The United Nations Global Compact-Accenture CEO Study Special Edition: A Call to Climate Action 2 The United Nations Global Compact-Accenture CEO Study Contents Foreword.........................................................................................................................................................................5 Introduction...................................................................................................................................................................7 Growth and Innovation: A Climate of Opportunity.............................................................................13 Special Focus – Leading the Way: Views of Caring for Climate CEOs.................................20 Climate Coalitions: The Road to Paris........................................................................................................22 Special Focus – Carbon Pricing.......................................................................................................................34 Annex – Beyond Incrementalism: Seizing Market Opportunities.............................................39 Toward Transformation: Closing the Gap.................................................................................................60 Acknowledgments...................................................................................................................................................61 References ...................................................................................................................................................................62 3 The United Nations Global Compact-Accenture CEO Study Special Edition: A Call to Climate Action In the first Special Edition of the CEO Study, the world’s largest program of CEO research on sustainability, business leaders call for urgent action from governments and policymakers as we examine their views on the importance of climate change to their business; on the opportunities for growth and innovation in addressing the climate challenge; on the role of policy in enabling new solutions, digital technologies and innovative business models; and on the need for bold action in Paris to unlock the potential of the private sector. November 2015 4 The United Nations Global Compact-Accenture CEO Study Caring for Climate – The Business Leadership Platform A Statement by the Business Leaders policies and measures to provide an enabling framework for business to contribute effectively to building a low-carbon and of the Caring for Climate Initiative climate-resilient economy. Since business leaders from around the world first came 6. Continuing to work collaboratively with other enterprises together to issue this statement in 2007, the magnitude and both nationally and sectorally, and along our value-chains, urgency of the climate challenge has become more apparent. to set standards and take joint initiatives aimed at reducing Climate change is a momentous threat to development, to climate risks, assisting with adaptation to climate change peace and security, and to market stability. While the pace and enhancing climate-related opportunities. of action by governments, businesses and society at large 7. Becoming an active business champion for rapid and has increased, our efforts, individually and collectively, must extensive climate action, working with our peers, employees, be accelerated further if the threat of catastrophic climate customers, investors and the broader public. change is to be removed effectively. It is with this in mind that we renew our call to the business community to make a lasting EXPECT FROM GOVERNMENTS: commitment to climate action now. 8. The urgent creation, in close consultation with the business community and civil society, of comprehensive, long-term We, the Business Leaders of Caring and effective legislative and fiscal frameworks designed to for Climate: make markets work for the climate, in particular policies and mechanisms intended to create a stable price for carbon. RECOGNIZE THAT: 9. Recognition that building effective public-private partnerships 1. Climate Change is an issue requiring urgent and extensive to respond to the climate challenge will require major public action on the part of governments, business and citizens if investments to catalyze and support business and civil society the risk of serious damage to global prosperity, sustainable led initiatives, especially in relation to research, development, development and security is to be avoided. deployment and transfer of low-carbon energy technologies and the construction of a low-carbon infrastructure. 2. Climate change poses both risks and opportunities to businesses of all sizes, sectors and regions of the world. It 10. Vigorous international cooperation aimed at providing a is in the best interest of the business community, as well as robust and innovative global policy framework within which responsible behavior, to take an active and leading role in private investments in building a low-carbon economy can be deploying low-carbon technologies, increasing energy efficiency, made, as well as providing financial and other support to assist reducing carbon emissions and in assisting society to adapt to those countries that require help to realize their own climate those changes in the climate which are now unavoidable. mitigation and adaptation targets while achieving poverty alleviation, energy security and natural resource management. COMMIT TO: AND WILL: 3. Taking further practical actions to improve continuously the efficiency of energy usage and to reduce the carbon footprint of 11. Work collaboratively on joint initiatives between public and our products, services and processes, to set voluntary targets for private sectors and through them achieve a comprehensive doing so, and to report publicly and annually on the achievement understanding of how both public and private sectors can of those targets in our Communication on Progress-Climate. best play a pro-active and leading role in meeting the climate challenge in an effective way. 4. Building significant capacity within our organizations to understand fully the implications of climate change for our 12. Invite the UN Global Compact to promote the public business and to develop a coherent business strategy for disclosure of actions taken by the signatories to this Statement minimizing risks and identifying opportunities. and, in cooperation with UN Environment Programme and the secretariat of the UN Framework Convention on Climate 5. Engaging more actively with our own national governments, Change communicate on this on a regular basis. inter-governmental organizations and civil society to develop 5 Foreword The adoption of the Sustainable Development Goals marks a critical turning point in the history of global development. As we look ahead to a new sustainable development agenda that tackles emerging challenges across economic, social and environmental dimensions, we anticipate the need for a rejuvenation of our global partnership. As we embrace a new set of global goals But unlocking the potential of the private Lise Kingo for development, we recognize a single, sector will require enabling action on the Executive Director integrated agenda that codifies our part of governments and policymakers. United Nations ambition to end extreme poverty, fight The innovation required to forge the Global Compact inequality and injustice, and tackle climate transition toward a low-carbon economy change. Business, governments and will depend on clear, coherent and civil society have a unique opportunity consistent policy frameworks that enable to step up in support of the Sustainable companies to invest with confidence and Development Goals, acting in concert to place the big bets that will bring about new unlock the full potential of our combined technologies and new business models to commitment, attention and resources. tackle the challenges of the 21st century. On the eve of the 21st Conference of Foremost among the challenges we Jean-Marc the Parties in Paris, the international face in rejuvenating our partnership Ollagnier community has an immediate for development is working together Group Chief Executive, opportunity to advance action through effectively across sectors, understanding Resources a bold, ambitious and universal our common priorities and facilitating Accenture agreement on climate. Collectively, we transformative action. Over the past must recognize that climate change decade, the UN Global Compact-Accenture is not simply one element among CEO Study has helped to understand multiple priorities: action to protect the priorities of business leaders habitats, secure livelihoods and worldwide, revealing the motivations of enshrine environmental justice can companies leading on sustainability and provide the cornerstone of an integrated uncovering the challenges in embedding development agenda and can lay the environmental, social and governance foundations of achievement across the issues at the heart of business worldwide. 17 individual development goals. Recognizing the urgency and immediacy of Achieving ambitious goals on climate the climate challenge, we have dedicated will depend on the active engagement this Special Edition of the CEO Study to of business. Through commitments understanding the perspective of business rooted in the Ten Principles of the leaders on climate change. In presenting United Nations Global Compact—the the authentic voice of global CEOs on the core values across human rights, labor importance of climate change to their standards, the environment and anti- business; on the opportunities for growth corruption that participant companies and innovation in addressing the climate are asked to embrace, support and challenge; and on the role of policy in enact—business leaders can play a enabling new solutions, digital technologies central role in galvanizing momentum and innovative business models, we hope to meet the first test of our collective to provide a rich, robust evidence base ability to deliver collaborative action on for discussion and collaboration that can the Sustainable Development Goals. lay the foundations of transformation in a new era of global development. 6 The United Nations Global Compact-Accenture CEO Study 7 Introduction The climate negotiations in Paris in December present a unique opportunity to chart a new pathway for the development of the global economy. Fully 91% of CEOs see climate change as an urgent priority for business, and a clear majority call for urgent action from policymakers to unlock growth and innovation in the private sector. Growing recognition of the scale of the opportunity for growth and innovation, and Last—and most importantly—we pay challenge has begun to translate into we have invited CEOs to share their views tribute to the founding executive director renewed advocacy for action: for perhaps through a series of open letters. While of the Global Compact, Georg Kell. the first time, we are beginning to see we acknowledge our sample may not be Georg’s leadership and vision over the a united front of business leaders and representative of business globally – in past 15 years has been instrumental in the policymakers setting their course toward its balance of gender, or of industries and growth of the Global Compact to become a bold deal that can begin to close the regions represented, for example – we the world’s largest voluntary corporate gap between ambition and execution. hope that our research can provide a sustainability initiative, and the unique platform for the authentic, unmediated role of the Global Compact in inspiring, This year is also a significant milestone views of business leaders to share their guiding and catalyzing change will stand for the United Nations Global Compact, unique perspectives on the climate testament to his extraordinary legacy. marking 15 years since its founding at challenge and the role of the private the turn of the millennium, and for our sector in charting a pathway forward. CEO Study program. Over the course of Lila Karbassi a decade of research, during which we On behalf of the United Nations Global have been fortunate enough to conduct Head of Environment Compact and Accenture Strategy, we one-to-one interviews with several would like to express our sincere thanks and Climate hundred CEOs from the world’s largest to the CEOs, business leaders and other United Nations companies, and collect the views of stakeholders who participated in the Global Compact thousands more through our surveys, study. The project team has endeavored we have traced the development of to understand and interpret their corporate sustainability from its roots many ideas, reflections and case study in corporate social responsibility toward examples in conducting the study and the integration of environmental, social delivering this report. Any insights are and governance issues as a critical theirs, while any errors are our own. Peter Lacy element in strategies for growth. In compiling this CEO Study Special Global Managing In compiling this year’s study, we followed Edition, we are once again indebted to the Director two principal strands of research. First, Global Compact and Caring for Climate Accenture Strategy, we conducted two surveys: one of team of Lise Kingo, Sean Cruse, Margaret Sustainability Services CEOs of Caring for Climate participant Fenwick, Carrie Hall, Tim Wall and Bianca companies, to identify and explore Wilson. We also recognize the leadership the unique approaches and beliefs of of the Accenture team, in particular companies publicly leading the way in lead author and project manager Jenna addressing the climate challenge; and Trescott, as well as Marielle Tourel another of business leaders from 750 and Amanpreet Talwar. There have Global Compact participants, drawn Rob Hayward been many further contributions from from 152 countries across 41 industry colleagues in Accenture too numerous CEO Study Lead sectors, to “take the temperature” of a to mention here, but without whom our Accenture Strategy, wide cross-section of companies globally. analysis would not be as compelling—in Sustainability Services particular the project sponsors Jean- Second, we have engaged further with Marc Ollagnier and Bruno Berthon, as Caring for Climate participants to develop well as Nobuko Asakai, Gib Bulloch, Ynse in-depth case studies of companies de Boer, Alexander Holst, Jessica Long, approaching the climate challenge as an Matthew McGuinness and Liz Steel. 8 The United Nations Global Compact-Accenture CEO Study Caring for Climate: An Urgent Priority of business leaders believe that believe business is not climate change is an urgent doing enough to tackle 91% priority for business 66% climate change believe progress is on track 34% to restrict global warming to less than 2C 750 41 152 business leaders industry countries surveyed sectors Growth & Innovation: A Climate of Opportunity 54% of business leaders 57% believe that Of leaders from the world’s largest companies*: see opportunities for growth investment in climate and innovation in addressing the climate challenge solutions is essential to competitive advantage 70% see 67% report 69% see opportunities a clear business investment in for growth case for action climate solutions 48% report a and innovation as essential to competitive clear business case advantage for action on climate *annual revenues in excess of US$1bn 9 Climate Coalitions: The Road to Paris Business leaders identify Legislative 5 Policy Measures and fiscal Global, Performance that can unlock further mechanisms robust and standards private sector investment to increase predictable to reduce investment Financial carbon pricing in climate solutions: instruments emissions mechanisms and enhance to stimulate The removal resilience or phasing R&D and 61% of respondents, and innovation out of fossil 74% of leaders of the fuel subsidies world’s largest companies, see a long-term agreement in Paris as critical to unlocking private sector investment in climate solutions Our research also identifies 5 Leadership Behaviors Setting emissions reduction targets exhibited by companies taking a leading inline with science role in addressing the climate challenge: Investing in low-carbon and the 2C limit technologies and solutions Providing proactive, constructive Collaborating with input for governments to create industry peers to Taking concrete effective climate policies foster leadership measures to increase and innovation climate resilience 10 The United Nations Global Compact-Accenture CEO Study The Road to Paris: A Call to Action We would like to thank the CEOs featured here for their participation in the Study, and for contributing their insights on the challenges and opportunities of climate change for their companies. The in-depth perspectives shared in our series of open letters complement our broad-based survey research, and offer a unique insight into the opinions and approaches of leading companies worldwide. Kurt Bock “At COP21, politicians have the chance to set up a long-term, reliable emission reduction framework, CEO, BASF enabled by low-carbon technologies... Creative minds in business all over the world would have a clear picture of the low-carbon future they are innovating for, finding answers to the substantial challenges we are facing.” Gavin Patterson “We need certainty. Certainty that our investment in renewable energy and the low-carbon economy Chief Executive Officer, BT Group will reap rewards for all. Certainty that the actions of companies like ours are adding up to a bigger impact on a global scale. Let’s make Paris not just a footnote in history, but a turning point for us all.” Niels B. Christiansen “In Paris in December, world leaders should ensure that the new global agreement enables President and CEO, Danfoss A/S greater uptake of energy efficient solutions: we need to create frameworks that