Companies must listen to scientists and align their plans to reach net zero targets with a global pact to fight climate change, executives told a Reuters Next conference on Monday.
Under the 2015 Paris Agreement, countries agreed to take steps to limit global warming to well below 2 degrees Celsius, and preferably to 1.5C, compared with pre-industrial levels.
But time is running out and scientists warn that society needs rapid and unprecedented change to curb global warming and avoid catastrophic climate change.
“Governments and companies need to be thinking about what the scientists are telling us. COVID-19 teaches us that,” Sean Kidney, chief executive of Climate Bonds Initiative, said.
In the United States, the incoming administration includes a “strong team” of leaders, including former Secretary of State John Kerry as climate czar, to help advance new technology and reduce carbon emissions, Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University, said.
But it will also be important for businesses and local leaders to support the shift to clean energy, Sachs said.
And people need to be informed on the approaches, such as wind power and solar power, that are gaining traction in their area and understand how they can help, he added.
“People know across the country that we need to do this, but what they need to see now is local plans,” Sachs said.
Some companies have set their own targets for net zero carbon emissions, but they differ in terms of what is included making it hard for investors to measure progress.
“Setting a 2050 net zero target is easy for a chief executive to do when they know they will be gone by the time it becomes clear whether or not the company has met that target,” Nick Stansbury, head of climate solutions at Legal & General Investment Management, said.
“It is key that near returns are demonstrably aligned with net zero targets with well-costed plans on how to get them and clear measures so we can track progress in the near term.”
Europe’s top oil and gas companies, which account for roughly 7 per cent of global crude consumption, have committed to targets that vary in scope and detail.
Shell last year set a next zero emission target by 2050 or sooner. It previously had long-term intensity based targets, rather than goals based on absolute emissions cuts.
“A big change over the last few years is (factoring) the risk of the broader carbon footprint of companies,” said David Hone, chief climate change advisor at the Anglo-Dutch company.
“When you fill a car with petrol (from a Shell garage) they are Shell emissions and that is included in our footprint.”
Shell aims to cut the carbon emission footprint from the energy products its sells, an intensity-based measure, by around 65 per cent by 2050, and by around 30 per cent by 2035.
At least $1 trillion a year of capital was needed to finance the low-carbon transition and the most powerful tool to enable that was a clear and science-based price on carbon and all greenhouse gas emissions, Kidney said.
Although that has been hard to achieve at a global level, regional carbon markets can play a role in incentivising companies to invest in low or zero carbon technologies and move away from fossil fuels.