“Human-caused climate change is causing dangerous and widespread disturbances in nature and affecting the lives of billions of people worldwide, despite efforts to reduce the risks,” is how the Intergovernmental Panel on Climate Change (IPCC) summarized their findings in a recent report entitled “ Impact, Adaptation and Vulnerability.”
“This report is a dire warning about the consequences of inaction,” Hoesung Lee, IPCC Chair said in their press release about it. The report “shows that climate change is a major and increasing threat to our well-being and a healthy planet,” the release said, adding that, “The world faces a range of unavoidable climate hazards over the next two decades with global warming of 1.5° C ( 2.7°F)…some of them are irreversible. The risks to communities will increase, including lowland coastal infrastructure and settlements.”
The $1 billion number of extreme weather events is increasing, costing lives, livelihoods and dollars. In 2021, there were 20 such events, and over the past five years, there have been 89, with $764.9 billion in losses, and 4,557 lives, according to NOAA.
The IPCC calls on us to undertake “rapid and deep reductions in greenhouse gas emissions” to combat climate change and keep the earth from warming by more than 1.5 degrees, in which permanent damage to our natural resources and habitats, and possibly our lifestyle, will occur.
Political bottlenecks render substantive climate policies unenforceable. But….
President Biden managed to secure some climate-related investments in the bill that passed this divided Congress, and announced an Executive Order to tackle some others while Congress hesitated.
However, Earth Day 2022 represents a major leap forward in the fight against climate change. Why?
Because the private sector is taking some big steps to reduce its massive environmental impact. Driven on all sides – by activist investors, their children and grandchildren, consumers and the exodus of valuable talent, and later by the Securities and Exchange Commission (SEC) – the private sector has gone far bigger since the last Earth Day than ever before.
· Investments made: At the major UN Climate conference known as COP26, the world’s largest asset manager announced a $130 trillion commitment to support the transition to a net zero economy, through a new entity called the Glasgow Financial Alliance To Net Zero (GFANZ). As Gillian Tett, chairman of the editorial board of the Financial Times and former Managing Editor in the US, told me on my Electric Ladies podcast, “GFANZ is potentially very interesting because what they’ve done is say we have 450 institutions from all over the world. world that has assets worth 130 trillion (dollars). Everyone will commit to trying and decarbonizing the world economy and it should reach zero by 2050.”
· Rethinking the pandemic: The pandemic is forcing corporate executives to rethink modus operandi in every aspect of their business. From the way they configure their workforce and workplaces, to their raw materials, supply chain, energy sources and operations, to rethinking the products they make for us and how we get them, the constraints applied to existing business models are driving companies to be more resilient. and more eco-socially responsible.
· Doubling ESG investment: Environmental-social governance investments have grown in both assets and popularity and are now mainstream. Reuters calls 2021 the “Year of ESG Investment,” as $649 billion flows into ESG funds in late November 2021 and, during the pandemic, ESG funds outperform non-ESG portfolios, according to BlackRock, the world’s largest asset management firm.
· The SEC is responsible for: And then the SEC announced their proposed new climate
risk disclosure rules at the end of March 2021, which when implemented, will force companies to disclose the good, bad and bad of their carbon footprint, instead of hiding behind a glossy voluntary corporate liability report. “The very important thing I think about this rule (of the SEC),” Dr. Julie Gorte, a veteran ESG investor, told me on my Electric Ladies Podcast, “is that if companies are going to be recorded as having certain levels of emissions, especially when climate change gets worse, there will be increased scrutiny and pressure on them to reduce those emissions,”
· Behemoth got the message: Even the oil giants have their wake-up calls too. Oil giant Exxon Mobil needs to replace three board members with climate-conscious ones, and BP announced its net zero target. Six major automakers are committed to phasing out internal combustion engines that emit emissions as well. Russia’s war against Ukraine is forcing the economy to switch to clean energy more quickly, too.
· Talent demands: The “Great Resignation” caused by the pandemic – or the “Great Reset” as some call it – put talent in the driver’s seat since last Earth Day, too. Today’s talented people want to work for companies that align with their values, and they want hard evidence of those values and that those values are practiced consistently and across the organization, forcing companies further into the ESG framework. .
With all this shift in company priorities and focus, it’s no surprise that there’s one other thing that makes this Earth Day different – and I don’t mean that this month’s Easter, for which the line is famous, meets Easter. and Ramadan. There’s more turnover in the C-suite itself in the first half of 2021 than ever before, according to a groundbreaking study by Heidrick & Struggles, as companies decide they need a different type of CEO now. Interestingly, this study also found that, twice as many women were appointed as CEOs than in the previous period.
We have a tough road ahead of achieving a net zero economy in time to avoid the catastrophe the IPCC report predicts, but Earth Day 2022 clearly reflects the private sector’s massive leap towards that goal and is responsible for its massive impact.