Tackling climate change will take co-operation on a scale not seen since WWII

The world is at a tipping point. We’re facing a climate crisis which – if left unaddressed – will have worldwide implications for everyone at a scale not seen since World War II. While the tragic events that unfolded in the 1940s saw two alliances battling each other in a divided world, this time we need to battle together, fast.?

We’re running out of time to solve the climate crisis. Science tells us the world needs to halve carbon emissions by 2030 to limit global warming to 1.5 degrees – our analysis suggests we need to increase the annual rate of decarbonisation by fivefold to hit that objective. We need all businesses, governments and 8 billion people in the world to work together - breaking down barriers and playing their part in a shared mission that is, ultimately, about humanity’s future survival and prosperity.?

The urgency of this challenge is why I was so pleased PwC could sponsor Climate Week in New York last week. At the same time as the United Nations General Assembly saw significant new national commitments, we helped The Climate Group bring together a broad community to discuss and agree voluntary action from business under the theme of “Getting it done”.?

I want to say a huge thank you to Helen Clarkson and the whole team at the Climate Group for putting on such a great week of events, both in person and online.

A common thread running through conversation was the intimate relationship between trust and sustained outcomes - something we have put at the heart of our new strategy, The New Equation . Cooperation between business, government and civil society needs trust that Net Zero commitments are more than words. And what builds that trust? It’s outcomes, quick wins initially, but then sustained outcomes. By demonstrating real impact, trust is built and cooperation can flourish.?

Beyond that, four themes stuck out for me that I thought you might find interesting:

Climate change matters to every business in every sector

The first is that, whatever industry you’re in, climate change matters. It is also an issue that is becoming increasingly hard to ignore, with pressure mounting from a broad group of stakeholders - from investors to talent to regulators. While some leaders may be taking a “wait and see” approach, there will likely be a time in the near future when they will be forced to act. Organisations that get ahead of this will come out strong from a reputational perspective. And as my colleagues Emma Cox and Casey Hermann wrote in a piece for Climate Week, doing so is good commercially as it has the potential to create significant shareholder value .

Capital is moving rapidly?

Second, capital markets are changing at speed. The Glasgow Financial Alliance for Net Zero, chaired by Mark Carney, already brings together institutions managing $88 trillion of capital around a set of principles designed to accelerate the Net Zero transition. Last week saw another step forward for this initiative, as we helped launch the Net Zero Financial Service Providers Alliance. This brings together auditors, index providers, credit rating agencies and stock exchanges who provide market infrastructure that enables the movement of capital. Our focus in this alliance is on our work as auditors. By committing to support the evolution of robust climate-related disclosures, we can help build trust in information and make it easier for stakeholders to take the decisions needed to deliver sustained outcomes that meet the needs of our planet and society. For us, this fits with our wider push to help standard setters and others enable improved disclosures around Net Zero and wider ESG measures.?

It would be wrong to think this is, or should be, altruism. This is the capital markets responding to their own interests - both in identifying value creation opportunities and managing risks. This is a good thing. The creative power of competitive markets is every bit as important as the campaigning energy of NGOs if we are to deliver systemic change.?

Net zero requires a complete mindset shift

We need this intensity of action from business, civil society and government because the world needs to do something it has never done before: decouple economic growth from emissions. It is clear that “business as usual” isn’t going to get us to a net zero world.?

This will require a complete mindset shift that touches every part of the organisation. It means transforming business and operating models and working in partnerships with others across the entire ecosystem as this can’t be done by one organisation alone. Companies should also support governments with recommendations for change to help enable speed and scale, and give them the backbone to go bigger and faster and manage the transition risks that come with it.

Government has a key role to play?

Finally, I want to come back to where I started: the role of government. We need enabling policy and regulatory frameworks that incentivise corporate climate action. Companies that lead should not be put at a competitive disadvantage.

This process has begun, with many countries introducing policies including bans and phaseouts of polluting activities, fossil fuel subsidy reforms, tax reforms, new product and fuel standards, and mandatory ESG and climate risk disclosure. Here too there are many issues to work through which are complex and hard to navigate. There is a need to align socio-economic action with the green agenda to deliver a just transition. Issues of land use and biodiversity; food security and water; reskilling and job creation all have to be part of the net zero transition.

As I said at the UN Opening day last week, the challenge we need to overcome is huge. The only way to get there is by breaking down silos across sectors and countries. Like during WWII, business, government and the citizens of the world need to come together more so than ever before. I remain optimistic that we can get there - if we all work together.?

#TheNewEquation, #PwCNetZero