20 March 2023 (London): Responding to the release of the IPCC's Sixth Assessment Synthesis Report, Amir Sokolowski, Global Director for Climate Change at CDP, said: “The scenarios included in the synthesis report and its warnings are a direct result of a continued lack of ambition and most importantly, concrete action, from governments and corporates alike. We know well the action that needs to be taken to avoid catastrophic climate change. Adaptation is already becoming harder, the costs of inaction measurable and are only to increase the longer we neglect emission reductions.
"In the five years since the IPCC’s sixth cycle began with the special report on global warming of 1.5°C (SR1.5), our window to 1.5°C has rapidly narrowed. The IPCC’s Mitigation of Climate Change Report last April found that, since SR1.5, the likelihood of staying below 1.5°C under even the most ambitious mitigation pathways has dropped by almost 10% - from 46% in SR1.5 to 38% in AR6.
"This is a direct result of governments and corporates in high-emitting economies failure to implement the needed transformation in a coherent manner. This lack of commitment to ambition and action for 1.5°C disproportionally affects the most vulnerable across the planet. Our definition of “high ambition” is increasingly pale in comparison to a lack of action which results in a continued rise in emissions, and an increasingly hostile environment. We are seeing significant gaps between plans or ambition and implementation:
- Less than 1% of companies disclosing through CDP reported developing a credible climate transition plan
- Governance is high, yet implementation in a business plan lags far behind: just 35% of organizations reported in 2022 that they identified spending or revenue that is aligned with a 1.5°C transition
- Only 41% of companies reported any Scope 3 emissions data, despite supply chain emissions accounting for 11.4 times more than direct emissions and being central an ability to transition to net-zero.
- 50% of companies do not show any evidence of undertaking scenario analysis, suggesting that they are not building the business resilience needed to withstand a high physical risk scenario.
- Just 39% of all companies that disclose on climate engage their suppliers at all
- Data from the Assessing low-Carbon Transition (ACT) shows that amongst the high-impact sectors of oil and gas, electric utilities, automotives and transport, only 8% of companies have targets aligned with their decarbonisation pathway.
"This is not good enough, particularly when the necessary journey for companies is clear. Five-year transition plans outlining how companies will transition to the 1.5°C-aligned business model, how their capital allocation will align with this and what governance the company has in place to ensure delivery are essential for short-term action. Credible transition plans toward a net-zero future must include increasing and tracked adaptation measures if they are to be truly effective, alongside robust, science-based 2030 targets.
"Corporates who did not already heed the warnings of last year’s reports must wake up to the reality that climate change is the single greatest risk to the global economy, and it will impact them directly in the coming years. The IPCC rightly highlights in AR6 climate risk disclosure as one of the "frameworks, behavioural incentives, and economic instruments that address market failures”. Companies must prepare themselves by measuring and managing environmental risks through disclosure and ensuring they have the ability to adapt through resilient supply chains or business models. Future climate-related risks will depend on the rate, peak and duration of warming and these correlate directly with rate of emission reduction. Such reduction is also essential in any company’s attempt to boost their resilience.
"Cities, states and regions also have a critical role to play in this transition. Setting science-based climate targets and reporting environmental risks and actions is the best way for local governments to ensure they are reducing emissions and increasing resilience. In 2022, 43% of cities and local governments reported emissions reduction targets, 32% of reporting local governments indicated working towards a science-based target and 28% have a net zero target to achieve by 2050 or sooner.
"Policymakers must embed these signals, evidence, and recommendations from the real economy, into policies and regulation to ensure effective implementation of national commitments and action plans, and ultimately to rapidly decarbonise in the transition to a 1.5°C, nature-positive and equitable future. All elements of the action equation are currently falling far short: governments as well as non-state actors. ahead of COP27 just 24 countries updated their NDCs, despite committing to doing so just one year before at COP26, and most of the world’s largest economies were amongst those failing to update or strengthen their NDC This report highlights long known facts. Our actions now will have a direct impact on our not-distant future. The year ahead is strewn with opportunities to enhance action, the years beyond will present us with the results.”
ENDS
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