make it easier to overcome barriers such as funding, policy incentives, knowledge sharing and education.” Claudio Descalzi “We believe this is not the time for business as usual, but that we now need governments Chief Executive Officer, Eni S.p.A. around the world to provide a precise, stable, ambitious regulatory framework.” José Édison Barros Franco, Board of “We hope the private sector will, through leadership and collaboration, unlock scalable Directors’ President, InterCement solutions that will address the climate challenge. We have already come a long way, but we have to—and we can do—even more.” 11 “We strongly believe that business is part of the Paul Bulcke solution and that industry-wide, multi-agency, collaborative efforts are pivotal to scale efforts and Chief Executive Officer, Nestlé make lasting change. We want to encourage country member states to make ambitious, time-bound commitments and set action-oriented targets.” “I believe international and domestic Zenji Miura collaboration will be critical to more broadly commit the private sector to climate solutions.” President and CEO, Ricoh “The opportunity is clear: We have the Joe Kaeser, President and Chief technologies, we have the business cases, and we have the responsibility. Now all we need is Executive Officer, Siemens AG the commitment.” “Making the transition to a low-carbon Eldar Sætre, President and Chief economy is a bigger task than any single company alone can achieve. For us to Executive Officer, Statoil ASA contribute more and faster, we need urgent action from policymakers to enable clear, stable and long-term regulatory frameworks.” “At COP21 in Paris this December, we need Murilo Ferreira business, governments and civil society to come together to set a global framework that enables CEO, Vale greater international ambition while securing justice and prosperity for all.” 12 The United Nations Global Compact-Accenture CEO Study 13 Growth and Innovation: A Climate of Opportunity Business leaders see Figure 1: Business leaders believe climate action is an urgent priority for business to address climate change as Disagree Strongly 1% disagree 1% an urgent priority for Neutral 7% business—but do not believe their industries are doing enough Climate change is an urgent priority for business, presenting a clear business Agree 43% Strongly case for action and opportunities for The climate challenge agree 48% growth and innovation – but companies is significant and are not doing enough, and government action is an urgent action will be essential to unlocking the priority for business full potential of the private sector. That is the unambiguous view of business leaders in our latest survey of United Nations Global Compact participants. Fully 91% of the 750 business leaders we surveyed, across 152 countries and 41 industry sectors, believe that the climate challenge is significant and that action is Data based on UN Global Compact-Accenture survey of 750 Global Compact participant companies an urgent priority for business – not just in the interests of the planet, but core to the with annual revenue in excess of $1 billion in certain sectors perceive the climate future success of their companies. see climate change as an urgent priority, challenge particularly acutely: 100% More than half (54%) of business leaders and 70% see opportunities for growth and of business leaders we surveyed in the surveyed believe that climate change innovation – but less than one-quarter mining and metals industry, for example, will create opportunities for growth and (24%) believe that progress is on track. and 97% of those in the utilities sector innovation for their company in the next see climate change as an urgent priority. In the context of the 21st session of the five years, and 48% believe that there But despite the clear impact of climate Conference of the Parties to the United is already a clear business case in their change on the economics of their sector Nations Framework Convention on Climate industry for action on climate change. and the drivers of future success, just Change (COP21) negotiations in Paris 35% and 44%, respectively, see their But amid this strong belief in the later this year, this marks an important industry peers doing enough. importance of urgent action, and the recognition of the gap between ambition opportunities that action on climate change and execution, and promises bolder action Strikingly, for industry sectors that will can present, just one-third of business from the private sector in collaborating be at the center of global initiatives to leaders surveyed believe that progress with governments and policymakers to address the climate challenge, very few is on track to restrict global warming to address the climate challenge. business leaders in the financial services less than 2 degrees Celsius (2C)—and just (25%) and energy (26%) sectors believe Our sample of 750 UN Global Compact one-third believe that companies in their their industries are making sufficient participant companies reveals industry are doing enough. efforts to restrict global warming to less instructive findings on business leaders’ than 2C, demonstrating the scale of the These views are particularly pronounced approaches to climate change. Against challenge in extending the commitment of among the world’s largest companies: the backdrop of climate challenges leading companies to businesses globally. 94% of business leaders from companies reshaping industry dynamics, leaders 14 The United Nations Global Compact-Accenture CEO Study Kurt Bock CEO, BASF “Limiting [global] warming to 2C involves lowering the energy demand of houses. The potential that enterprises have for substantial technological, economic and At the same time, we have been driving technological innovations for a institutional challenges”. innovating in order to reduce the fossil low-carbon future can also be seen in fuel demand and associated carbon our R&D expenditure. BASF spends more This quote from the Fifth Assessment emissions in transportation radically, than 50% of its annual R&D budget of Report of the Intergovernmental Panel starting with lighter materials. Realizing 1.9 billion euros on solutions in the area on Climate Change points out the that electric cars with an increased of climate protection and energy and scale of progress demanded from our battery performance will allow for larger resource efficiency. society to address climate change. As a cruising ranges and thus “change the business, we will play an important role game”, we began to work intensively on And this is where we come full circle to find the answers to this challenge and materials for more efficient batteries. – back to the regulatory framework related issues, such as the availability of mentioned at the beginning. The water and raw materials. Just as we drive product innovations, investments in R&D are always long- we also further develop our own term oriented with the ultimate target The challenge will be to develop production processes. Since 1990, to improve processes or go for new solutions, which enable the growing we have reduced the greenhouse gas technologies. At COP-21, politicians have world population to attain a high intensity of our production by 74%. the chance to set up a long-term, reliable standard of living while using resources In order to continue on this path, we emission reduction framework, enabled most efficiently. With an adequate just set ourselves the new corporate by low-carbon technologies. The national regulatory framework in place, and target to implement energy efficiency contributions to this framework need to guided by an agenda for sustainable management systems at all our be globally harmonized. This is key as development as laid out by the UN, production sites by 2020. However, we the economy will only be able to fulfill its the economy will be able to act as a have to realize that the technological role as a “broker” for the best possible “broker” and facilitate the best possible improvement of existing processes has global distribution of the limited carbon distribution of limited resources. physical limits. That is why we are also emission budget, if we have comparable looking for disruptive innovations for our levels of greenhouse gas reduction At the same time, substantial production processes. In this respect, efficiency globally rather than regionally technological innovations are required I am convinced that cross-sectoral diverging concepts and measures. to enable every human being to co-operations play an important role. lead a “good life” without overusing I am convinced that with such an Together with ThyssenKrupp and Linde, the resources. These technological agreement in place, investments into for example, we are working on a new innovations are mainly driven by incremental technological improvements process for the production of hydrogen (a enterprises: in order to be able to assert as well as into R&D for breakthrough basic material for the chemical industry) themselves in competition, they invest in innovations would further increase. that is much more carbon efficient than research and development and introduce Creative minds in business all over the the conventional process and at the new technologies into the market. world would have a clear picture of the same time delivers metallurgical carbon for use in the steel industry. Similarly, low-carbon future they are innovating Both the incremental further we have teamed up with other chemical for, finding answers to the substantial development of existing products as companies in a Low Carbon Technology challenges we are facing. well as game-changer innovations are key contributions to this end. For Partnership initiative. Jointly we are example, BASF has continuously been analyzing the potential of various game- improving and developing insulating changing innovations for carbon emission materials that help in significantly reduction in chemical production. 15 Business leaders are more To many observers, the Business & Climate Summit, held in Paris in May fueling the ambition and determination of negotiators in Paris, but also in engaged than ever before 2015—a symbolic six months before innovating the solutions that will enable ambitious commitments to be realized— on the climate challenge the beginning of COP21—marked a sea change in the public role of the private the United Nations Global Compact, The run-up to the Paris climate sector. Previously, many business Caring for Climate and Accenture conference, COP21, has focused attention leaders were perceived to have been Strategy have partnered this year to on the ability of the global economy publicly content to wait for action conduct a Special Edition of the long- to transition toward a low-carbon from governments; now, against the running CEO Study research program. future. As governments, policymakers, backdrop of country-by-country national Usually conducted every three years, the businesses and nongovernmental commitments (“intended nationally CEO Study examines business leaders’ organizations come together to forge a determined contributions,” or INDCs), attitudes toward sustainability, and universal agreement limiting the rise in senior figures across industry sectors since its first publication in 2007 has global average temperature to 2C above began to call for ambitious action to traced the development of sustainability preindustrial levels, attention is focused address the climate challenge. strategies from philanthropy and on a settlement that enables continued corporate social responsibility toward a Recognizing the ever-increasing landscape in which environmental, social economic growth and prosperity while importance of the private sector and governance issues have become a reducing the environmental impact of to the climate debate—not only in critical part of business as usual. human development. Figure 2: Business leaders do not believe their industries are doing enough to address climate change 100% Mining and Metals 35% 97% Utilities 44% Industrial Engineering 96% 53% 95% Communications 50% Infrastructure, Travel 93% and Transport 30% 93% Support Services 12% Energy 92% 26% Chemicals 90% 29% Consumer Goods 90% and Services 38% 88% Financial Services 25% 86% Healthcare and Pharma 49% 82% Electronics and High Tech 38% Business leaders who believe climate change is significant and an urgent priority Business leaders who feel sufficient efforts are being made in their industry to restrict global warming to less than 2 degree Celsius Note: Percentage represents the proportion of respondents selecting ‘Strongly agree’ and ‘Agree’ 16 The United Nations Global Compact-Accenture CEO Study Joe Kaeser President and Chief Executive Officer, Siemens AG Committing to cutting our global carbon energy efficiency at offices and factories, “carbon credits” from credible organizations footprint is not only prudent — it’s profitable. including sites in the United States, working to reduce carbon around the Germany, China, Brazil and Britain. world, ranging from reforestation efforts A number of major companies — from These investments are based on existing to updating power plants. PepsiCo to Walmart to U.P.S. — have strategies and promising results. recognized that corporations have a Through these steps, we hope to responsibility to address the causes of At our gas turbine plant in Berlin, demonstrate to other companies that climate change before it is too late. we installed automated heating and cutting your carbon footprint is not only ventilation systems and moved to more possible, but profitable. With today’s We do not have to wait for an energy-efficient lighting. At our plant in software and technology, it’s easier than international treaty or new regulations Sacramento, where we build light-rail ever before to increase efficiency. And to act. At Siemens, the global industrial vehicles and Amtrak locomotives, we while it requires a substantial investment, manufacturing company I lead that installed solar panels that generate about it will pay for itself quickly. In fact, we makes everything from wind and gas 80% of the plant’s energy needs. expect our $110 million investment to pay turbines and automation systems to for itself in just five years and generate high-speed trains and M.R.I. machines, While time consuming and labor $20 million in annual savings thereafter. we understand that taking action is not intensive, requiring us to go system by In other words, cutting your carbon just prudent — it’s profitable. system and location by location, the footprint is not only good corporate effort is paying off. Between 2010 and citizenship — it’s also good business. That’s why, today, we are committing 2014, we increased our facilities’ carbon to cut our global carbon footprint in efficiency by approximately 20%. We also I do not want to make this effort sound half by 2020 and to make our global will require Leadership in Energy and simple. This requires major support at operations carbon neutral by 2030. We Environmental Design certification for all levels of the company, particularly at will accomplish this by eliminating a vast all our new buildings, including our new the board level. It requires that we take majority of our carbon emissions, while global headquarters in Munich. a longer-term view when it comes to also supporting projects that reduce investment decisions. It means accepting greenhouse gas emissions outside of We will also focus on our company fleet of a longer payback period for energy- Siemens, known as carbon offsets. Our about 45,000 vehicles producing roughly efficiency measures. net CO2 emissions will be zero. 300,000 metric tons of carbon emissions per year. In Germany and elsewhere, we But no effort can be spared and all of Worldwide, Siemens employs more than have already lowered emissions by the us must do something. While we remain 340,000 people, does business in over purchase of more fuel-efficient cars for hopeful that global policymakers will come 200 countries, and operates nearly 300 our employees and service teams. Now to an agreement at the United Nations major production sites. Last year, we we’ll do this on a global scale. Climate Change Conference in Paris later were responsible for 2.2 million metric this year, we also know that the business tons of carbon emissions. That means We will increase our use of distributed community does not have to wait to act. our global carbon footprint is about energy systems at our own sites — by three-quarters that of Washington, D.C., combining solar panels, wind and highly As we approach the COP21 negotiations where our United States headquarters is. efficient gas turbines with intelligent in Paris, the opportunity is clear: We have energy management, smart grids and the technologies, we have the business So how does a company cut its carbon energy storage solutions. cases, and we have the responsibility. footprint in half in just five years? We’re Now all we need is the commitment. targeting facilities, vehicles and fuel. Finally, we will buy clean power. To make up for the emissions that cannot be avoided in A version of this letter was originally Over the next three years, we plan to the near term, we will purchase electricity published in The International New York invest more than $110 million to improve from renewable sources like wind parks and Times on September 22, 2015. 