Zurich, January 20, 2021: If the world is to achieve net zero carbon emissions by 2050, then we need to cut 30 billion tons of CO2 from our global carbon footprint by no later than 2030. Mission impossible? Not quite. But the private sector is struggling to read and react properly to the poor price signal on greenhouse gas (GHG) emissions being sent by governments. As a result, progress on cutting emissions continues to be slow.
Until governments realise they need to enforce an economic system that places a higher price on good climate behavior, the bad behavior -- in the form of climate pollution -- will continue, according to a new report by South Pole, called How should the private sector step up climate action?
The average carbon price around the world, where there's a price at all, is less than one tenth the level of where it needs to be: near $100 a ton. Even in the European Union, it's less than half that. This weak price signal is diluting the incentive of emitting companies to cut their production of GHGs at the pace required to avert disastrous climate damage.
A low price on carbon also leads to less investment in climate-friendly technologies and projects, which is starving struggling post-pandemic economies of the well-paid green jobs they need.
Companies will only accept a mandate from governments to fight the climate crisis after politicians bite the bullet and support markets that make polluters pay. This is the only way to force companies to use their money toward cutting carbon.
With President Elect Joe Biden coming into office, governments around the world have a rare chance to align on a climate strategy. They should take the chance, said Renat Heuberger, CEO of South Pole. "It is no longer acceptable that the cost of climate change is not borne by the actual emitters."
Against this backdrop, South Pole calls on the private sector to scale up climate action. The private sector must make the most of all available climate solutions today. This means both avoiding and reducing greenhouse gas emissions within their operations and supply chains, as well as offsetting all remaining emissions, starting immediately.
“ The time for planning and setting climate ambitions has passed. Now is the time for setting specific mitigation targets and milestones, and acting on them. We welcome all efforts: we need to stop fighting over the question of whether internal carbon reduction or compensation is better. If we want to stand any chance to get to net zero by 2050, it is not 'either, or', but 'both, and'", Heuberger continued.
While government action is lagging, consumers and civil society are increasingly putting pressure on companies to take responsibility for the environmental damage they cause on a daily basis. This cost to society - not only in terms of more extreme weather events, but also in terms of air pollution and related illnesses, the negative effect on crops, biodiversity and ultimately income and livelihoods around the world - is enormous and must be accounted for.
At the moment, the majority of voluntary climate action is being taken by listed companies who are setting Net Zero targets and boosting corporate responsibility policies. However, these efforts are still not enough to reach the 1.5°C climate target of the Paris Agreement, and a significant group of climate polluters – large unlisted fossil fuel providers – still lack transparency on their true emissions.
“ Today's voluntary carbon market is largely driven by the perception that a company's carbon footprint is a liability, and we need to make sure that companies that are stepping up to address that liability have a clear pathway to doing so", said David Antonioli, CEO of Verra."In addition, being proactive on climate change provides companies with a unique opportunity to strengthen their brand, including by combating global inequality and climate injustice."
The private sector should play a key role in accelerating global decarbonisation, and the voluntary carbon market is a transparent, efficient and cost-effective way to do so. Compensating for a company's emissions is critical: it puts a price on carbon, it attracts funding to eligible and deserving projects, it allows companies to do something (rather than nothing) to support and catalyse more decarbonisation, and in the meantime, it develops solutions that will dramatically reduce emissions today.
The private sector's full support of the climate agenda now could be the game-changer to finally make the transformation to a low-carbon economy happen.
About South Pole
South Pole is a leading global carbon project developer and provider of climate solutions. South Pole currently supports over 1,000 companies and organisations in designing and implementing their sustainability strategies, moving them from ambition to climate action.
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Media contact: Isabel Hagbrink, Director of Communications, South Pole, email: [email protected]