Considering the current rate of emissions growth and the uneven attempts to curb it, it is “more likely than not” that global warming will exceed 1.5°C this century, with a “best estimate” that this will occur before 2040, according to the United Nations Intergovernmental Panel on Climate Change’s (IPCC) AR6 Synthesis Report: Climate Change 2023, released in March in advance of COP 28 in Dubai from November 30 to December 12, 2023.
Insights for What’s Ahead
- Businesses and governments will face increased scrutiny and be expected to increase the pace and scale of their climate action in advance of the Dubai COP 28 meeting.
- Businesses that develop strategies and models aligned with the goal of not exceeding 1.5°C can stay ahead of regulation, while potentially reducing costs and operational disruption in the long term.
- Overshooting 1.5°C would be risky for business and society in general, even for a short time, according to the IPCC. The choices made in the next few years can play a critical role in shaping the future business environment.
Three Key Takeaways from the IPCC’s Synthesis Report
Source: The Conference Board
The AR6 Synthesis Report: Climate Change 2023 is a summary of the findings of six previous reports covering the latest climate science; impacts and adaptation; and mitigation; as well as deep dives into the implications of a 1.5°C rise in emissions; land use change; and oceans and frozen lands. Three takeaways from the report:
1. Exceeding 1.5°C is risky, even for a short time
Overshooting 1.5°C will cause irreversible damage to ecosystems with low resilience, such as polar, mountain, and coastal ecosystems, the IPCC says. The Conference Board essay outlining Why 1.5-2 Degrees Celsius Matters focuses on the potential business implications of higher global temperatures.
Increased wildfires, mass mortality of trees, and permafrost thawing would lead to even further warming and more extreme weather events while making a return below 1.5°C harder. In theory, warming could gradually be brought back below this level by the end of the century if global CO2 emissions became net negative. This would require the use of so-called carbon dioxide removal (CDR), which includes biological methods such as reforestation and peatland restoration, and engineered solutions such as carbon capture at power stations.
2. Renewed focus on the world’s richest countries to bring forward net zero
UN Secretary-General António Guterres has called for leaders of developed countries to aim for net-zero emissions “as close as possible” to 2040 to boost chances of holding global temperature rise below 1.5°C.
Speaking at a March 20 press conference to launch the IPCC report, Guterres said:
“This is the moment for all G20 members to come together in a joint effort, pooling their resources and scientific capacities as well as their proven and affordable technologies through the public and private sectors to make carbon neutrality a reality by 2050.”
Most governments and businesses with net-zero targets have set a deadline of 2050, so the move would be a significant acceleration of ambition. The earlier targets could be met by phasing out coal by 2030 in OECD countries and 2040 in all other countries; ensuring net-zero electricity generation by 2035 for all developed countries and 2040 for the rest of the world; ceasing all licensing, funding, or expansion of new oil and gas; and shifting subsidies from fossil fuels to a just energy transition, the report says.
While there is emphasis on the developed world, emerging economies, particularly China (world’s largest GHG emitter) and India (world’s third-largest emitter), have a crucial role in achieving global climate ambitions. Although both countries have made significant progress in recent years in deploying renewable energy, their continued investment in coal-fired power generation is a challenge for efforts to address climate change.
Net zero transition will bring opportunities and challenges. Business leaders need to follow the climate policy developments closely to best prepare and navigate the transition.
3. Financing exists to solve the climate crisis, but allocation is insufficient
Over the past decade, the flow of finance to climate change solutions has increased across all regions and economic sectors, the IPCC notes. However, financing for fossil fuels from both public and private sources is still greater than that for climate change.
The overwhelming majority of climate finance is directed at mitigation, yet it still falls short of what is required to limit warming to below 1.5°C (or even 2°C) across all sectors and regions. It also is less than the USD 100 billion per year promised by developed countries to poorer nations to support emissions reductions.
Finance flows to support adaptation are far lower than for mitigation and have so far come mostly from public sources. The gap between what is needed and what is provided is widening. Extreme weather caused by climate change has damaged the economies of developing countries, further restricting availability of finance for adaptation.
So, What Can We Expect Leading Up to COP 28?
Business leaders can expect increased attention to climate action and sustainability leading up to COP 28 in Dubai. This pressure is likely to come in the form of calls for greater transparency around climate-related risks and opportunities, as well as demands for stronger commitments and actions to reduce GHG emissions and promote sustainable business practices.