17 The climate challenge opportunities for growth and innovation for their company in the next five years, industry environments: more than one-third of companies in the utilities is presenting both and 48% believe that there is already a (46%), communications (36%) and infrastructure (33%) sectors believe challenges and clear business case in their industry for action on climate change. that climate change will fundamentally opportunities to disrupt their business within five years. As might be expected, views of climate companies in every sector challenges and opportunities vary The disruptive impact of climate change widely by industry. Leaders of fully on traditional business models and This year, our research demonstrates 85% of companies in the utilities industry sectors, added to opportunities that business leaders are engaging with sector, 84% in chemicals, and 78% in for growth and innovation in addressing climate change not only as a global issue communications see climate change the global challenge, means that climate that demands urgent action, but also bringing about new opportunities by change now sits at the center of many as a powerful disruptive force that is 2020. Similarly, a majority of business corporate strategies for growth. More presenting challenges and opportunities leaders in utilities (77%) and chemicals than half (57%) of business leaders for their companies. Where action on (65%) already see climate change we surveyed believe that investment climate change may previously have reshaping industry economics. Most in climate solutions will be critical to focused on the mitigation of disruptive strikingly, business leaders in certain achieving competitive advantage in impacts and the management of future sectors already see climate change their industry; this trend is particularly risk, business leaders are beginning having a profound and disruptive impact pronounced in certain sectors (90% in to focus on opportunities for growth on their industry, with direct impacts of mining and metals, 83% in utilities), in and innovation. More than half (54%) climate change, the effects of enhanced certain regions (69% in Africa, 65% in Latin of company leaders surveyed—and regulation and government action, and America), and among the world’s largest fully 70% from companies with annual future opportunities to enable new companies (69% of companies with annual revenue in excess of $1 billion—believe solutions all contributing to shifting revenue in excess of $1 billion). that climate change will create Figure 3: Business leaders across industry sectors see opportunities for growth and innovation in addressing the climate challenge Utilities 26% 59% Chemicals 13% 71% Communications 14% 64% Industrial Engineering 17% 49% Financial Services 10% 55% Electronics and High Tech 15% 39% Energy 11% 42% Infrastructure, Travel 10% 43% and Transport Mining and Metals 10% 38% Support Services 0% 45% Consumer Goods and 3% 29% Services Healthcare and Pharma 3% 26% "Strongly agree": Climate change will create opportunities for growth and innovation for my company in the next 3-5 years "Agree": Climate change will create opportunities for growth and innovation for my company in the next 3-5 years 18 The United Nations Global Compact-Accenture CEO Study Gavin Patterson Chief Executive Officer, BT Group When I became BT CEO two years ago, I Managing a company with these types of • Secondly, an ambitious fifth carbon knew we could do more not only to help tools gives us a huge responsibility and budget to help drive further reductions ourselves be a low-carbon company, but it’s one I intend we live up to. in UK emissions. I know we all work also help our customers on this journey too. harder when we have clearer goals We’ve set ourselves a simple ambition. to work towards. Last year we earmarked £440 million To help our customers reduce their carbon to ensure all our energy came from emissions by at least three times our own • And thirdly, a strong global climate renewable sources. BT is now 100% end-to-end carbon impact by 2020. deal in Paris in December, which limits renewable in the UK and in less than temperature rises to 2C. We have a five years’ time, 100% of our global Our toughest challenge is still on the unique chance to make this happen operations will be renewably powered demand side – inspiring people to take and a unique responsibility. where markets allow. action on climate change. That’s why in September we launched 100% Sport. It’s The economic cost of not meeting this But we want to go even further, because a global movement to inspire millions challenge has been well quantified – 4% at BT our purpose is to use the power of of sports fans worldwide to switch to of our global GDP by 2100 according to communications to make a better world. renewable energy to make a better world. the World Resources Institute. It also aims to encourage the clubs, People around the globe have become organizations and players they love to do The benefits grow clearer day by savvy downloaders, digital creators the same. 100% Sport has the potential to day. When we’re connected we come and online shoppers. Our customers accelerate our journey to the next century. together. And when we come together now want and expect always-on we can achieve great things, not just for connectivity. Whether they’re at home or But of course we’re just one company in us today, but for our children tomorrow. out and about. Whether they’re working, a globe of many. Failure to tackle that big streaming entertainment or relying challenge – climate change – puts us all Let’s make Paris not just a footnote in on ICT to keep their global business at risk. So we need certainty. Certainty history, but a turning point for us all. connected. An always-on, constant flow that our investment in renewable energy of data is becoming the new norm. and the low-carbon economy will reap rewards for all. Certainty that the ICT enabled solutions also have the actions of companies like ours are adding potential to remove 9.1 Gt of CO2 from up to a bigger impact on a global scale. industrial production per year. According to the IEA’s Carbon Tracker Initiatives, That’s why, with the UN climate that’s more than 10% of the amount of negotiations almost upon us, on behalf CO2 we can ‘safely’ manage to prevent of my colleagues, our customers and dramatic climate change. A Harvard myself, I’m asking for three clear things Business School study estimates that before the end of the year: across 11 representative economies 4.5 Mt of CO2e could be saved annually from • Firstly, new financial instruments virtualizing services. to help stimulate alternative energy and efficiency projects as well as green bonds. 19 To unlock the potential carbon economy. Recognizing this gap, however, many business leaders have to support governments to take bold and ambitious action. In April 2015, a of the private sector, begun to engage more actively with coalition of 43 CEOs facilitated by the governments and policymakers—both World Economic Forum affirmed their business leaders are publicly and behind closed doors—to shape collective responsibility to “engage looking to close the policy solutions that can unlock further actively in global efforts to reduce global investment from business and begin to greenhouse gas emissions, and to help gap between ambition provide the means of delivering against the world move toward a low-carbon, and execution an ambitious agreement in Paris. climate-resilient economy.” Further, the coalition called upon governments “to Immediately after the Business & Climate Central to our research into business take bold action at the Paris climate Summit in May, worldwide business leaders’ views is an apparent paradox. conference in December 2015 to secure networks pledged to lead the global More than 90% of business leaders we a more prosperous world for all of us,” transition to a low-carbon, climate- surveyed believe that climate change through “a comprehensive, inclusive resilient economy. With widespread is an urgent priority for business, and and ambitious climate deal in Paris on recognition at the summit that business a majority believe that investment in mitigation, adaptation and finance — in could lead the way through scaling-up climate solutions will be critical to future combination with a strong set of clear efforts to build the prosperous, low- competitive advantage in their industry. policy signals from the world’s leaders.”2 carbon economy of the future, business Yet less than one-third of companies leaders called on policymakers to With a clear, consistent policy are allocating significant investment leverage public funds and private sector landscape, business leaders believe to innovate and scale transformative finance toward low-carbon assets; to that the private sector can begin to solutions to the climate challenge, and introduce carefully designed, robust scale up its investment in low-carbon two-thirds report that their industry and predictable carbon pricing; and to technologies with greater confidence. peers are failing to play their part. eliminate fossil fuel subsidies.1 Closing the gap between ambition and This gap between ambition and execution execution—for individual companies, for This coordinated, public engagement is not encouraging for those who believe industry sectors and for the economy was the latest in a reemergence of that the private sector must play a critical as a whole—will depend on unlocking high-profile business leaders addressing role in delivering the transformation innovation to find solutions that can the climate challenge and pledging required to transition toward a low- enable a prosperous future. Figure 4: Business leaders already see a clear business case for action on climate change Utilities 38% 41% Chemicals 13% 52% Mining and Metals 10% 50% Energy 11% 47% Industrial Engineering 19% 36% Financial Services 13% 39% Infrastructure, Travel and Transport 19% 31% Communications 18% 32% Consumer Goods and 5% 38% Services Support Services 17% 21% Electronics and High Tech 12% 23% Healthcare and Pharma 3% 31% "Strongly agree": There is a clear business case for action on climate change in my industry "Agree": There is a clear business case for action on climate change in my industry Percentage represents the proportion of selecting ‘Strongly agree’ and ‘Agree’; data based on survey responses from 750 Business leaders. 20 The United Nations Global Compact-Accenture CEO Study Special Focus – Leading the Way: Views of Caring for Climate CEOs Signatory companies of Caring for Climate, the UN’s initiative for business leadership on climate change, are paving the way for transformative action. Launched by UN Secretary-General This year, to understand the views of factor, cited by two-thirds of respondents. Ban Ki-moon in July 2007, Caring for CEOs leading the way in the private Zenji Miura, President and CEO of the Climate mobilizes business leaders to sector’s response to the climate Ricoh Group, notes the company is looking advance climate solutions and policies. challenge, we have conducted a special for opportunities beyond the boundaries Since the founding of Caring for Climate, survey of CEOs of Caring for Climate of their conventional businesses, “We participant companies have demonstrated participant companies. Our analysis seek to become a leader in releasing and remarkable progress in pursuing reveals instructive lessons on how spreading new low-carbon technologies, comprehensive long-term strategies leading companies are approaching the products, and business models around that seek to align their interests with a climate challenge. Fully 80% of CEOs the world, which address the climate concerted and collaborative global effort surveyed believe that action on climate challenge while growing our business to tackle the climate challenge. Through change is an urgent priority for their in new markets.” investment in energy efficiency and business: not just a top-level agenda innovative technologies, these companies item for business generally, but critical Brand, trust and reputation remains are beginning to forge a pathway to a low- to the future prospects of their own important, as consumers and citizens look carbon economy: in the words of José company. Murilo Ferreira, CEO of Vale, to the private sector for leadership, and Édison Barros Franco, InterCement Board notes that widespread participation companies see an opportunity to steal a of Directors’ President, “We have the in Caring for Climate initiatives are march on their competitors: the third- capital and flexibility to implement low- “essential to the success of our business most important motivating factor cited by carbon initiatives that both make business and the prosperity of host communities” CEOs is the opportunity for competitive sense and can lead the economy to a new and in the words of Paul Bulcke, Chief advantage in their industry. As Joe model of production-consumption.” Executive Officer of Nestlé, “We are Kaeser, President and Chief Executive strongly committed to providing climate Officer of Siemens AG, observes: “We From transformational leaders change leadership in the long-term.” understand that taking action is not just prudent — it’s profitable.” to climate champions This commitment is rooted in the In the most recent UN Global Compact- fundamentals of business success: 77% These motivations provide an illuminating Accenture CEO Study, published in 2013, of Caring for Climate CEOs perceive comparison with the critical factors cited our analysis of the ‘Transformational opportunities for growth and innovation in by CEOs in the 2013 CEO Study. Then, Leaders’ showed how companies addressing climate change – significantly a clear majority of respondents (69%) that combine outstanding business higher than the 54% of UN Global saw brand, trust and reputation as a key performance with sustainability leadership Compact participants globally – and 74% motivating factor, with 49% citing the are more likely to regard sustainability report that their companies are already potential for revenue growth and cost as critical to the success of their seeing rewards from their investments in reduction. The primacy of revenue- and business; to approach sustainability as low-carbon solutions. The motivations of cost-related motivations with regard an opportunity for growth and innovation; these business leaders to invest in climate to investment in climate solutions is an and to attach greater importance to solutions are striking: the potential for encouraging sign for those working to effective partnerships with investors, revenue growth and cost reduction is align global markets with development governments and civil society. identified as the single most important objectives – and confirms that many 21 Figure 5: Caring for Climate CEOs are realizing the business opportunity in investing in climate solutions 80% 77% 74% Action on climate change is an Climate change will create opportunities My company is already seeing urgent priority for my business for growth and innovation for my rewards from our investments company in the next 3 - 5 years in low-carbon solutions Data based on survey of 75 CEOs of Caring for Climate participant companies; data represents proportion of respondents selecting “agree” and “strongly agree”. of the world’s leading companies are important role”; similarly, Zenji Miura stimulating investments in low emissions approaching climate change as a route underlines that the Ricoh Group “calls technologies and the use of the right to innovation and growth. upon our peers to take a leadership resources at the right time.” Reflecting position on climate change.” on the road ahead, and the ability of their Making progress: CEOs call for companies to plan effectively for the ambitious action in Paris Asked what action by governments future, 82% of CEOs believe that business would motivate their companies to needs a clear roadmap and timeline from Amid the commitment of CEOs to accelerate action in tackling climate governments on policies related to future tackling the global climate challenge change, CEOs identify an ambitious global carbon pricing mechanisms. is a clear message to governments and agreement in Paris as the single most policymakers. With one-third reporting important factor: as Niels B. Christiansen, Business leaders also see other that current policy and regulation is President and CEO of Danfoss A/S, notes, interventions from governments and hindering their company from investing “we absolutely need to speed up the policymakers as part of the critical in low-carbon solutions, fully 87% implementation of low-carbon solutions, pathway towards unlocking further of CEOs believe that a long-term and a strong agreement in Paris could private sector investment. Nearly half of agreement in Paris is critical to unlock serve as a much welcome accelerator.” CEOs surveyed (43%) identify a need for private sector investment in addressing legislative and fiscal mechanisms (e.g. tax the climate challenge. Accelerating action: The need incentives, removal of trade barriers, feed- for carbon pricing in-tariffs) that can stimulate investment Business leaders recognize that the in climate solutions; 38% call for more onus is not on the public sector alone. An Addressing the specific elements of a stringent and consistent performance essential element in the commitment of deal in Paris, business leaders emphasize standards that can reduce emissions and CEOs to the Caring for Climate platform the urgent need for a robust system of enhance climate resilience; and 31% see is to engage actively and responsibly carbon pricing (see ‘Special Focus: Carbon the removal or phasing out of fossil fuel with governments and policymakers; in Pricing’, p. 34). Fully three-quarters of subsidies as key to further progress. In this context, 93% believe that greater CEOs surveyed believe that carbon pricing the words of Eldar Sætre, President and collaboration is needed between is an essential tool in accelerating action Chief Executive Officer of Statoil ASA, business and governments, and 84% on climate change. Specifically, 84% “The transition to a low-carbon economy assert that companies must step up their believe that carbon markets, enabled by a is a bigger task than any single company role in providing proactive, constructive robust carbon price, can drive low-carbon alone can achieve. For us to contribute input for governments to create effective innovation and investments in clean more and faster, we need urgent action climate policies. Kurt Bock, CEO of BASF, energy and efficiency: as Claudio Descalzi from policymakers to enable clear, stable emphasizes the need for disruptive of Eni notes, “We believe that carbon and long-term regulatory frameworks to innovations, noting “I am convinced that pricing will discourage high emissions channel investments and technological cross-sectoral co-operations play an options and reduce uncertainty, while advancement in the right direction.” 