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By Andrea Vittorio
Dec. 9 — About 100 businesses are starting to line up their carbon-cutting efforts with a target being haggled over by 195 of the world's governments as they write a global deal to fight climate change: 2 degrees Celsius.
Two degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels is the warming threshold scientists have laid out for averting dangerous climate impacts.
Diplomats meeting at a United Nations-led summit in Paris are trying to find a way to keep temperatures, which already have climbed almost 1 degree, from rising even more. The most vulnerable nations are calling for a tighter 1.5-degree goal (235 ECR, 12/8/15).
The 114 companies—which together account for 125 coal-fired power plants' worth of carbon emissions each year—want to contribute their fair share toward staying within the temperature budget. But it is not all philanthropic: The companies also recognize what climate science is telling them could happen to their bottom lines as agricultural productivity declines and more extreme weather events hit.
“It's about future-proofing your business,” Steve Howard, chief sustainability officer at Ikea Group, told Bloomberg BNA.
Ikea, the world's biggest furniture retailer, is one of the companies that pledged Dec. 8 to reduce its carbon footprint in a way that is consistent with a 2-degree pathway.
Ten companies' goals, from the likes of Dell, General Mills, Kellogg, NRG Energy, Procter & Gamble and others, have passed a test of ambition laid out by a group of nongovernmental organizations that is campaigning for what they call “science-based” targets. The rest of the companies, including Walmart, Unilever and Ikea, have promised to eventually do the same.
The idea is this: The majority of the world's largest companies already have emissions reduction goals, but only a few of them actually base their targets on science. The rest have been deemed not ambitious enough by researchers, or they follow what has been called an “out-of-thin-air” approach to target-setting (99 ECR, 5/22/15).
The proof may be in the results reported by the world's 250 largest companies. Of those that publish data on their progress, about half already have met or are tracking ahead of their carbon-cutting goals, according to a recent survey from audit, tax and advisory services firm KPMG LLP.
The catch is only a third of companies that set targets provided a rationale for why they picked them.
Without that “communication or explanation” for corporate carbon goals, investors and other stakeholders could be missing out on context or meaning, Katherine Blue, who leads KPMG's U.S.-based sustainability efforts, said. And “if companies are asked by investors how they plan to build shareholder value in a world where governments, in the future, are legislating to a 2-degree goal,” then businesses need to understand what 2 degrees means for their operations, products and customers, Blue said.
Ikea isn't worried about whether it can adjust to a 2-degree world.
“We can reinvent our business,” Howard said. “That, for me, is an exciting task, and we can see already many developments that are delivering to that agenda,” he said, from sourcing more sustainable cotton and timber to selling more efficient light bulbs.
Compared to corporate carbon performance to date—emissions at FTSE All-World Index companies grew a median 0.55 percent over the past three years, according to a recent Bloomberg Intelligence analysis—the companies committing to science-based targets are aiming for much more dramatic results.
Take, for example, Coca-Cola Enterprises, an independent bottler of Coke products in Europe. The company has pledged to cut absolute emissions from its core business operations 50 percent by 2020, using a 2007 baseline.
As of 2014, its carbon footprint has fallen by 29 percent, and Joe Franses, who directs corporate responsibility and sustainability efforts at Coca-Cola Enterprises, acknowledges there is still “a lot of work to do to deliver against 50 percent.”
“It will require us to move faster, move quicker and make further investments,” across manufacturing, distribution and refrigeration, he said, and suppliers will need to get in on it, too.
Progress appears more elusive at consumer products giant Procter & Gamble, which wants to cut emissions from its operations 30 percent from 2010 levels by 2020. Energy efficiency efforts have helped it to cut absolute emissions by just 4 percent so far. To get the rest of the way, P&G says it is making major commitments to renewable energy, including biomass and wind.
The question is whether science-based targets are actually achievable.
Only about a third of CEOs surveyed by Accenture and the UN Global Compact, a voluntary corporate responsibility initiative, think the 2-degree goal can be met.
Country commitments made toward the global climate deal add up to at least 2.7 degrees of warming.
“Of course, it's going to be an experiment for the companies [involved],” said Lila Karbassi, head of climate and environment at the UN Global Compact, and “until it's done, they can't really say 100 percent that it will happen.”
“But there will be so much pressure on the side of companies to actually meet their goals that I'm very confident they will make all efforts to get there,” she said.
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