- Governments from across the world recommitted to the 1.5°C climate change goal at COP26 summit in Glasgow.
- But too few policymakers and business leaders are implementing climate-friendly solutions at the scale required.
- A great acceleration of climate action such as the deployment of green infrastructure is needed to deliver on the Paris Agreement.
2021 was the first year of the Decade of Action proclaimed by the United Nations – a decade that, the idea goes, will bring about a sharp acceleration of sustainable solutions for the world’s biggest problems. It was also the year in which the debate on climate action (UN Sustainable Development Goal #13) reached new heights. Extreme weather events – from the US to Europe, from China to India – fuelled this climate change debate and illustrated what’s at stake. Then, at the COP26 Summit in Glasgow, the governments of the world recommitted to the 1.5°C goal.
Most policymakers and business leaders I talk to understand the urgency of climate action and are personally committed to tackling this challenge. But while that marks progress, I still have an uneasy feeling after COP26, as the 1.5°C goal is already hanging by a thread. To reach it, all countries would have to fully meet their commitments – and that’s far from certain. It will require perfect execution of very ambitious plans. While many people still spend their time on climate change protests and pledges, far too few major actors are implementing climate-friendly solutions at scale – day by day, week by week, month by month.
Slow to act on climate change
Why so slow? I think it’s the classic wait-and-see mindset: While most companies and countries have set net-zero targets for 2030 or earlier, many of them are hesitating to switch to green technologies because they are legitimately concerned that markets are not yet ready for such a radical transformation. They’re waiting for others to create the demand before investing in resource-efficient technologies.
Have you read?
Or they’re waiting for a price on carbon. This kind of thinking is common at inflection points, but it results in incremental progress at best. And we don’t have time for that when it comes to fighting climate change.
So, instead of waiting for others to make a move, we should take a leap of faith. We should act now and assume others will do their part. There’s no other way to end the wait-and-see standoff. I am convinced that we are at the point where first movers will benefit.
Lessons learned at Siemens and Maersk
This “leap of faith” has become much smaller in recent years. The sustainability efforts of the two companies I chair, Siemens and AP Moller–Maersk, offer some valuable lessons in this regard. Both have taken leaps of faith that are now bearing fruit.
In 2015, Siemens became the first major global industrial company to commit to carbon neutrality by 2030. The company has since reduced its greenhouse gas emissions by more than half and is now ahead of schedule in meeting that commitment. However, that’s just part of the story. Over the past two decades, Siemens has made a business out of environmental technologies. A large share of the company’s products and solutions for manufacturing, mobility, buildings, and healthcare revolve around resource efficiency – about doing more with less.
These technologies were in high demand before the pandemic, but even more so during it: 2021 was one of the company’s most successful fiscal years ever, and the solutions of Siemens’ environmental portfolio accounted for roughly one third of total revenue. In sum, the environmental portfolio technologies installed at customer sites enabled them to reduce emissions CO2 emissions by nearly 90 million tons per year. This is clear proof that sustainability can become a successful business model.
The Maersk experience also offers key lessons in accelerating climate action. Maersk is the world’s largest container logistics company. In 2018, the leadership team made a commitment to decarbonize operations by 2050. Back then, nobody really knew how to achieve that; shipping is by nature an industry that is difficult to decarbonize. Nevertheless, the hard work began.
Only three years after the dream of zero-carbon shipping was announced, Maersk found the right solution: Power-to-X, a combination of chemical processes that converts green electricity into green fuels. It’s not new technology, nor did Maersk invent it. But it turned out to be the critical piece in Maersk’s decarbonization puzzle.
In July 2021, Maersk to ordered the first vessel powered by green methanol, to be delivered in 2023. Two months later, the company ordered another eight large vessels and made the first investments in green fuel. Since then, we’ve ordered another four. Maersk recently announced that it is moving its commitment to carbon neutrality forward by 10 years – from 2050 to 2040. What seemed to be an impossible dream in 2018 is now becoming a reality – 10 years earlier than originally planned.
The lesson here is that it pays off to take the first step. Maersk’s message to both stakeholders and competitors was: “We’re serious. We’re moving! There will be demand! So, scale up the production of green fuels. In the end, your business will profit because decarbonized shipping is what customers want and demand is bigger than supply."
Potential to accelerate action on climate change
Launching virtuous cycles like Siemens and Maersk has the potential to bring about the great acceleration of climate action the world so urgently needs. Companies that boldly invest in decarbonization now won’t regret it. Decarbonization is already a key demand raised by stakeholders – be it shareholders, government regulators, customers, or society at large – and the business case for climate-friendly technologies gets stronger every day. And those who move first will have a major competitive advantage.
Governments, too, can promote the acceleration of climate action. They can join the nations championing a global price on CO2, which would spark investment in climate-friendly technologies. And carbon pricing implemented globally would eliminate concerns that climate action costs too much or has a negative impact on competitiveness. It would level the playing field and allow the private sector to focus on the real issue: accelerating the transition to sustainable value chains.
What’s the World Economic Forum doing about climate change?
Climate change poses an urgent threat demanding decisive action. Communities around the world are already experiencing increased climate impacts, from droughts to floods to rising seas. The World Economic Forum's Global Risks Report continues to rank these environmental threats at the top of the list.
To limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policy-makers, and civil society advance comprehensive near- and long-term climate actions in line with the goals of the Paris Agreement on climate change.
The World Economic Forum's Climate Initiative supports the scaling and acceleration of global climate action through public and private-sector collaboration. The Initiative works across several workstreams to develop and implement inclusive and ambitious solutions.
This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions to transitioning to a low-carbon, climate-resilient economy. CEOs use their position and influence with policy-makers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.
Contact us to get involved.
Another action governments can take to tackle climate change is to invest in large-scale green infrastructure and to encourage private investors to do likewise. Green infrastructure is an investment in the future and wise use of pandemic recovery funds.
Finally, acting now will build trust and promote collaboration – among companies and countries that have committed to meet emission reduction targets. Ultimately, even those who hesitate will join – because climate action will no longer be a leap of faith or a benchmark in business, it will be the new normal. This is a leadership moment. In this Decade of Action, it’s up to us to make the “Great Acceleration” happen and deliver on the Paris Agreement by acting now.