22 The United Nations Global Compact-Accenture CEO Study Climate Coalitions: The Road to Paris The opportunities Adopting a leadership role on climate will demand that companies orient their Climate Adaptation and Resilience; and Transparency and Disclosure. presented by the climate operations to the demands of the climate This year’s CEO Study Special Edition challenge will be seized challenge, seeking efficiencies throughout their supply chain; scale up their offers the opportunity to understand through investment and investment and innovation targeted at new the perspectives of business leaders market opportunities through innovative with regard to the leadership behaviors innovation solutions; and work collaboratively with they perceive as important, and those governments, regulators and industry on which their company is currently Our research demonstrates that peers to shape consistent and coherent engaged. Asked about the most companies in every region and in regulation that ensures a level playing important behaviors that characterize every industry sector are seeking field for climate change action. leading companies on climate change, new opportunities for growth and business leaders identify responsible innovation in addressing the climate To inspire participant companies to adopt engagement (with 55% selecting challenge. For those companies that an active leadership role in key areas, this behavior among their top three), can take a leading role in innovating the Caring for Climate has developed a collaboration with peers to innovate solutions of tomorrow, the opportunities series of business leadership practices. and scale transformative solutions are legion. But striking out ahead These recommended behaviors for (46%), and investment in low-carbon of competitors and achieving a new companies committed to demonstrating technologies (44%). Respondents also competitive advantage will depend active leadership in addressing the recognize the importance of business on clear, unambiguous leadership and climate challenge provide practical leadership in areas such as climate a commitment to investment in new guidance and blueprints in key areas, resilience in operations and communities markets and new technologies. including Carbon Pricing; Science-Based (44%), and emissions reduction targets in Targets; Climate Policy Engagement; line with science and the 2C limit (43%). Figure 6: Business leaders see responsible engagement, collaboration and investment as critical to business leadership on climate change Commit to responsible corporate engagement 55% in climate policy Collaborate with industry peers to innovate 46% and scale transformative solutions Allocate a significant proportion of investments 44% to low-carbon technologies and solutions Take concrete measures to increase climate 44% resilience in operations and communities Set emissions reduction targets in line with 43% science and the 2º C limit Commit to remove commodity-driven 21% deforestation from all supply chains Commit to achieve climate neutrality by the 14% second half of the century Note: data represents the proportion of respondents selecting each factor among their top three choices. 23 Leadership behaviors: Leadership behaviors: Leadership behaviors: responsible corporate collaboration with industry investment in low-carbon engagement peers to innovate and scale technologies and solutions Business leaders identify the most transformative solutions Business leaders identify investment in important business leadership behavior low-carbon technologies and solutions Through assessing the implications of on climate change as committing to as the third most important leadership climate change, creating and aligning responsible engagement in climate policy. behavior on climate change. In our policy positions, and seizing these Companies play an important role in survey, 44% of respondents identified opportunities to provide constructive providing proactive, constructive input for investments in low-carbon technologies input, leading companies are charting governments to create effective climate and solutions as a critical leadership a pathway for others to follow in their policies. Through the core elements of behavior; the proportion is notably higher engagement on climate policy, shaping legitimacy, opportunity, consistency, in the communications (59%), energy the context for future transformation. accountability and transparency, (58%) and utilities (56%) industries, all businesses can “connect the dots” Respondents to our survey also sectors well positioned to gain from the between their sustainability commitments believe strongly in the importance of market opportunities presented by the and their corporate policy positions. collaboration with industry peers to transition to a low-carbon economy. foster leadership, innovation and scaling The commitment to this principle A commitment to investing in new of climate solutions. Collaboration of responsible engagement is technologies and solutions is a critical among business, governments, civil demonstrated by the group of nearly element in leading companies’ ability to society and the UN can fuel innovation 400 UN Global Compact signatories who shift the response of the private sector and advance solutions to effectively have already made a public commitment to the climate challenge. In moving from address climate change; effective to engage more actively and responsibly an approach of mitigation and adaptation partnerships can help facilitate the with policymakers. Through committing that responds to climate impacts to transfer of technologies, especially to to engage responsibly on climate policy, a proactive, forward-looking mindset developing and middle-income countries. companies agree to: focused on opportunity, innovation In our survey, 46% of business leaders and growth, the private sector can • Identify the company’s climate harness its collective resources to identify collaboration with industry peers change risks, opportunities and become the engine of transformation. to innovate and scale transformative policy influences: To establish Tackling climate change will be central solutions as one of the critical leadership legitimacy and understand to the achievement of the Sustainable behaviors for success. They perceive opportunity, a responsible company Development Goals, ensuring livelihoods advantages for their industry, and the will tune into the outside world and be and prosperity, and the ability of beneficiaries of the solutions it can open to understanding the implications companies to invest in innovation and provide, but also for their own company: of climate change. technology will be critical. 48% believe that broad action by business • Align words with actions, ambitions in their industry will accelerate market Leading companies are already and influences (both direct and opportunities for their own companies. developing and improving innovative indirect): To ensure consistency and technologies, driving energy efficiency, The emphasis on collaboration is accountability, a responsible company growing the supply of renewable energy, particularly strong in asset-intensive will take steps to review and align leveraging low-carbon innovations industries that need to overcome unique its direct and indirect influences on and building climate resilience. With a barriers to promote innovation: business climate policy. number of leading technological and leaders in the energy (61%), chemicals (61%) and mining and metals sectors social innovations already in place, there • Report on policy positions, (55%) place particular emphasis on is enormous potential to mitigate and influences and outcomes: To ensure collaboration with peers. To meet this adapt to climate change by bringing transparency, a responsible company need, the UN Global Compact Business these innovations to scale. The Caring for will disclose information about how Partnership Hub has been created to Climate Business Forum provides a venue it views climate policy and what it is facilitate such collaboration. It allows for business and investors to demonstrate doing (or has done) to help advance companies to browse existing partnership progress and discuss how to bring policies that reflect that position.3 projects and to showcase those that greater scale to business innovation. have potential for scalability and that seek to engage additional partners. 24 The United Nations Global Compact-Accenture CEO Study Leadership behaviors: through new products and services, and accessing new financing streams. global warming to less than 2C is an effective mechanism for businesses to climate adaptation and address climate change and advance the Business leadership in this area can resilience be driven by risk and opportunity, for global development agenda. In our survey, 43% of CEOs see reduction targets in line Of the 750 respondents to our survey, example, in preempting the potential with science and the 2C limit as one of 44% underlined the importance of consequences of climate change that the most important climate leadership investing in climate adaptation and can affect supply chains, or in expanding behaviors for companies to adopt. resilience across their operations and in into new markets through new products the communities in which they operate. and services. Caring for Climate aims to According to data reported to CDP, highlight leading corporate adaptation more than 80% of the largest 500 Climate change poses risks for human actions to show the benefits of adaptation companies in the world have already and natural systems and, according to and community resilience for the private adopted commitments to reduce their the IPCC, can lead to breakdowns of sector, particularly in developing countries, greenhouse gas emissions. By aligning infrastructure networks and critical and to inform the preparation of company corporate voluntary greenhouse gas services, food and water insecurity, and the strategies and activities in this area. reduction targets with climate science, loss of ecosystems. The consequences of companies can contribute to closing the climate change can have an impact on the Leadership behaviors: gap to 2C, improve performance through utilities and affect operations of businesses, resource efficiency and innovative their supply chains, workplace security, science-based targets solutions, and strengthen stakeholder consumer needs and market expansion. Leading companies are also taking reputation and investor trust. Anticipating and adapting to climate change action to set ambitious climate goals impacts therefore bring multiple benefits Caring for Climate, in partnership with and capture the economic opportunities to companies, such as avoiding costs and CDP, the World Resources Institute (WRI) of a low-carbon transition. Specifically, better managing liabilities, protecting and WWF, calls on companies to align science-based target setting to reduce employees, expanding market shares corporate voluntary greenhouse gas greenhouse gas emissions and limit RELX Group: Capturing the opportunity in big data analytics to transform the future of agriculture With the market for big data and mobile decision tools with broader data sets techniques and resilience to deliver information services valued at over $220 and more sophisticated analytics. better results: by generating detailed billion in 2014, major companies are Through Reed Elsevier Ventures, a insights, for example, farmers can looking to expand their capabilities and global venture capital partnership, make data-based operational decisions access new markets. Across industry RELX invests in disruptive companies on nutrition that optimize yields, sectors, climate-smart solutions are that align with its core competences increase revenue, reduce costs and revolutionizing management and helping to partner in transforming markets lower the risk of crop failure. companies make better decisions, through the application of data, Agworld is currently used by over 17,000 optimize resource productivity, improve technology and analytics. growers and consultants in the U.S., resilience and reduce emissions. Mobile Recognizing the rapidly changing Australia, New Zealand, South Africa and information services, for example, future of farm production, in 2014 Chile, and is at the forefront of farming combined with cloud-based analytics, Reed Elsevier Ventures entered the information solutions. At present, limited are transforming production and land agricultural information management knowledge and mechanisms for the use in the agricultural sector, optimizing and big data market with an investment diffusion of technology are major barriers inputs and improving yields. of $5.4 million in Agworld, an to the expansion of smart agricultural RELX Group, formerly Reed Elsevier, Australian agricultural cloud software and land use techniques: government is one of the world’s largest content, company. Agworld provides a farm intervention to advance local financing technology and analytics companies. management platform which connects systems and increase awareness among The company has rapidly responded key players in arable agricultural fragmented producers will be critical to to changing markets and technologies, production to enhance the efficiency developing markets and driving adoption transforming from print publishing to and profitability of farms. Cloud-based of the big data technologies that fuel digital, and is now driving the transition analytics and mobile information climate-smart farming solutions. from electronic reference to electronic services can improve agricultural 25 reduction targets with climate science, companies should scale up their interests Importantly, our survey suggests that the demonstrating how companies that in low-carbon solutions, only 29% are push for more responsible engagement follow this path can safeguard future already allocating significant investment. may be hampered by the lobbying activities profitability through driving innovation, of some industry and trade associations. enhancing competitiveness, building These gaps demonstrate the challenge While nearly three-quarters of Global their credibility and reputation, and that many business leaders face in 500 respondents to CDP reported that influencing public policy frameworks.4 advancing transformative action on they engaged with policymakers on climate change. Even for those leaders climate legislation through their trade personally committed to advancing Companies demonstrate action on climate change, pressure from associations, our respondents highlight inconsistencies with trade associations a ‘performance gap’ shareholders and other stakeholders, the as one of the greatest challenges to lack of a compelling business case, or between ambition and a lack of clarity in policy and regulation responsible engagement on climate policy: just 45% of respondents (as few execution may be holding them back. Indeed, 14% as 38% in North America) believe the of all respondents acknowledge that industry associations reflect their views Our research uncovers a gap between they are not currently engaged in any of on climate policy. ambition and execution on climate their identified leadership behaviors. action, with notable “performance gaps” between those leadership behaviors that Even on responsible engagement, a CEOs believe are most important, and behavior already adopted by 56% of those actions that their own companies companies in our survey, progress may be have already taken. For example, slower than a glance at the leaders might while 43% of business leaders believe suggest: less than half of respondents companies should set emissions targets in believe that business as a whole is line with science, just 27% report they have providing constructive input to create already done so. And while 44% believe effective climate policies. Figure 7: Companies demonstrate a performance gap between ambition and execution Set emissions reduction targets in line 43% with science and the 2C limit 27% Allocate a significant proportion of investments 44% to low-carbon technologies and solutions 29% Take concrete measures to increase climate 44% resilience in operations and communities 34% Collaborate with industry peers to innovate 46% and scale transformative solutions 38% Commit to remove commodity-driven 21% deforestation from all supply chains 16% Commit to achieve climate neutrality by 14% the second half of the century 10% Commit to responsible corporate 55% engagement in climate policy 56% Leadership behavior considered critical Leadership behavior prioritized by my company Note: data represents the proportion of respondents selecting each factor among their top three choices. 