Expert Eye - Ceres

A moment like no other, calling for faster, bolder action 

On Earth Day 2022, Mindy Lubber, President and CEO of the sustainability nonprofit organization Ceres, encourages industries worldwide to invest in our planet 

Written by: Mindy Lubber, CEO and President, Ceres
 
 
The risks posed by the climate crisis are rapidly becoming reality. We now know that no one is safe from the fires, floods, hurricanes, heatwaves, and droughts that have devastated nations across the globe. The latest climate science shows that without dramatic action within the next eight years, we will reach a tipping point that guarantees a catastrophic future for our planet and economy.  
 
This month’s latest report from the Intergovernmental Panel on Climate Change provides the starkest assessment yet of just how far we are today from the level of action required to keep warming to 1.5 degrees Celsius.    
 
Yet the report also affirms that we have the tools and capital required to take this action. It will take an immediate, concerted response from all market actors – investors, companies, policymakers, consumers, employees, and regulators – to respond to this crisis while we can still avoid the worst impacts of the climate crisis and seize the massive opportunities that come with decisive action.   
 
Companies can start by decarbonizing not only their own operations, but their full value and supply chains, and improving their water stewardship practices to better safeguard freshwater supplies. Investors and financial institutions can work to rapidly redirect flows of money toward clean energy and clean water solutions, rather than fossil fuels. We must ensure global capital flows to the right places.  
 
That’s why the recent landmark draft rule from the US Securities and Exchange Commission to mandate climate risk disclosure for all publicly-traded companies is so important. It would level the playing field for companies, allow investors to better protect their investments, and catch the US up with many countries around the world, where mandatory disclosure is already law. Companies and investors alike can voice their support for this critical proposal. Last year, the largest number of investors ever – 733 investors managing $52 trillion in assets – joined us in calling for mandatory disclosure.   
 
Disclosure provides insight, but it has to be paired with strong tools to drive urgent, bold, ambitious action. Climate Action 100+, the world’s largest investor engagement initiative on climate, found in its latest Net Zero Company Benchmark that while 69 percent of the initiative’s focus companies – many of the world’s largest emitters – have set net zero goals, the vast majority have not set adequate medium-term emissions reduction targets or fully aligned their capital expenditures with the goals of the Paris Agreement. There has been progress – but it’s not at the pace and scale to meet the crisis we face.  Every company must issue a climate action plan aligned with operating in a net zero emissions economy, and raise their ambition to meet the standards of the Benchmark.  
 
Furthermore, investors are dramatically ramping up their pressure on companies that fail to act. This proxy season, shareholders have filed a record-shattering 209 climate-related resolutions at their portfolio companies, calling for proof of progress on emissions-reduction goals, transition plans with interim targets, climate lobbying in line with a 1.5 degree Celsius future, and assurance of strong climate governance. And this barrage is racking up wins. So far this year, investors engaged with companies at an unprecedented pace, negotiating 92 agreements under which companies must act in exchange for proposal withdrawals.   
 
Now, this proxy season – with the future of our planet and economy hanging in the balance – is the time for shareholders to support these climate proposals. And, all investors need to make their own commitments and pair them with strong Investor Climate Action Plans (ICAPs) that map out how they will help accelerate the transition to net zero emissions economy by 2050 or sooner and protect the long-term value of their investment portfolio. 
 
When large market actors take action, they help to transform industries and drive wholesale change. That’s the aim of Ceres Ambition 2030 initiative, focused on decarbonizing six of the world’s highest-emitting sectors. If top companies act on strong climate commitments with time-bound, science-based, short- and medium-term targets, peers will be pulled along through a competitive cascade powered by investor, employee and consumer expectations. Emphasis on ‘scope 3’ emissions will ensure that corporate climate action impacts suppliers and purchasers, propelling change throughout supply and value chains.  
 
The financial costs of the status quo are massive for both companies and investors. The science is clear: there is no room in our global carbon budget to support new oil and gas infrastructure. Investors and fossil fuel companies already risk holding trillions of dollars in stranded assets. Without early retirements or reductions in use, the world’s current fossil infrastructure will make it impossible to limit warming to 1.5 degrees Celsius, the IPCC report warns. Investors, whose job it is to protect shareholders, must engage with fossil fuel holdings to align their business models with a sustainable future.    
 
A stable climate offers companies, communities, and nations greater economic strength and increased physical security. The tools to make that future – and not the one we’re currently on the path for – are in our hands.  Let’s get to work.