The transition to net zero carbon emissions is the challenge of our generation. The Paris Agreement – to stave off the worst effects of climate change by keeping global warming below 2°C – requires companies and economies to move at an unprecedented pace.
The challenge is especially evident in Standard Chartered’s footprint markets of Asia, Africa and the Middle East. Many of our markets are amongst the most vulnerable to climate change – and most in need of funding to ensure that economic development can continue while the climate crisis is addressed. We commissioned Zeronomics to understand how far companies have come on their journey, what’s blocking their path and what might help them move faster. Our survey of senior business leaders and investors reveals that most companies intend to transition to net-zero by 2050 but have yet to take the action needed to get there. A majority cite funding as an obstacle, saying they need medium to high levels of investment to transition to net zero. Carbon-intensive industries and emerging-market companies struggle the most with funding. One reason for this might be an unintended consequence of the rise of environmental, social and governance (ESG) investing, which means that carbon-intensive companies are struggling to raise finance for their net-zero transition. Another reason particularly affecting emerging markets is the perceived investment risk. A successful net-zero transition must be just, leaving no nation, region or community behind. The stakes are high. In spite of the hurdles, action needs to be swift. Net carbon emissions must fall by 45 per cent from 2010 levels by 2030 for the world to stay on-track1 but seven in 10 companies plan to defer action on climate change, raising the threat of the 2020s becoming a lost decade. If businesses fail to take rapid, meaningful action to reduce emissions, we will fail to arrest the very worst effects of climate change. We must act now, and we must act together: companies, consumers, governments, regulators and the finance industry must collaborate to develop sustainable solutions, technologies and infrastructure. Some form of standardised global net-zero transition measurement, an effective global carbon tax and a full functioning carbon market, as recently
proposed by the Taskforce on Scaling Voluntary Carbon Markets, 2 all have a part to play in a successful transition to net zero by 2050. Decarbonisation is a key focus for Standard Chartered: we are committed to reaching net zero carbon emissions from our operations by 2030, and from our financing by 2050. Our markets are among those most impacted by climate change, but they also represent some of the greatest opportunities to leapfrog to low-carbon business models and renewable power. Our presence in these markets gives us a unique opportunity to ensure that economic development continues at pace while climate impact is reduced. There are many challenges on the road to net zero, but there are also many reasons for optimism: rapid technological advances, focus from governments, and the positive intentions of many business leaders and investors. Good intentions are the first step towards sustainable change. Now is the time to translate strong words into bold action.
Group Chief Executive, Standard Chartered
1 https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/
2 https://www.iif.com/tsvcm