26 The United Nations Global Compact-Accenture CEO Study José Édison Barros Franco Board of Directors’ President, InterCement Climate change poses a threat to the for almost 5% of the world’s greenhouse Because of our leadership in these areas, sustainability of all life on Earth and is gas emissions. We have both a duty and InterCement is prominently recognized the greatest challenge we will face in responsibility to act. among our peers in the Cement the 21st century. While the intensive use Sustainability Initiative, a voluntary of carbon-intensive materials has led At InterCement, we have incorporated movement that brings together the to the incredible pace of prosperity and climate change into our strategy. In largest international cement companies. social progress seen in the last century, 2006, we ratified the “Sustainability We see a strong role for partnerships if we continue on this path all progress Letter,” which described our ambitions in the search for transformational, to-date will be at risk. and long-term vision for economic, industry-led solutions: we are proud to social and environmental issues. In engage in the Caring for Climate initiative Ongoing debate regarding the human 2009, we set out our “Climate Agenda,” and other voluntary business forums, origins of global warming and resulting which comprised nine commitments with universities and with governments, changes in weather patterns are futile. for mitigating and adapting to climate to share our path and identify new In the world today, we are already change. Our current long-term strategy, opportunities. We hope the private experiencing the impacts of climate “Vision 2023” further incorporates sector will, through leadership and change, and they threaten business and the carbon variable and defines our collaboration, unlock scalable solutions economic growth. A new, low-carbon commitments to: that will address the climate challenge. economy has become essential. • Increase our substitution of fossil In Paris and beyond, governments and While we have all contributed to this fuels for alternative energy sources, policymakers will have the opportunity urgent issue, we must now be a part of from 15% to 43.4% by 2023; to finalize the debate on matters that the solution, and InterCement believes are fundamental to creating business that the private sector will have a decisive • Increase additives in the cement opportunities in the construction contribution to make in the transition to production process from 28.2% to sector. COP21 will play a critical role in a low-carbon economy. We believe we 40% by 2023, underpinned by hard- providing mechanisms for encouraging have a moral obligation to act on climate won achievements in establishing new renewable energy and energy efficiency change, reduce the negative impacts technical standards that will substitute and a price on carbon that enforces the from our operations, and pursue business the consumption of natural resources true value of environmental assets opportunities to innovate transformative and reduce CO2 emissions; and solutions. We have both the capital and We have already come a long way, but • Invest approximately $80 million flexibility to implement low-carbon we have to—and we can—do even more. in R&D projects by 2023, achieving initiatives that both make business a low-carbon portfolio that has sense and can lead the economy to a the potential for reducing carbon new model of production-consumption. emissions by up to 40%. Our company works with construction The cement sector also plays materials, a key sector for providing an important role in industrial elements that are essential for human ecology, when it transforms waste, development, including infrastructure, an environmental liability, into an housing, schools, hospitals and alternative fuel. Co-processing is, sanitation. Concrete is the second most therefore, an important element in consumed material on the planet and the our emission reduction strategy. industry’s carbon footprint is responsible 27 Business leaders see renewable energy and low-carbon technologies, boosting access to United Nations Environment Programme Finance Initiative (UNEP FI) advocate the a vital role for policy in innovation and enhancing the resilience integration of climate aspects into decision-making processes. unlocking the potential of communities. of the private sector By setting coherent fiscal mechanisms 3. Performance standards to reduce at the global, regional and local levels, greenhouse gas emissions and The most recent triennial UN Global governments and regulators can provide enhance climate resilience Compact-Accenture CEO Study, published a level playing field that can help to in September 2013, demonstrated a scale up climate-smart innovations, Business leaders believe that the notable change in attitudes over the role and stimulate investment in low-carbon development of harmonized technical of policy. In a distinct shift away from technologies. New frameworks can standards could significantly enhance the widespread faith in market solutions stimulate market-based investment, climate resilience and reduce that was shared by the majority of knowledge and technology development, greenhouse gas emissions, particularly CEOs interviewed for the 2007 and and collaboration. in carbon-intensive areas such as 2010 studies, 83% of CEOs in 2013 infrastructure, construction and highlighted the importance of government 2. Financial instruments to transport. Regulatory standards provide policymaking and regulation in achieving stimulate R&D and innovation certainty and consistency on emission further progress on sustainability. in low-carbon solutions levels, and they send a clear signal that discourages business as usual: nearly This year, for our Special Edition Study The second highest-priority policy half of all business leaders (47%) in our on climate change, we asked business measures, identified by 50% of our survey identify performance standards leaders for their views on the policy respondents, is the creation of innovative as critical to private-sector investment. tools that could enable their companies climate financing mechanisms that to go further, faster on climate change. can unlock private-sector investment Government-led emissions standards and Looking specifically at the climate to address the climate challenge. regulations can be designed to mandate challenge, CEOs see five critical policy R&D is needed not only to develop companies to invest in low-carbon measures that can unlock further private new technologies but also to make improvements and incentivize demand sector investment and address the existing ones more affordable; for low-carbon products while also being climate challenge: government support can help bring simple for companies to understand and forward innovation and technology respond to. Examples of such policies 1. Legislative and fiscal breakthroughs, reducing the costs and include imposing greenhouse gas mechanisms to increase investment the risks associated with investment. emission limits or performance standards in climate solutions on operations and products, such as Mechanisms to support and de-risk efficiency and vehicle emission standards. In our survey, 70% of business leaders long-term investments or early- The need for and adoption of performance identify legislative and fiscal mechanisms stage technologies can include direct standards can be better understood by as a critical element in unlocking grant or research funding, subsidy the private sector with the development further private-sector investment in mechanisms, innovation agreements, of and access to climate-related risk climate solutions. Sector-specific fiscal tax credits or deductions. Government information, including forecasting systems policies can send price signals to the commitments to the Green Climate and vulnerability and exposure data. market, creating incentives for business Fund have the potential to be catalytic, to invest in low-carbon technologies particularly in developing countries, 4. Global, robust and predictable and accelerate the implementation of where public finance can support policy carbon pricing mechanisms existing solutions on a wider scale. improvements, the green bonds market, public-private partnerships, investment Business leaders are standing up in Fiscal incentives and policy mechanisms, screening and innovative financing. support of a price on carbon as an such as rebates, tax credits, feed-in effective way to incentivize low-carbon tariffs and subsidies, can be used to These instruments, business leaders growth and lower greenhouse gas stimulate new markets for innovative believe, can stimulate and grow new emissions. When surveyed, 42% of CEO technologies and overcome entry financing for low-carbon and resilient respondents (and 59% of those from barriers. They can also be used to create economic growth, as investors are able companies with annual revenue in excess demand for low-carbon solutions and to take greater account of climate risks of $1 billion) cited global, robust and to drive adoption of new technologies. and opportunities in their strategies: predictable carbon pricing mechanism Mechanisms also include reducing the UN-supported Principles for as critical to unlocking investment (see barriers to trade and investment for Responsible Investment (PRI) and the Special Focus: Carbon Pricing, p. 34). 28 The United Nations Global Compact-Accenture CEO Study Establishing a price for carbon could 5. Removal or phasing out fossil fuels keep prices to consumers send a clear and predictable signal to of fossil fuel subsidies and costs to producers artificially low, business, which commits governments disadvantage clean energy sources and to penalizing greenhouse gas emissions Many business leaders believe that the divert public resources. and rewarding deployment of low- removal or phasing out of fossil fuel carbon solutions. A meaningful price on subsidies can support the transition to a While subsidy phase-out demands careful carbon can bring about the investment low-carbon economy and establish a level design and implementation, they can offer needed to realize complex and long-term playing field in critical industry sectors. significant benefits to transformative solutions, such as carbon capture and Of the 750 companies represented in businesses and can redirect consumption storage, offshore wind and smart cities. our survey, 41% cited fossil fuel subsidy and investment to clean energy sources. reform as critical to furthering investment The IEA forecasts that accelerated action Carbon pricing mechanisms, such as in climate solutions. toward a partial phase-out of fossil fuel emission trading schemes and carbon subsidies would create fiscal space for taxes, can be complemented by long- The IEA’s latest estimates indicate that investment in efficiency and clean term national or regional energy plans. subsidies for fossil fuel consumption energy, and reduce CO2 emissions by These plans could include targets worldwide amounted to $548 billion in 360 megatons by 2020. for renewable energy use and energy 2013, more than four times the value of efficiency, and they could support the subsidies to renewable energy and more deployment of renewables through than four times the amount invested policies such as feed-in tariffs, fiscal globally in improving energy efficiency.5 incentives and grid integration measures. Consumer and producer subsidies toward Figure 8: Business leaders across geographies see five critical policy measures to unlock private-sector investment climate solutions Europe Asia North America 46% 34% 71% 61% 45% 73% 50% 43% 377 119 38% 40 45% 48% Middle East/North Africa 39% 60% 45% 48% 37% 48% Africa Latin America 22% 59% 27 52% Australasia 42% 81% 37% 52% 76% 36 58% 30% 83% 139 75% 61% 12 54% 58% 59% 33% 33% Legislative and fiscal mechanisms to increase investment in climate solutions Financial instruments to stimulate R&D and innovation in low-carbon solutions Performance standards to reduce greenhouse gas emissions and enhance climate resilience Global, robust and predictable carbon pricing mechanisms Removal or phasing out of fossil fuel subsidies Note: data represents the proportion of respondents selecting each factor among their top three choices. 29 COP21 in Paris will be The extent to which the agreement enables companies to scale innovative 1. Ambitious national targets by all countries in line with climate goals a critical juncture in climate solutions will hinge on its ability Nearly three-quarters (73%) of business international efforts to to effect predictable, robust policy at both the national and international levels leaders surveyed believe that ambitious combat climate change and send a clear and credible signal to national targets in line with climate goals business that low-carbon policies will will be an essential factor influencing While companies are beginning to endure. To truly create value for business, their company’s strategy and investments seize low-carbon opportunities and are the agreement should reduce uncertainty, in addressing the climate challenge. already reaping the reward, the majority ensure competitiveness and build Companies that have seized low-carbon of business leaders in our survey agree confidence in comparable implementation opportunities are increasingly seeing that a long-term agreement in Paris will at the national level. In responding to our rewards, but to go further, business be critical to unlocking further private survey, business leaders identify four key leaders need an ambitious agreement sector investment in climate solutions. elements in an agreement: that sends a clear and credible signal to business that climate policy will drive the world toward a low-carbon future. IDEAcarbon: Corporations in Action on Carbon Pricing Over the next 15 years, unprecedented transparency in this developing market, to delivering a geo sector carbon levels of investment will be required in 2007 IDEAcarbon established the pricing product suite, and eventually to enable the transition of the global Carbon Asset Rating Agency (CARA), a global price on carbon. By joining economy toward a 2C pathway. Green which provides ratings, research and the IDEAcarbon consortium the UN bonds are a new financing instrument strategic advice in the area of carbon Global Compact supports the creation aimed at funding environmental finance. CARA’s objective is to provide of a focused unit within the UN investment, from upgrading building credible analytical tools to measure Global Compact umbrella to enable energy efficiency standards to and predict asset returns in carbon engagement of leading corporations expanding operations in renewable and energy efficiency denominations. and IDEAcarbon to develop and test energy. But to mobilize funds quickly, geo sector carbon pricing. The UN CARA is the world’s only rating credible and transparent project Global Compact is committed to agency focused on carbon and energy assessment standards are required accelerating the development of these efficiency asset ratings. Its Carbon to boost investor confidence. products for its members through a Bonds Rating methodology assesses the fundraising exercise. As a member of Since the market came to life in 2007, quantitative level of “greenness” of a the IDEAcarbon consortium the UN green bond issuance showed strong bond (its Environmental Rating) and the Global Compact will be the umbrella growth, reaching over $36 billion in quantitative amount of carbon returns it is organization for current and new 2014, and is expected to rise to $100 likely to produce (its Carbon Rating). Such members of the Caring for Climate billion this year. Borrowers include standardization is intended to increase initiative to engage with IDEAcarbon. municipalities as well as companies such investor confidence in the market and as Toyota, Unilever, Vestas, Taiwan’s therefore attract private capital. In IDEAcarbon, through CARA, develops technology company ASE, and Thai oil particular, environmental ratings of the tools needed to value carbon and major, Bangkchak Petroleum. With rising cities and regions will allow them to climate action comparatively and investor interest, further growth from more quickly and easily raise capital for consistently, create a global index corporate and municipal bond issuers is environmental projects and acquire the price on carbon, and enable credible expected, particularly as China increases funding needed to execute INDCs. collateralization of environmental assets its antipollution and renewable energy for debt capital markets. As a result, In May 2015 the UN Global Compact investments ($7.8 billion in Chinese developing economies may experience joined the IDEAcarbon consortium corporate bonds are already connected increased capital flows, allowing representing the global corporate to environmental projects).6 them to invest in the technologies and communities’ participation in an important infrastructure needed to both mitigate Since green bonds are an emerging initiative to value carbon and climate and adapt to climate change. asset class, credible standards for what action comparatively and consistently. constitutes an “environmental project” The UN Global Compact and IDEAcarbon The UN Global Compact sees the have not yet been developed, raising the will continue to work with all parties in IDEAcarbon global pricing product risk of “greenwashing” bonds. To ensure an inclusive and focused manner to help initiative as the most credible path achieve merit-­based outcomes we all seek. 30 The United Nations Global Compact-Accenture CEO Study Murilo Ferreira CEO, Vale Vale believes that development can in an open letter published in 2009 with only be sustainable when our company the Ethos Institute, the Sustainable and society grow together, sharing the Amazonia Forum and thirty of our industry value generated through our success. peers. The Letter also indicated ways for In setting and achieving ambitious goals the country to transition to a low-carbon on sustainability, we seek to establish economy, enabling Brazilian business to strong and open relationships with our take advantage of new opportunities and host communities, contributing to the increase its competitiveness. Vale’s Global development of the regions where we are Climate Change Mitigation and Adaptation present. We believe that relationships Policy incorporates the commitments of based on ethics and transparency the Open Letter, establishes a Carbon with communities are essential to the Goal to reduce direct greenhouse gas sustainability of our