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How the 2023 IPCC Synthesis reshapes the business environment

The world has grown accustomed to a regular drumbeat of alarming scientific reports on the status of climate change. The latest Intergovernmental Panel on Climate Change (IPCC) publication represents something of an inflection point. Its 2023 Synthesis Report provides a comprehensive overview of climate science and its response to climate change by bringing together findings from its 6 previous IPCC reports since 2018. Described as an up to date assessment of the climate crisis, it doesn’t just present the latest findings on temperature change, sea level rise, land use change, CO2 emissions and other important projections, but acts as a beacon to guide and inform policymakers preparing for the COP28 negotiations in UAE later this year.

Given its headline conclusions that climate change is unequivocally human induced, together with the fading chances of meeting the 1.5 degree temperature rise target, this Synthesis isn’t just talking to politicians and policy makers – it has a clear messages for business and civil society.

So, what can we learn from this new report?

Decarbonisation won’t be enough to stop climate change

Given the amount of greenhouse gases we are continuing to put into the atmosphere, climate effects won’t be held back by simply removing CO2 from our activities overnight (hard as that undoubtedly would be). We also need to adopt more permanent solutions that remove CO2 from our atmosphere, both naturally and using technologies such as capturing CO2 directly from the air. Given that nature-based approaches like large-scale reforestation are needed, our new pathway will require a significant change of ethos, where damage to nature is no longer accommodated on any grounds. Doing right by nature can’t be a nice-to-have bonus if our rewilding efforts are to have any impact. Effectiveness will require consistency, coordination and coherence to both policy and actions.

We’re (still) not investing in the right things

For all that we’re seeing some really positive investments in sustainable energy across the globe, too often this is undermined by ongoing investments and ‘lock-in’ to existing fossil fuel energy infrastructure. Such infrastructure is still being planned and financed by multilateral development banks, all impacting our remaining carbon budgets. At the end of 2021, nearly 200 coal fired power stations were under construction in Asia alone.

To remain within the temperature commitments that 196 countries agreed to under the Paris Agreement we need to plateau emissions by 2025 and then reduce them rapidly, to reach net zero by mid-century. Given fossil fuel energy plant investment are always multi-decade bets, these decisions represent a terrible failure to respond to a problem we claim to be addressing. The IPCC Synthesis report highlights some pathways to avoid intensifying climate risks, yet in reality, wider system transformation is needed. There is a broad acknowledgement that much of the technology, finance, tools and solutions are already available to bend our emissions curves, but we need more rapid and sustained emissions reductions across our power generation, buildings, transportation and industrial sectors.

Given the deadline… society must prioritise (and we can)

Developing workable decarbonisation strategies has gone from being a high level idea to business-in-practice. But, too few organisations have committed taking this step in practice.

These root-and-branch programmes identify emissions reduction opportunities at every layer of a business’ assets, supply chains, investments and operations. This baselining is overdue, and in many parts of the world the appropriate legal and regulatory frameworks to support this are not in place. This is leading to delay, but in many cases the priorities are clear and action could be taken.

Business gains predictability

Politics faces greater unpredictability caused by the often socially unjust impacts of extreme weather and the many other intensified effects of climate change. Reading the IPCC’s Synthesis Report from a business’ standpoint, you are struck by how comprehensive its implications are for supply chain issues, transport costs, the importance of avoiding nature damage, conservation of resources, and a whole list of related operational/commercial risk factors.

Climate change, often seen as the inexorable movement of markers on graphs, in effect provides an insight into tomorrow’s operational environment. Business planning, taking that all important 5-10 year horizon into account, can now be conducted with a set of knowable constraints, backed by the latest and most robust scientific data. The resilience of our businesses can be improved by translating these plans into implementation at greater speed.

Resilience gains momentum

The urgent need for adaptive improvements to the urban environment and supporting infrastructure we all depend upon, is clear to all. The need to prepare for the regular occurrence of what were once rare climate shocks, is galvanising action in government offices worldwide. The private sector also has an opportunity here, to partner with governments to accelerate solutions to counteract the expediential growth of flooding, heatwaves and water scarcity as we move to a warmer world. More than 170 governments have identified adaptation measures in their national policies and plans, recognising solutions that can deliver broader sustainable development benefits. The reality is these solutions are not of the scale to avoid such intensifying climate risks. Private sector innovation, working in partnership with government agencies will be needed if real resilience is to be achieved.

Climate changes everything

Unlike almost any other single challenge humanity has yet faced, climate change dominoes through every aspect of our society and economy. Damage or pollution of ecosystems leads to failing food chains. Diminishing access to drinking water leads to social unrest. Dried up land leads to agricultural failure leads to population displacement leads to unemployment leads to social unrest or even civil war. Climate change’s relentless global implications mean that the solutions developed must work for all groups in society – the call for ‘climate justice’ and protection for the most vulnerable isn’t political but simply humane logic.

We also need to be honest about the real trade-offs we face when responding to the climate crisis. Ending fossil fuel production and associated infrastructure development is a clear priority. Yet, we can’t leave behind a generation of workers without offering them a future of employment with dignity. Our approaches need to consider a range of measures that counteract displacement of workers and negative spill-overs that harm local economies. The messaging from the IPCC is clear, we must enable a predictability of finance flows that target climate action while governments and businesses need to collaborate across interventions that address the issue from multiple directions at once. And perhaps as importantly, we have to build public support and consensus around the urgency and value of any actions we take.