Purpose on Payday

By Sophie Morello

We are embarking on a transformational year for business and the environment – at least that is the hope! Last year was a year of commitments and aspiration, but this will be a year for governments and big corporates to start demonstrating measurable and meaningful impact. We are firmly on the road to net zero, albeit at the beginning of the journey.

But will this year be transformational enough? We need to have big and bold ambition to meet net zero. Analysis from McKinsey said a transformation of the global economy is needed to achieve net-zero emissions by 2050 and would require $9.2 trillion in annual average spending on physical assets, $3.5 trillion more than today – this is equivalent to half of global corporate profits.

We are continually presented with data and analysis such as this, which is difficult to comprehend and leaves current solutions and commitments looking inadequate. Progress has been made, but the imperative for keeping to targets and pushing further is getting greater by the day and leaves no doubt that this year and those ahead of us need to see transformational change.

Significant steps were made at COP26, but the Summit didn’t achieve quite as much as COP President Alok Sharma had hoped for, particularly in relation to coal. Nevertheless, he is clearly intent on preserving and delivering on the significant agreements that were made.

In a speech this week, Sharma outlined his aims for the coming year, up until November when he will hand over the COP presidency to Egypt for COP27. He talked of how the “collective self-interest that helped COP26 to succeed must now drive us to nurture the spirit of global cooperation forged in Glasgow, and honour the Glasgow Climate Pact.” The 1.5 degree target hangs in the balance and it all depends on successful “collaboration” and “cooperation” – a running theme that we will probably see repeated.

But while there is a huge amount at stake, Sharma emphasised that “the opportunities presented by tackling climate change are increasingly evident…Net zero is one of the clearest economic trends there has ever been…One that is being seized by companies, by countries and by financial institutions around the world.”

This is a vital point to remember, and one which was echoed in Larry Fink’s latest annual letter to CEOs. He said, “I believe the decarbonising of the global economy is going to create the greatest investment opportunity of our lifetime. It will also leave behind the companies that don't adapt, regardless of what industry they are in.”

While business leaders may be overwhelmed or unsure of how to move forward in a net zero world, they must remember that there is great opportunity as well, and this is a time to embrace the challenge, innovate and be part of the solution.