business. In order to emissions and encourages our value operate safely and work well alongside chain to do the same. communities, we seek to manage and In addition to our commitments to mitigate risk and social impacts and manage the climate impact of our understand their needs and demands, operations, we focus on both the risks collectively building sustainable and opportunities for business, with the solutions for all involved. goal to minimize our vulnerability while Vale recognizes climate change as a major maximizing climate opportunities. In environmental issue that demands urgent particular, Vale supports the development and sustained action. We recognize its of innovative technologies to reduce criticality to our operations, and we are greenhouse gas emissions and increase already monitoring climate phenomena: carbon sequestration, and to develop weather and tide changes, for instance, cost-effective regional climate change have a significant effect on our day-to- mitigation and adaptation solutions. day operations, and potential shifts in Both through my position as CEO disease vectors could also impact the of the Vale Group, and in a personal communities in which we operate. The capacity, I believe that governments and mining sector by its very nature involves policymakers must play a critical role in long-term investment projects in locations creating competitive conditions for all outside of our direct control, making a sectors, while encouraging innovation global commitment to addressing climate and making the transition towards a change, and widespread participation low-carbon and resilient economy more in initiatives such as Caring for Climate, effective. At COP21 in Paris this December, essential to the success of our business we need business, governments and and the prosperity of host communities. civil society to come together to set a As we approached COP15 in global framework that enables greater Copenhagen, Vale was one of the first international ambition while securing Brazilian companies to publicly set out justice and prosperity for all. commitments to action on climate change, 31 Current national pledges are falling 3. Equitable global participation across 130 countries were mobilized. short of the action required to stay within to create a level playing field The group pledged to lead the global the 2C limit, and coalitions of business transition to a low-carbon, climate- leaders are calling for greater ambition Business leaders perceive equitable resilient economy, outlining three central from national governments, declaring global participation to be central in proposals from the private sector, asking they will actively support leadership encouraging competitiveness and creating governments to: introduce a fair and from policymakers who set clear a level playing field for their industries: reliable carbon pricing system; create an frameworks to accelerate investment 66% of business leaders believe this alliance with businesses to support the and deployment of climate solutions.7 component will be very important to their private sector’s efforts against climate strategies and investments. change; and establish a public fund to Business leaders are looking for support the financial sector’s investment governments attending the Paris To reduce disparities in the impact in a decarbonized economy. conference to stimulate private sector COP21 will have on business globally, investment by demonstrating ambition the agreement should involve all major in national commitments, setting long- global competitors, comparable national term goals, and establishing regular commitments, and common rules review periods to increase ambition over for measurement and verification. An time. The level of ambition will reflect agreement that drives governments the impact it can have on the long-term to introduce policy and frameworks plans and investments for business. equitably will reduce uncertainty for business: enabling global linkages 2. Transparency and accountability among carbon pricing systems, for of national obligations example, could avoid carbon leakage and ensure competitiveness across Some 70% of business leaders see the industries and regions. transparency and accountability of national obligations as an essential part Notably, companies in the utilities of a climate agreement in Paris. Leaders (82%), mining and metals (80%) and of companies headquartered in Africa chemicals (77%) sectors, industries (83%) and Asia (83%) place particular that rely on global commodity markets, emphasis on national obligations; felt most strongly about this aspect of those in Europe (67%) are less likely to the agreement. prioritize this element of an agreement. 4. Support for the creation of Business leaders are seeking effective carbon pricing systems transparency and rules related to how the and policies national commitments will be enforced. A clear and standardized systems for The majority of CEOs (61%) believe carbon measuring, reporting and verification pricing systems and policies will be very (MRV) of national emissions would build important to driving their strategies and confidence in business that progress will investments. Asset-intensive industries are be tracked and contributions fulfilled. striking in their belief that carbon pricing A clear work plan would further enable outcomes will be particularly important companies to adjust their strategies and to their strategies: respondents from the investments to align with international chemicals (81%), mining and metals (79%) and national policy measures. and energy (70%) industries identify carbon pricing as a core element in any agreement. In particular, business is seeking clarity from governments on what to This past year, in the lead-up to COP21, expect in the implementation of carbon business leaders across industries markets: 82% of Caring for Climate have stepped up in support of effective CEOs believe that business needs a clear carbon pricing systems: at the roadmap and timeline from governments Business & Climate Summit in May, an on policies related to future carbon unprecedented 25 worldwide business pricing mechanisms. networks representing companies 32 The United Nations Global Compact-Accenture CEO Study Zenji Miura President and CEO, Ricoh With our environment undergoing In particular, with respect to the theme To help promote a low-carbon economy, tremendous change, we are faced with of Harmony with the Environment, we we advocate a carbon price in the United problems on a global level, including launched our Sustainable Environmental Nations global climate agreement. We an increase in the number of disasters Management program which aims to endorse the World Bank’s initiative related to climate change, water achieve environmental and climate goals to support carbon pricing and we and food shortages, and decreasing while also improving profitability. Based are a signatory to the Trillion Tonne biodiversity. As a society, meanwhile, on this concept, we have improved our Communiqué. We also agree with the we are also dealing with expanding production processes and developed new coalitions advocating the importance economic disparities and poverty, human technologies within our core business of strengthening anti-climate change rights issues, and rising pollution levels, domains as a global supplier of office measures and limiting the rise in global as we struggle to decouple growth from equipment and solutions. As a result temperatures to below 2C. We have joined environmental impact. of these efforts, the Ricoh Group now We Mean Business ahead of the upcoming provides products with the world’s COP21 in Paris to amplify our support of Given the urgency of the situation, highest-level energy-saving performance ambitious action by governments. business must take on a greater role and while increasing the efficiency of our responsibility in providing the solutions production processes, and contributing In our long-term vision for 2020 and to the climate challenge, and seek a to reducing greenhouse gas emissions beyond, I set sustainable environmental greater impact on societal outcomes. throughout the life cycles of our products. management as a key priority for our Companies with sufficient capital, company, with a focus on creating new talented human resources, innovation- While Ricoh is seizing the business businesses that will help solve climate producing technologies, and the ability opportunities, I believe international and change beyond the boundaries of our to conduct business on a global scale domestic collaboration will be critical to conventional businesses. In 2015, can bring business-led solutions to more broadly commit the private sector we opened the Ricoh Eco Business accelerate the world’s progress to climate solutions. Ricoh proactively Development Center, in which we have toward a low-carbon economy. engages in collaborative networks and made strategic investments for the calls upon our peers to take a leadership development of new environment- The Ricoh Group has been ahead of position on climate change. For example, related businesses. We seek to become its peers in prioritizing environmental, as a member company of the Japan a leader in releasing and spreading new climate and social initiatives to contribute Climate Leaders’ Partnership (Japan- low-carbon technologies, products, and to the sustainability of society and CLP), we seek to drive private sector business models around the world, which the environment, and in 2002, Ricoh activity for the creation of a low-carbon address the climate challenge while joined the United Nations Global society and we participate in forums to growing our business in new markets. Compact. Based on the principles of foster dialogue among policymakers, this international initiative and our CSR the private sector, and the citizenry. Charter and Code of Conduct, we conduct Through this network, we also urge other corporate social responsibility activities Japanese companies to get more involved across our value chain, in line with the in the issues of climate change. themes: Integrity in Corporate Activities, Harmony with the Environment, Respect for People, and Harmony with Society. 33 34 The United Nations Global Compact-Accenture CEO Study Special Focus – Carbon Pricing In the view of CEOs and business leaders across regions and industry sectors, carbon pricing is an essential tool for governments and policymakers in advancing progress on international climate goals and unlocking the potential of the private sector in addressing the climate challenge. Business leaders see carbon pricing This year, a broad spectrum of business innovation (84%), and that carbon pricing as a route to emissions reduction leaders – both individually and in concert is an essential tool in accelerating action through incentivizing global markets – have called for the wider use of robust, on climate change (75%). to innovate the most efficient solutions effective carbon pricing mechanisms to the climate challenge. By providing to provide predictability and long-term Business leaders identify several pathways an economic signal to high emitters to signals that incentivize investment. that governments can take to enable the decide whether to reduce emissions or Continuing the momentum of the Paris development of a robust carbon price, to continue business as usual at higher summit, in June a group of six major oil providing varying levels of predictability costs, a carbon price can stimulate and gas companies announced a call and flexibility for business. An emissions clean technology and market innovation, to governments around the world to trading scheme (ETS), also referred to as fueling new, low-carbon drivers of introduce carbon pricing. Our survey a cap-and-trade system, caps the total economic growth.8 Through our research, shows strong support for carbon pricing, level of greenhouse gas emissions and it is apparent that many companies even in sectors that might once have allows industries with low emissions are seeking a carbon price to further been considered resistant to such a to sell their extra allowances, creating stimulate and protect their investments development: 79% of business leaders supply and demand for allowances and in climate solutions: nearly two-thirds in the mining and metals industry, and providing flexibility to larger emitters. of business leaders in our survey believe 71% in oil and gas, identify the creation Alternatively, a carbon tax directly sets that support from policymakers for of effective carbon pricing systems a price on carbon by defining a tax rate the creation of effective carbon pricing as critical to the development of their on greenhouse gas emissions. A tax systems will be critical to their company’s company’s strategy and investments. differs from an ETS in predefining a price future strategy and investments. rather than an emissions reduction target, Our conversations suggest that business providing cost predictability to business, Private-sector support to put a price on leaders are stepping up, both individually and raising revenue that can be redirected carbon is growing and broadening. In and collectively, because they believe a toward low-carbon investment. The design 2014, more than 1,000 companies and price on carbon can unlock investment and the policy details can vary within investors spoke up in support of carbon in solutions that can build competitive each; blended carbon pricing systems pricing through a series of initiatives advantage and tackle the climate comprising both an ETS and a carbon tax led by the World Bank. Similarly, the challenge. A price on carbon is regarded could also be used to reflect the variety 2014 Global Investor Statement on as an effective way to incentivize low- of national and economic circumstances Climate Change, signed by more than carbon growth and lower greenhouse among and within countries.9 360 investors with more than $24 gas emissions: nearly half of all business trillion in assets under management, leaders and Caring for Climate CEOs we Support for carbon pricing is growing included a call for “stable, reliable surveyed believe that global, robust and around the world as governments and economically meaningful carbon predictable carbon pricing mechanisms acknowledge that carbon pricing can pricing that helps redirect investment will be critical to unlocking private effectively reduce greenhouse gas commensurate with the scale of the investment in climate solutions. Caring emissions without harming economic climate change challenge.” for Climate CEOs further believe that prosperity. Today, nearly 40 national carbon markets will drive low-carbon governments and 20 cities, states and 35 provinces, representing nearly half of While market readiness is clear, A new study by the Global Commission global CO2 emissions, are participating in global participation and international on the Economy and Climate suggests or preparing for a carbon price. China, for cooperation will be critical to ensure that to “level the playing field” between example, has seven pilot carbon markets, a level playing field for business. A countries of differing climate ambition, and plans for a national emissions framework for global carbon pricing trading partners can coordinate trading system; this past year, California could be implemented by bilateral and the introduction of carbon prices of and Quebec have linked their cap-and- multilateral agreements to ensure global roughly comparable levels to overcome trade markets, with neighboring areas participation amid fears of weakening competitiveness concerns. By working planning to join. Altogether, the initiatives international competitiveness; greater together, countries can also benefit in operation today are valued at almost international cooperation among national from knowledge sharing on best $50 billion, and many are proving they coalitions can help to minimize the practice, greater transparency, and the can benefit both the environment and perceived risks and accelerate action. opportunity to link trading schemes economies.10 In the U.S., for example, The views of business leaders confirm where appropriate. Business leaders are the nine states that participate in the that global participation will be critical: also seeking clarity from governments Regional Greenhouse Gas Initiative cut 79% of business leaders who support on what to expect: 82% of Caring for their emissions by 18% and grew their global carbon pricing frameworks believe Climate CEOs believe business needs GDP by 9.2% in 2009–13; emissions in the that equitable global participation will be a clear roadmap and timeline from remaining states fell by just 4%, with GDP important to leveling the playing field in governments on policies related to growth of 8.8% over this same period.11 their industries. future carbon pricing mechanisms. Criteria Business driver Survey findings from C4C CEOs Internal Price • Set an internal carbon • Risk management and • 72%: The use of an internal price high enough preparedness carbon price in business to materially affect operations can help drive investment decisions to • Finance investment in energy efficiencies and reduce costs drive down greenhouse efficiency and renewable energy gas emissions • Innovation to meet customer demands and develop low-carbon products and services Public Support • Publicly advocate policy • Policies that reward climate • 84%: Companies must step mechanisms that take performance up their role in providing into account country- proactive, constructive input for specific economies and • Leveling the playing field and governments to create effective policy contexts policy clarity climate policies • Respecting and supporting UN goals Reporting • Communicate on • Continuously improving • 74%: My company is already progress over time on performance seeing rewards from our the two criteria above in investments in low-carbon