The Climate Of Business #142: $300B COP deal, UK ban on coal, CBAM Q&A, water leakage due to infrastructure and loss due to AI

Climate Change Reality

• Destruction after deadly landslides and flashfloods hit Indonesia’s Sumatra (Al Jazeera)
• Water scarcity could reduce GDP by up to 6% in some regions by 2050 (World Research Institute)
• Uganda targets 2027 start for world’s longest heated oil pipeline (Financial Times)
• China’s CO2 emissions have peaked or will in 2025, say 44% of experts in survey (The Guardian)

• Cop29 rescued as $300bn cash deal for poorer countries agreed (The Times)

• Less concrete and more green space: Denmark’s plan to avoid flooding (Euronews)
• South Korean capital Seoul hit by record November snowfall (Al Jazeera)
• Spain’s EU commissioner candidate shifts blame for deadly floods (Financial Times)
• ‘Unusual and extreme’: Weather experts on what Europe’s first snow could mean for this winter (Euronews)
• CLIMATE CHANGE PERFORMANCE INDEX 2025 is released (New Climate)
• Every $1 invested in habitat restoration provides an estimated $7–$30 return in economic benefits (World Economic Forum)

Business Climate Reality

• AI is accelerating the loss of the most sacred natural resource, water (Forbes)
• Business schools' transatlantic divide over ESG (Financial Times)
• New coal mining licences will be banned (GOV.UK)

• (EVENT) Building Bridges 2024 in Geneva - aligning finance and sustainability (link)
• Environmental grants promised to farmers in England frozen (The Guardian)
• Can Recycled Oilfield Water Quench the Thirst of Drought-Stricken West Texas? (Inside Climate)

• Maine sues oil companies over impact of fossil fuels on climate (Reuters)
• Most big businesses prepared for deluge of new sustainability reporting requirements, research finds (Edie)
• China's emissions peak in sharper focus as solar and electric cars boom (Financial Times)
• Carbon Adjustment Mechanism Q&A (Carbon Brief)
• UK Government launches landmark review into the economic benefits of sustainability for UK SMEs (Edie)
• San Francisco has launched an emission-free hydrogen ferry (World Economic Forum)
• Energy-hungry Big Tech shrinks from the spotlight at UN climate summit (Financial Times)

Reality Check?

Navigating the financial challenges of decarbonisation

As the world undergoes transformation to adapt to a more sustainable future, the path to a low-carbon economy is no longer a distant ideal but a pressing reality. Governments, businesses, and communities are being called upon to reduce their carbon footprints and align with global net-zero goals. However, while the benefits of a low-carbon economy are clear—combating climate change, fostering innovation, and ensuring long-term competitiveness—the financial burdens of this transition remain a significant hurdle for many organisations.

In this edition of our newsletter, we delve into the financial challenges of decarbonisation and outline actionable steps that companies can take to navigate this complex journey.

The financial implications of the transition to low-carbon

1. Investment in green infrastructure: Transitioning to a low-carbon economy requires substantial upfront investment in cleaner technologies, energy-efficient systems, and renewable energy sources. For companies reliant on carbon-intensive processes, the shift may involve costly overhauls of existing infrastructure. While government grants and subsidies can help offset some expenses, the scale of required investments often deters immediate action.
2. Stranded assets: As regulations tighten and market preferences shift towards sustainability, many companies risk holding stranded assets—investments or assets that lose value or become obsolete. For example, fossil fuel reserves, coal-fired plants, or diesel-powered fleets could become liabilities, leading to significant financial write-offs.
3. Compliance and Regulatory Costs: Increasingly stringent regulations on carbon emissions bring with them compliance costs. From carbon pricing mechanisms such as taxes and cap-and-trade systems to penalties for exceeding emission limits, these policies add a financial layer to the sustainability challenge.
4. Supply chain adjustments: Decarbonising supply chains often requires collaboration with suppliers to adopt sustainable practices. This can incur additional costs, especially when working with partners who are themselves lagging behind in their sustainability efforts.
5. Market and reputation risks: Companies failing to transition risk losing market share to competitors who embrace sustainability. Additionally, consumers and investors are increasingly favouring businesses with robust Environmental, Social, and Governance (ESG) credentials. Neglecting this shift can erode brand reputation and long-term profitability.

