Net-zero commitments will come to little without government action

Sarasin & Partners' Natasha Landell-Mills says companies should call on governments to deliver climate policies

A tidal wave of businesses, from global banks to oil majors, have now made formal commitments to support net-zero emissions.

While these pledges are critical in overcoming the potentially devastating social and economic realities of climate change, hidden in the small print, they virtually all depend on an assumption that governments will follow through on their own commitments to meet the Paris goals. While there is a powerful case for business leaders to act independently of government dictat, we cannot leave our planet to voluntary initiatives. In the end, system-wide change demands that governments deliver on their own climate promises.

Unfortunately, even those nations hailed as global leaders in the fight for climate have so far fallen short. The UK government’s Climate Change Committee progress report, released in June, highlights looming shortfalls against its statutory targets. The report even states there is “scant evidence of delivery against these headline goals so far” and “in most areas the likelihood of under-delivery is high”. Government greenwashing sets the tone; it fuels its private sector equivalent.

Political will is lacking

The lack of political will to effect material change is illustrated by the response to the ongoing energy crisis in Europe. Rather than accelerate a structural shift away from fossil fuel dependence amid the soaring oil and gas prices, governments are too often reviving fossil fuel subsidies, encouraging investment in new long-lived fossil fuel infrastructure and even re-opening mothballed coal power facilities.

This is despite there already existing an abundance of strategies that could set us on the path to limiting global temperature rises to 1.5°C. These include the Intergovernmental Panel on Climate Change’s latest report on climate change mitigation, the International Energy Agency’s energy transition scenarios, and national level roadmaps, such as that published by the UK’s Climate Change Committee – to name just a few.

Most of these strategies do not rely on technological breakthroughs. Rather, their success pivots on support for proven, and often simple, policies such as rolling out greater home insulation, funding low-carbon farming practices, or constructing more wind and solar energy generation capacity.

Governments need to get on with translating their long-range climate ambitions into short- and medium-term targets, with clear and tangible policy actions spanning all key sectors of the global economy. With a supportive policy backdrop, collective action from businesses will follow.

Businesses must put their weight behind determined government action

But this is not to let business off the hook. They know better than anyone what policy measures would deliver the required changes in behaviour. Instead of hiding behind government prevarication, they should actively lobby policymakers to deliver those policies that will unlock net zero.

Too often the opposite seems to happen. For example, while BP claims to support a 1.5°C goal, the energy major is a member of the European Community Shipowners Associations, which has actively lobbied against more stringent emission policies for shipping – one of the highest-emitting sectors.

And BP is not alone. In a recent review of 166 of the largest listed global emitters by Influence Map, just 9% of companies align their direct lobbying practices with the goal of limiting global temperature rises to 1.5°C.

Moreover, just 2% ensure their indirect lobbying – undertaken by associations in which they are members – is aligned. With nearly 70% of these companies boasting a formal 2050 net-zero commitment, there is a disconcerting disconnect here.

Protecting our planet makes economic sense

While lobbying against potentially disruptive climate policies may seem sensible to protect the short-term earnings of many high-emitters, a failure to ensure a supportive policy framework will cost these companies over the longer term.

Aside from the obvious harmful economic consequences that comes with severe weather events, or the clear reputational risks of being caught lobbying against the public interest, ongoing policy prevarication heightens investment risk.

Companies cannot be certain whether they can deploy capital into long-lived assets that may be legal today, but not tomorrow. They also need assurance the promised rewards from green alternatives will be delivered.

Moreover, senior directors face the spectre of being sued for their contribution to climate damage, as civil society organisations employ litigation to ensure accountability where governments fail to act.

Private action is undoubtably imperative in our collective fight to curb climate change. But company promises will be futile if governments fail to deliver 1.5°C-aligned market incentives.

Companies know best which policies can inspire meaningful positive action. It is high time they publicly – and forcefully – call on governments to deliver them.