public corporate reports • Measuring efforts and best solutions practices • Creating investor and societal trust and confidence Note: survey data from Caring for Climate-Accenture survey of 75 CEOs from Caring for Climate participant companies 36 The United Nations Global Compact-Accenture CEO Study Companies are taking action to Pricing Champions by aligning with the Working Group on Carbon Pricing has prepare for and promote carbon Business Leadership Criteria on Carbon also been formed to mobilize business pricing policies. The Caring for Climate Pricing: more than fifty companies from on a global scale to take a leadership Business Leadership Criteria on Carbon various sectors and regions have already stance on carbon pricing, contribute to Pricing, launched at the UN Secretary- become Carbon Pricing Champions. building confidence on making markets General’s Climate Summit in September work for the climate, and encourage 2014, comprises three distinct but Through such initiatives, governments policymakers to take proactive measures overlapping dimensions for business and business alike will have considerable to develop and implement carbon pricing action: integrating carbon pricing into support available to deploy carbon policies and mechanisms. At the Caring long-term strategies and investment pricing mechanisms. The Carbon for Climate Business Forum at COP21 decisions; responsible policy advocacy; Pricing Leadership Coalition, which in December, Caring for Climate will and communication on progress. All brings together leaders from across issue an Executive Guide to Carbon three dimensions of the criteria are government, the private sector and civil Pricing Leadership, which will provide a aligned with limiting the increase in society, is working to increase knowledge framework for business leadership on global mean temperature to 2C above on effective carbon pricing systems carbon pricing, with practical guidance to preindustrial levels. Ahead of COP21 and helping to define the business and inspire business to realize the business and beyond, Caring for Climate is calling economic case for carbon pricing. The leadership criteria. for companies to become Carbon Caring for Climate Business & Investors Figure 9: Business leaders in support of a global carbon pricing framework believe equitable participation can level the playing field Utilities 91% Industrial Engineering 89% Chemicals 84% Infrastructure, Travel and Transport 81% Health Care and Pharma 81% Energy 81% Electronics and High Tech 79% Support Services 79% Consumer Goods and Services 78% Mining and Metals 73% Financial Services 72% Communications 58% 37 38 The United Nations Global Compact-Accenture CEO Study Claudio Descalzi Chief Executive Officer, Eni S.p.A. In the coming decades we expect the It is for this reason we have launched a The challenge of climate change demand for energy in the world to grow. series of new initiatives in collaboration requires all of the creativity of the new Meeting this demand in a sustainable with our industry peers. With a number Thomas Edisons and Steve Jobs. But manner, respecting a planet that now of other large energy companies we have also, and above all, it requires the effort is home to seven billion people, is an created the Oil & Gas Climate Initiative, of governments, businesses, religious enormous challenge that requires an operational coalition that is working institutions, civil society and all people courageous decisions. But one thing to find practical solutions to reduce CO2 of good will, to “act together and agree” makes all this urgent: we have to limit emissions and to lay the foundations for with the goal of the common good the rise in temperature to below 2C, a future in which both natural gas and and the dignity of every human being. otherwise the phenomena linked to renewables will play a leading role. We We need solutions that do not cause climate change will become irreversible. were among the first to sign up to the disparities and do not penalize countries And currently, we are not succeeding. Global Gas Flaring Reduction project, that are still growing. promoted by the World Bank, which has a The scientific data collected by the very specific goal: zero routine gas flaring Moreover, along with the other five International Panel on Climate Change by 2030, i.e. to stop the burning of excess major groups in Europe in the industry (IPCC) leave no room for doubt. We need gas generated by extraction plants. (BP, Shell, Total, Statoil and BG), we to reduce CO2 emissions by 40-70% invite the UN and Government leaders by 2050 and eliminate them by 2100. Technology can be of great help, if directed to work with us to define a clear line Instead, they are still growing: in 2010 towards innovative choices that are able of global action on carbon pricing and emissions of greenhouse gases reached to drive the opportunities that exist in the promotion of natural gas, in view their highest level in history and their the field of engineering and in digital. of the Paris Conference on Climate growth in the last decade, has been more For Eni, these opportunities could play a Change. We believe that carbon rapid than in the previous three. significant role to facilitate the reduction pricing will discourage high emissions of emissions in our current activities options and reduce uncertainty, while The world’s energy companies are and to innovate new climate solutions. stimulating investments in low emissions ready to do their part and, because of its Eni’s technological platforms aim to technologies and the use of the right history and corporate culture, Eni is in unlock value in sustainable, low-carbon resources at the right time. We believe the forefront of this debate. For decades, energy development. They include clean this is not the time for business as usual, we have been dedicated to find the most mobility solutions and products which but that we now need governments suitable methods of extracting the earth’s have a low environmental impact, smart around the world to provide a precise, natural resources in a way that makes energy technology for energy efficiency, stable, ambitious regulatory framework. it possible to support the growth and gas-electricity network integration and development of the countries in which we smart city solutions, and renewable operate. Today, in which the need is more energy technologies. Eni’s R&D program pressing than ever to re-think creatively on renewables, for example, launched about how to meet energy needs, we in 2007, aims to develop breakthrough are working to put our experience at the technologies for the effective and efficient service of the most important challenge exploitation of renewables, in particular facing our generation. solar energy and biomass. 39 Annex – Beyond Incrementalism: Seizing Market Opportunities In examining the opportunities presented by the climate challenge, Accenture research shows unequivocally that business leaders believe the climate challenge is significant and urgent, and a potentially lucrative source of future opportunity and competitive advantage. As our survey of 750 companies demonstrates, more and more business Business is moving In this year’s study, we can clearly discern a shift in business leaders’ leaders are vocal in their belief that beyond incremental attitudes: more than half of business leaders we surveyed now believe that bold action makes business sense, with leading players moving beyond initiatives to bring about climate change will create opportunities incremental reduction to approach a transformation to a for growth and innovation for their climate change as a driver for growth and company by 2020. innovation. Significant investment is being low-carbon economy made globally toward transforming the One stimulus for this shift is the striking As scientific certainty on the causes most critical sectors—energy, agriculture rise in demand for investment in the and potential impacts of climate change and the built environment, for example— low-carbon economy. Evidence suggests continues to grow, business leaders are to low-carbon growth and is already that greening global economic growth increasingly viewing climate change as a delivering significant economic value is the only way to satisfy the needs of critical challenge to address, not only for and major reductions in CO2 emissions. a worldwide population that is likely global development and resilience but also to exceed 9 billion by 2050, driving for the future success of their companies. This investment, coupled with rapid development while reducing greenhouse advancements in technology, is creating Our survey of 750 companies worldwide gas emissions and increasing natural opportunities in new markets with a demonstrates that business leaders resource productivity. Innovative clear business case for investment recognize the importance of climate businesses will create and capture and innovation in climate solutions. change to their business: in the last UN market share in the low-carbon economy Business leaders recognize an epochal Global Compact-Accenture CEO Study by providing the products and services shift toward a low-carbon economy: in 2013, 29% of CEOs—and fully 41% of to the sectors that have the greatest companies across industry sectors are their investors—saw climate change as carbon abatement potential and require moving to innovate climate solutions and a top three challenge for future success. significant levels of investment: energy; adopt low-carbon business models. The 2013 Study showed how CEOs were agriculture, land use and forestry; and city already seeking to move from incremental infrastructure, transport and buildings. Policy support has long played a critical improvements in brand, cost and risk role in the ability of key sectors in the Accenture analysis, based on the work toward a new, transformational approach global economy to preserve resilience of the World Economic Forum, the Food driven by growth and innovation. Asked and future-proof communities for and Agriculture Organization of the United how their businesses could address the needs of tomorrow. As leading Nations, and the International Energy global challenges, business leaders saw companies look ahead to the challenges Agency (IEA), among others, estimates equal impact through inward-focused, and opportunities of the coming that investment between $69 trillion and operational initiatives—such as extending decades, business leaders are clear that $131 trillion will be required by 2030 under the principles of sustainability through government and policymakers will need a baseline scenario. However, an added their supply chain—and outward-looking, to play a smarter role at this pivotal investment of between $13 trillion and market-based solutions, such as deploying juncture to support business in seizing $35 trillion would enable a low-carbon their core products and service offerings market opportunities in the transition to transition and yield operating savings of to address sustainability challenges. a low-carbon economy. between $39 trillion and $45 trillion by 2050, offsetting the additional cost. 40 The United Nations Global Compact-Accenture CEO Study Eldar Sætre President and Chief Executive Officer, Statoil ASA Before government officials and business Statoil, together with many of our peers It is achievable to start working on leaders gather in Paris to negotiate an in the oil and gas industry, believes common monitoring, reporting and ambitious agreement, I would like to take that putting a price on carbon is a fair, verification procedures that enable this opportunity to articulate Statoil’s effective and cost-efficient way to carbon pricing schemes to be linked as positions on the climate challenge. reduce emissions widely. Carbon pricing they emerge across the globe. reduces demand for the most carbon- The starting point for Statoil is that we intensive fossil fuels, and promotes Statoil believes in a price on carbon unequivocally accept the findings of the greater energy efficiency, use of natural because we know it can work. In Norway, Intergovernmental Panel on Climate gas to replace coal and increased we have had a high CO2 tax for more Change (IPCC) 5th Assessment Report investment in low-carbon technologies. than 20 years. Currently, it is about $65 on human-induced climate change. per metric ton. It has helped reduce Climate change is serious and is to a large On 29 May, Statoil, together with five emissions to less than half of the global extent being caused by human-induced other leading oil and gas companies, average while the Norwegian Continental greenhouse gas emissions. We embrace BG Group, BP, Eni, Shell and Total, Shelf remains an attractive oil and the need to limit the global temperature announced our call to governments gas basin financially. According to the increase to 2C and we support the around the world and to the United World Bank, over 40 national and 20 efforts of the United Nations to agree on Nations Framework Convention on subnational jurisdictions, representing necessary actions to achieve this goal. Climate Change (UNFCCC) to introduce half of global greenhouse gas emissions, carbon pricing systems where they do have either implemented or are in Statoil is already taking a number of not yet exist at the national or regional preparation for carbon pricing. actions to limit emissions: prioritizing levels. The call was largely welcomed energy efficiency improvements in our by the UN and civil society. In her reply Statoil wants to be a constructive own operations, such as flaring and to the six CEOs, Christiana Figueres, the partner in addressing the climate methane reduction; growing the share Executive Secretary of the UNFCCC, challenge. With COP21 scheduled for of gas in our production and investing in wrote “… I am confident that your Paris in December, now is the time for us renewable energy and other low-carbon assertion that you want to be part of the to engage with policymakers to enable solutions, especially offshore wind and solution to climate change is genuine.” the right kind of regulation and with civil carbon capture and storage. society to create trust and support for However, some questioned whether it was our contributions. We look forward to However, we realize that making the a tactic for oil companies to delay action, working together with you. transition to a low-carbon economy is suggesting that we are counting on the a bigger task than any single company world not being able to agree on a global alone can achieve. For us to contribute price on carbon. A single global price more and faster, we need urgent action on carbon is not what we seek. Rather, from policymakers to enable clear, stable we are calling for national governments and long-term regulatory frameworks to to introduce carbon pricing and for the channel investments and technological UNFCCC to provide a framework that advancement in the right direction. allows the use and linking of various carbon pricing schemes. 41 New technologies and productivity and achieve a competitive advantage – from mobile-enabled supporting decentralized energy production and connected electric business models are car sharing to GPS-enabled precision cars. A transition in the way businesses demonstrating the business agriculture and big data-enabled smart grids. As companies continue to view markets, customers and natural resources are eliminating the very case for investment integrate climate change and innovation concept of ‘waste’ and capturing its in their business strategies, digital value across sectors: from reutilizing Technology breakthroughs and solutions will become more accessible, biomass waste to enter the $80 billion disruptive new business models are driving greater connectivity and market for advanced chemicals and radically changing the economics of innovative business models, with the energy, to creating a stronger connection climate solutions, making the business potential to generate over $11 trillion in with customers through product returns case for broader industry investment economic benefits per year by 2030.12 and pay-for-use arrangements. The and low-carbon growth. Advances convergence of the digital revolution in digital technologies and materials Digital and technology-enabled and innovative businesses models are science are driving rapid efficiency new user-centric, circular business reducing asset, capital, and energy gains and supporting the diffusion of models are shifting profit pools across intensity, transforming mainstream climate solutions. Digital innovations industries, with a potential reward of industries and putting traditionally and information and communication $4.5 trillion in the next 15 years:13 energy protected industries at risk. The technology (ICT), such as the internet storage, big data analytics and advances transition to low-carbon, climate- of things, machine-to-machine in renewable energy technology, for resilient economies is not only feasible, communication, sensors, social media, example, are driving utilities to shift both technically and economically, but big data analytics and end-user devices, away from centralized high emission also already underway. The challenge are being leveraged across sectors to fossil fuel energy production to more is the ability of companies to go further, develop new revenue streams, improve service-oriented business models faster in scaling investment and growth. Figure 10: Business leaders believe that investing in climate solutions will be critical to competitive advantage in their industry Mining and Metals 30% 60% Utilities 32% 53% Energy 8% 71% Communications 14% 59% Chemicals 13% 55% Infrastructure, Travel and Transport 28% 36% Consumer Goods and 8% 48% Services Support Services 12% 40% Industrial Engineering 23% 28% Electronics and High Tech 18% 30% Financial Services 17% 29% Healthcare and Pharma 11% 29% "Strongly agree": Investment in climate solutions will be critical to achieving a competitive advantage in my industry "Agree": Investment in climate solutions will be critical to achieving a competitive advantage in my industry Percentage represents the proportion of selecting ‘Strongly agree’ and ‘Agree’; data based on survey responses from 750 Business leaders. 