucially, to create that green recovery, we need to redirect financial resources away from sectors which exacerbate the climate crisis. All businesses, large or small, need to understand exactly what their operational impact is on the global carbon budget and implement strategies to ensure that it decreases, addressing Climate Action - SDG 13 - and setting in motion the programmes which will precipitate positive change. By understanding what the effect of your operational footprint is, measuring it, and - vitally - by reporting on it so that investment flows can be shifted to positively support businesses moving in the right direction, those climate targets will become attainable. The disclosure of climate-related financial information annually in mainstream reports is becoming a mandatory requirement around the world in a very short timeframe. New Zealand has led the way with its announcement in September that its largest businesses and financial institutions (around 200 in total) will be required to disclose in line with the TCFD global reporting framework. And in the UK Chancellor of the Exchequer Rishi Sunak announced last week that companies and other organisations will be required to report on climate change in the very near future – paving the way to mandatory TCFD-aligned climate disclosure for corporates and the financial sector, by 2025. Listed companies, large private companies and financial firms will be captured by 2023, with smaller companies and other organisations included by 2025.
Attention is already turning onto COP26, rescheduled to this time next year. With the emphasis firmly focused on driving change to hit the Paris Agreement targets, the use and application of the TCFD framework will be a key lever. Momentum will be building. The times will be a-changin’.
JS Global supports businesses in aligning with the TCFD reporting system as part of a sustainability strategy. We work in partnership with ESG and TCFD specialist Zero Carbon Finance and other leading consulting firms including international energy and research specialists Wood Mackenzie and Lansons financial communications and reputation management consultancy.
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