What… a Climate Leader? Yes indeed, Climate leaders: companies that do whatever it takes to reduce their carbon footprint to adhere to the Climate Agreement that was signed last year in Paris.
But how do you know that you work for a Climate Leader? The chances are unfortunately quite small that you work for such a company. Last week we had the privilege to publish the results of companies from the Benelux and France for the third consecutive year. Only 195 companies across the globe got awarded on their climate endeavor’s by the non-governmental organization CDP. In this article I want to share some insights and developments on this topic.
Download the report here CDP Climate Change Report 2016 France & Benelux edition.
1. What makes you a Climate Leader?
This year, 195 companies made it to the Global A-list, and the Benelux and France have a strong representation in this list with 21 companies. The sample of the Benelux and France region, consists of 141 companies, which equites to 11% of the companies that are on the top of the climate score. But when can you call yourself a Climate Leader? CDP uses a four step approach to benchmark companies and define leadership:
- It starts with Disclosure of CO2 emission data, the more extensive and detailed, the better.
- The second step is Awareness, that considers the extent to which the company has assessed environmental issues, risks and impacts in relation to its business;
- Thirdly CDP looks at Management, it looks at how the company has implemented actions, policies and strategies to address environmental issues;
- Last but not least: Leadership which looks for actions a company has taken that are truly the best practice in the field of environmental management.
Compared to 2015, the number of Climate Leaders more than doubled as it grew from 9 to 21 companies in 2016. This is very good news and it’s even better when you realize that big emitters, like EDF and ENGIE are part of this list and LafargeHolcim and Shell are the runners up.
2. Being Good for the Planet Is Profitable
Climate leaders distinguish themselves through a couple of elements:
- They set ambitious targets;
- They investigate and implement new business models that reduce carbon emissions in the supply chain;
- And last but not least they are actively involved in new business models based on circular economy principles.
As a bonus Climate Leaders financially outperform other businesses. So the companies aren't just being good for the planet, it's also for profit. Let me elaborate.
In the sample of the Benelux and France we see that 20% of the ‘non leader’ companies have no target on carbon reduction. Meanwhile 80% of the Climate Leaders have set absolute reduction targets for their companies, the remaining 20% of the leaders have intensity targets. ING Group for instance managed to decrease its emissions by 19% due to energy efficiency activities and renewable energy use. KPN however plays in a league of its own by offsetting all remaining greenhouse gas emissions by gold standard certificates. Not only do leaders set targets, they also include carbon pricing in investment decisions to ensure that investments that are made now are good business in the future as well.
"Climate Leaders use climate change as an opportunity to innovate"
Climate Leaders use climate change as an opportunity to innovate, optimize the use of energy and resources, rethink their operations in order to create value for their customers, their stakeholders and the planet. The recent announcement of AkzoNobel, DSM, Philips and Google (all Climate Leaders) to procure renewable energy for their Dutch operations is a great example of how leadership and cooperation can make genuine impact.
One could say that it's not a coincidence that all Dutch Climate Leaders, AkzoNobel, BAM, DSM, ING and Philips, are actively involved in Circular Economy. These companies understand that materials are responsible for 50% of global CO2 emissions, by transforming to business models that do not rely on virgin materials can give them the circular advantage. BAM for instance is the only major construction member of the Ellen MacArthur Foundation’s CE100 program, working actively with clients to develop business models for “circular buildings”, including the ABN AMRO pavilion at the Zuidas in Amsterdam.
Since investors are getting more aware of climate risks and search for the most future proof investments, it’s not strange that Climate Leaders are outperforming the non-leaders on the stock exchange.
So is this enough? Unfortunately not.
3. Ambitious Reduction Targets Are Crucial
By now everyone hopefully understands that if we want to keep our planet livable, we should limit our man-made temperature increase by a maximum of 2°C. This 2°C is an average number: especially on the North Pole the temperature increase is way above this two degrees already.
Scientists have made calculations on how much carbon we still can put in the atmosphere to stay within this ‘safe’ upper limit (‘safe’ is very relative though, the 1000+ deaths on Haiti can’t explain it any more) and how fast we should reduce our emissions. To give an example, if we get to zero GHC emissions in 2040 (just 24 years from now!) we have a 50% chance to stay within the 2°C-threshold. If we want to increase our chances to 66% we only have 20 years left. And since gambling with humanity is a risky business, companies should at least align their carbon reduction targets towards the so called “Science Based Targets” (SBT).
So the challenge is tough and current reduction targets are unfortunately not in line. First of all the majority of companies doesn’t have long-term targets: 26% of responding Benelux and France companies haven't updated their current targets that end in 2016 yet, 56% of the companies have targets untill 2020 but don’t have a strategy beyond.
Secondly, the targets are not ambitious enough. We extrapolated the emission reduction for the 39 companies that have absolute reduction targets, their future reduction only add up to 53%. With soaring severe weather events, inequality, climate refugees and damage and costs as result of climate change it’s about time to get serious and put our money where our “Global Climate Agreement” mouth is.
Contribute to Positive Impact
Everyone can make a positive impact. It starts however with understanding the problem: "What is climate change, what is on the line and what is the solution?" The solution is clear, the technology is there, but what is needed is a change in will.
So be bold and dare your company to be brave: Because you want to work for a Climate Leader, don’t you?
There are some great global initiatives like We Mean Business and Renewable100, in which companies unit on ambitious goals like the usage of 100% renewable energy in the next decade. There is no reason why your company can’t adopt Science Based Targets and join one of those initiatives.
And if there is a reason: Let me know, since I like to dare you on that one! Off course you can also contact me if you have questions how to engage your leadership on the challenge of the decade!