Considering the current rate of emissions growth and the uneven attempts to curb it, it is “more likely than not” that global warming will exceed 1.5°C this century, with a “best estimate” that this will occur before 2040, according to the United Nations Intergovernmental Panel on Climate Change’s (IPCC) AR6 Synthesis Report: Climate Change 2023, released in March in advance of COP 28 in Dubai from November 30 to December 12, 2023.
Insights for What’s Ahead
- Businesses and governments will face increased scrutiny and be expected to increase the pace and scale of their climate action in advance of the Dubai COP 28 meeting.
- Businesses that develop strategies and models aligned with the goal of not exceeding 1.5°C can stay ahead of regulation, while potentially reducing costs and operational disruption in the long term.
- Overshooting 1.5°C would be risky for business and society in general, even for a short time, according to the IPCC. The choices made in the next few years can play a critical role in shaping the future business environment.
Three Key Takeaways from the IPCC’s Synthesis Report
Source: The Conference Board
The AR6 Synthesis Report: Climate Change 2023 is a summary of the findings of six previous reports covering the latest climate science; impacts and adaptation; and mitigation; as well as deep dives into the implications of a 1.5°C rise in emissions; land use change; and oceans and frozen lands. Three takeaways from the report:
1. Exceeding 1.5°C is risky, even for a short time
Overshooting 1.5°C will cause irreversible damage to ecosystems with low resilience, such as polar, mountain, and coastal ecosystems, the IPCC says. The Conference Board essay outlining Why 1.5-2 Degrees Celsius Matters focuses on the potential business implications of higher global temperatures.
Increased wildfires, mass mortality of trees, and permafrost thawing would lead to even further warming and more extreme weather events while making a return below 1.5°C harder. In theory, warming could gradually be brought back below this level by the end of the century if global CO2 emissions became net negative. This would require the use of so-called carbon dioxide removal (CDR), which includes biological methods such as reforestation and peatland restoration, and engineered solutions such as carbon capture at power stations.
2. Renewed focus on the world’s richest countries to bring forward net zero
UN Secretary-General António Guterres has called for leaders of developed countries to aim for net-zero emissions “as close as possible” to 2040 to boost chances of holding global temperature rise below 1.5°C.
Speaking at a March 20 press conference to launch the IPCC report, Guterres said:
“This is the moment for all G20 members to come together in a joint effort, pooling their resources and scientific capacities as well as their proven and affordable technologies through the public and private sectors to make carbon neutrality a reality by 2050.”
Most governments and businesses with net-zero targets have set a deadline of 2050, so the move would be a significant acceleration of ambition. The earlier targets could be met by phasing out coal by 2030 in OECD countries and 2040 in all other countries; ensuring net-zero electricity generation by 2035 for all developed countries and 2040 for the rest of the world; ceasing all licensing, funding, or expansion of new oil and gas; and shifting subsidies from fossil fuels to a just energy transition, the report says.
While there is emphasis on the developed world, emerging economies, particularly China (world’s largest GHG emitter) and India (world’s third-largest emitter), have a crucial role in achieving global climate ambitions. Although both countries have made significant progress in recent years in deploying renewable energy, their continued investment in coal-fired power generation is a challenge for efforts to address climate change.
Net zero transition will bring opportunities and challenges. Business leaders need to follow the climate policy developments closely to best prepare and navigate the transition.
3. Financing exists to solve the climate crisis, but allocation is insufficient
Over the past decade, the flow of finance to climate change solutions has increased across all regions and economic sectors, the IPCC notes. However, financing for fossil fuels from both public and private sources is still greater than that for climate change.
The overwhelming majority of climate finance is directed at mitigation, yet it still falls short of what is required to limit warming to below 1.5°C (or even 2°C) across all sectors and regions. It also is less than the USD 100 billion per year promised by developed countries to poorer nations to support emissions reductions.
Finance flows to support adaptation are far lower than for mitigation and have so far come mostly from public sources. The gap between what is needed and what is provided is widening. Extreme weather caused by climate change has damaged the economies of developing countries, further restricting availability of finance for adaptation.
So, What Can We Expect Leading Up to COP 28?
Business leaders can expect increased attention to climate action and sustainability leading up to COP 28 in Dubai. This pressure is likely to come in the form of calls for greater transparency around climate-related risks and opportunities, as well as demands for stronger commitments and actions to reduce GHG emissions and promote sustainable business practices.
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