10 steps to transform financial burdens into strategic opportunities

The challenges of transitioning to a low-carbon economy are significant, but they are not insurmountable. With careful planning, collaboration, and innovation, companies can mitigate financial risks and position themselves as leaders in sustainability. Here are actionable steps to prepare:

1. Conduct a comprehensive carbon audit: Before embarking on the journey to decarbonisation, companies must understand their current carbon footprint. A carbon audit identifies key emission sources, quantifies their impact, and highlights areas for improvement. By benchmarking against industry standards, organisations can set realistic targets aligned with science-based goals.
2. Develop a clear decarbonisation roadmap: A detailed roadmap is essential for any successful transition. This plan should outline short-, medium-, and long-term goals, allocate resources effectively, and integrate sustainability into the company’s broader business strategy. Clear milestones help track progress and build accountability.
3. Prioritise energy efficiency: Energy efficiency measures often yield a high return on investment while reducing carbon emissions. Simple changes—such as upgrading to LED lighting, installing smart energy management systems, or retrofitting buildings with better insulation—can significantly lower operational costs over time.
4. Diversify into renewable energy: Transitioning to renewable energy sources is a cornerstone of the low-carbon economy. Companies can explore options such as purchasing green energy, investing in onsite solar or wind installations, or participating in power purchase agreements (PPAs). These strategies not only reduce reliance on fossil fuels but also shield businesses from volatile energy prices.
5. Leverage green financing options: Financial institutions are increasingly offering green loans and sustainability-linked bonds to support environmentally friendly projects. These financing instruments often come with lower interest rates, providing companies with affordable capital for sustainability initiatives.
6. Collaborate across the value chain: Achieving net-zero goals requires a collaborative approach. Companies should work closely with suppliers and partners to decarbonise their value chains. Transparent communication, shared targets, and mutual incentives can drive collective progress while reducing individual financial burdens.
7. Harness technological innovation: Emerging technologies—such as carbon capture and storage (CCS), AI-driven energy optimisation, and carbon management software for transparent carbon tracking—are transforming the sustainability landscape. Early adoption of such technologies can give companies a competitive edge and reduce long-term costs.
8. Invest in workforce training: Transitioning to a low-carbon economy demands a workforce equipped with the necessary skills and knowledge. Companies should invest in training programmes to upskill employees, ensuring they are prepared to implement and manage sustainable practices effectively.
9. Monitor and adapt to regulatory changes: Staying informed about evolving regulations is crucial to avoiding compliance costs and penalties. Proactive companies often engage in policy discussions, providing input on legislation and ensuring their strategies are aligned with future requirements.
10. Communicate transparently: Clear and honest communication about sustainability efforts builds trust with stakeholders. Regular updates on progress, challenges, and milestones through sustainability reports can enhance a company’s reputation and attract environmentally conscious investors and customers. Read Plan A's comprehensive guide to communicating your sustainability strategy here.

The financial burdens of transitioning to a low-carbon economy are real, but they are also manageable with the right approach. By treating sustainability as a strategic priority rather than a regulatory obligation, companies can unlock new opportunities, drive innovation, and create long-term value. The journey may be challenging, but the rewards—both for businesses and the planet—are immeasurable.

As we wrap up this week’s newsletter, we encourage companies to view the low-carbon transition not as a cost, but as an investment in resilience, innovation, and leadership in a rapidly changing world. Together, we can build a sustainable future that benefits all.

Schedule a call with Plan A. Our experts are ready to discuss how your company can leverage best-in-class carbon accounting and decarbonisation strategies to gain a competitive edge.?

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