42 The United Nations Global Compact-Accenture CEO Study Policy and regulation will • City infrastructure, buildings and transportation: Responsible for Energy—on the brink help business reshape the 40% of global energy-related CO2 of transformation sectors most critical to emissions, cities will increasingly be the hubs of economic growth. The transition to a lower-carbon energy low-carbon growth Demand for efficient infrastructure, system is already underway, with supported by regulatory incentives, leading companies investing in energy The private sector is driving transformative has created opportunities for business efficiency, renewable energy and smart investment in the low-carbon economy. to invest in smart solutions for energy solutions to achieve cost savings Investments in areas such as clean fuels, buildings and transportation where and revenue growth. Across the sector, low-carbon and low-energy buildings; new technologies and connectivity are advances in digital technologies and smart cities using intelligent urban public driving efficiency and enabling low- materials are supporting the development transport and traffic management; and carbon business models. and adoption of smart energy solutions the harnessing of digital, technological including smart grids, connected end- and data revolutions are all being driven While new technologies and business user devices and energy storage, driving first and foremost by the private sector, models are demonstrating a clear the transition to decentralized energy reshaping the sectors most critical to business case for investment and generation and a new, smart energy low-carbon growth: prompting companies to invest in low- landscape. In turn renewable energy carbon opportunities, significant barriers quotas, coupled with technological • Energy: The energy sector is the exist to securing the required scale and advances, are driving rapid efficiency engine of global growth and the speed of progress. New climate solutions gains, putting renewable energy sources major source of CO2 throughout the require industries to rethink their business at increasing cost parity with conventional economy, representing approximately models, develop new competencies, and fuels, and prompting fossil-based 30% of emissions worldwide. To date, invest significant capital up front. For industries to rethink their investments. government and regulatory policy has instance, a step change in investment in played an intermittently enabling role in research and development (R&D) will be The policy landscape may be understood the green growth agenda for the energy required to tackle the climate challenge: to have had a mixed impact on this sector; the transition to a lower-carbon while 29% of companies in our survey transition. Regulation has in some cases energy system is already underway, report that they are already allocating prompted transformative investment with leading companies investing in a significant proportion of their R&D across energy-intensive industries, cutting energy efficiency, renewable energy investment to low-carbon technologies, energy-related costs and developing and smart energy solutions. less than half (38%) believe they already opportunities for new revenue; elsewhere, have the technological solutions to solve business leaders perceive barriers to • Agriculture, land use and forestry: the climate challenge. growth in the uncertainty of future Agriculture, land use and forestry policy development. While technological are responsible for 30% of energy- Policy support has long played a critical progress is building momentum as a driver related CO2 emissions globally and will role in influencing the direction of these of change, regulation may need to further face rising pressure for productivity sectors, but in some areas has failed push industries to seize opportunities: amid growing constraints, creating a to provide clear incentives to business supportive, predictable policy measures significant challenge and opportunity to invest in climate solutions, and the and frameworks could unlock further for business. Innovation is driving current landscape may limit the scale and private sector investment and enable the companies to invest in climate-smart speed of transformation to a low-carbon transformation of the global energy system. solutions such as data analytics, economy. Legacy fiscal measures such sensors and mobile information as fossil fuel subsidies, combined with Investment in energy efficiency and services, but they face barriers to the slow progress of international climate new energy sources will be critical uptake in the absence of supportive negotiations, have weakened market to global economic resilience policy and incentives for farmers. signals that might otherwise incentivize green investment: in our survey, nearly Investment in low-carbon energy one-third of business leaders believe infrastructure will be critical to meeting policy is hindering their investment plans, future demand while decoupling growth and almost three-quarters say policy from environmental impact. The energy and fiscal mechanisms are needed to sector accounts for approximately one-third stimulate further investment. of global greenhouse gas emissions and is estimated to grow by at least 20% by 2030. 43 Already, there are clear signs that energy-related emissions: in 2014, the reduction targets achieved an average economic growth and energy-related global economy grew by around 3%, while of 9% better return on investment emissions have started to decouple. The energy-related CO2 emissions remained than those without targets, and 80% of global patchwork of emerging carbon constant for the first time in 40 years.15 companies achieved higher returns on pricing systems, together with the impact their carbon investments than on their of national and sub-national policies, is Leading companies, too, are investing average investment portfolio.16 The changing the economics of climate action. in energy efficiency measures that can Danish shipping conglomerate Maersk, for In the European Union (EU), for example, cut costs while reducing environmental example, has developed super-efficient the Climate Energy Package mandated a impact. A recent study by the World Triple E class container ships that have 20% improvement in energy efficiency and Wide Fund for Nature (WWF, also increased capacity by 16% and resulted increase in renewable energy compared to known as World Wildlife Fund) and the in savings of $1.6 billion in 2012, while 1990 levels.14 Such efforts are contributing Carbon Disclosure Project (CDP) found cutting fleet CO2 emissions by 50%.17 to a decoupling of economic growth and that companies with greenhouse gas Tata Group: Leadership in climate action opens new investment opportunities Accounting for 6% of global emissions but have also created opportunities to To further market growth, TCCL and 8.5% of global coal consumption in grow new low-carbon markets through believes, policy support will be needed 2013, India is one of the world’s largest innovation. Tata Motors, India’s largest to address three major challenges that greenhouse gas emitting countries, commercial vehicle manufacturer, set hinder current investment: cumbersome with environmental pressure expected up a ”Recon” business to recondition legal procedures for investors, the to increase as the country’s population used aggregates and extend vehicle life, high risk profile of investments, and rises from 1.2 billion to 1.6 billion by generating revenue of $19.6 million in a lack of incentives for financing 2050. Recognizing the need to take a 2014. This year, Tata Motors announced projects. The company recommends leadership role in combating climate it is exploring an electric version of its the standardization of power purchase change, the Indian government has set popular light truck, which would be agreements (PPA) to eliminate the an ambitious objective of becoming a India’s first battery-powered commercial ambiguity that deters investors, and asks leader in renewable energy, requiring vehicle and marks the company’s foray for exemption of stamp duties on PPA investment of $200 billion by 2022. into the electric vehicle market. assignment, reducing the time and cost Strong incentives and policies will be of investment. To lower the risk involved, critical to harness investors’ interest Tata Capital is capturing a piece of the TCCL encourages the transparent and and reach the market potential. country’s growing clean energy market, credible assessment of credit worthiness by establishing Tata Cleantech Capital and the development of innovative The Tata Group, a global enterprise with Limited (TCCL), driving investment into insurance products for renewable energy more than 100 companies operating low-carbon technologies by financing producers. Finally, to incentivize the flow across multiple industries, including the innovation in industries from steel of credit, TCCL recommends that PPAs power, automotive and steel sectors, and power to chemicals and hotels. match international standards. These stepped ahead of national regulation To date, the group has invested $120 measures will accelerate investments in 2009 with its group-wide climate million mainly in renewable energy in its target sectors. policy. Tata Group began by cutting projects but going forward it has its own emissions, and soon realized plans to expand to energy and water As a publicly-committed leader on that low-carbon initiatives also made efficiency projects in key sectors such climate change, Tata Group has been good business sense. Tata Steel, for as smart agriculture, smart grids and proactively engaged in promoting new example, has implemented its climate transportation. The fund has grown and innovative solutions to the global change strategy by adopting lean rapidly and expects to register business challenge. An ambitious national carbon and energy-efficient processes capital of $750 million within five regulatory agenda for clean energy and technologies for steelmaking at years. This growth is accelerated by solutions and aggressive goals for Jamshedpur Steel Works, which have the government’s capacity targets and reducing emissions will not only unlock resulted in estimated savings of $22 tax incentives, which have boosted business opportunities for investment million per year over the last six years. India’s attractiveness in the renewable and growth but also accelerate India’s energy market, with investments in trajectory toward a low-carbon economy. Tata Group’s climate initiatives have clean energy increasing 59% in the first not only generated efficiency benefits, quarter of 2015 alone. 44 The United Nations Global Compact-Accenture CEO Study Although leaders are already realizing has grown more than fourfold,24 and the could create more than $800 billion in the benefits of investment, the IEA company is on track to reduce the carbon revenue for renewable energy companies estimates that a lack of structured footprint of wind energy turbines by 15% and $2 billion for the ICT sector.27 incentives may have left the global over five years to 2015.25 energy productivity market untapped While conventional grid networks often by 50–80%.18 An additional $12 trillion Given the right policy landscape, the waste excess electricity or fail to balance invested globally could yield nearly IEA estimates that investment in new demand and supply, smart grid solutions double that amount in savings over 20 energy sources could reach $400 billion and energy storage are enabling the years and could boost global GDP by an by 2030.26 Despite such apparently integration of intermittent energy, improving additional $18 trillion.19 The resulting positive forecasts, it is striking that grid stability and efficiency, and reducing gains for the climate are also significant: 100% of business leaders surveyed overbuilt capacity. Tesla Motors’ high- reducing energy consumption in one- in the alternative energy sector profile launch of the Powerwall battery is third of the top 1,000 corporations by believe current policy and regulation an example of innovative technology that 10–20% would save approximately one is hindering their ability to invest in is shaping and enabling more efficient gigaton of CO2 per year by 2020. climate solutions. Specifically, 80% of energy usage and unlocking barriers to these respondents in our survey call decentralized energy generation and micro- Technological innovation and for the removal or phasing out of fossil generation. Such energy storage solutions globally-enforced regulation are fuel subsidies and for the imposition of support the integration of intermittent driving the growth of renewables legislative and fiscal mechanisms that renewable energy sources with the can level the playing field and increase electric grid by storing excess electricity As the sector continues its efforts to investment in climate solutions. produced for later use, smoothing the meet future demand, the IEA estimates variability of energy generation to better that the sector will require more than Advances in digital technologies balance with demand. $23 trillion in new infrastructure and materials are supporting the investments. The nature of these development and adoption of smart LG Chem, Aquion Energy and LightSail investments will determine the future Energy are all innovating storage energy solutions prospects of major players across the solutions, and traditional power sector and chart a pathway for the global The transformation toward a low- companies are also looking to enter the economy: investment in low-carbon carbon energy system may be furthest market: Australia’s AGL, for example, energy growth could reduce greenhouse advanced in the electricity sector, where owner of Victoria’s brown coal generator gas emissions by up to 7 gigatons.20 technological breakthroughs such as Loy Yang, the largest power station in smart energy solutions, energy storage Australia, announced it will develop Globally-enforced regulation on renewable and distributed generation are disrupting its own battery package and enter the energy quotas are driving private sector the conventional utility model and solar plus storage market, forecast to investment and technological advances, benefiting multiple industries. In our survey, grow to $1 billion by 2018.28 Advances bringing renewable energy sources toward business leaders in the utilities industry in renewables, smart energy solutions, cost parity with conventional fuels. In are optimistic that climate change will and energy storage are driving the power 2014, global investments in renewable create opportunities for their companies sector to transition to decentralized energy rose to $270 billion, a 700% by 2020 (85%) and most already see a energy generation and requiring increase within the past decade,21 driving clear business case for action (79%). conventional utilities to transition from rapid efficiency gains and dramatically linear electricity production to user- bringing down costs: the cost of wind Smart energy solutions such as advanced centric, service-oriented models. energy has fallen 60–75% over the past analytics, digital interconnectivity and 25 years, and solar costs have fallen 50% big data are enabling utilities to manage Government programs are in some cases since 2010.22 A new analysis by Bloomberg demand and supply dynamically and accelerating the transition: the United New Energy Finance indicates onshore optimize load management: in Colorado, Kingdom’s plan, for example, to introduce wind power is fully competitive with gas for example, data transmitted from wind smart meters in 30 million homes and and coal in a number of countries, with turbines is analyzed with data from weather businesses by 2030 led National Grid to solar closing the gap.23 stations, satellites and other wind farms. As invest more than $40 million to install a result, utilities are able to make accurate smart meters in 15,000 households, Alternative energy companies are forecasts of wind speed and electricity providing digitized real-time electricity driving efficiency gains in the price-to- generation, more effectively integrating usage information to help consumers performance ratio and realizing rapid variable wind electricity into the grid. monitor their consumption. The company growth: Vestas, for example, is investing Smart energy solutions have the potential estimates that consumers will reduce to advance the efficiency of wind energy to abate 2.5 gigatons of CO2 emissions monthly bills by $16 on average.29 through design innovation to reduce by 2030 and bring business benefits to material use. Since 2002, Vestas revenue multiple industries: smart grids, for example, 45 46 The United Nations Global Compact-Accenture CEO Study Governments are enabling and off-grid systems offering a solution Adoption of decentralized energy companies to seize opportunities where grid infrastructure is unavailable or in developing countries can create that can increase energy access expansion costs cannot yet be justified.31 significant social value, and in many cases governments are playing an active Advancements in distributed generation, Companies are already tapping into these role in supporting expansion. Providing coupled with growing demand, have markets and seeing business results: distributed renewable energy solutions in strengthened the business case for M-KOPA Solar, a for-profit social enterprise, remote areas where grid infrastructure renewables in developing markets. Today 1.3 provides an off-grid, decentralized is lacking saves infrastructure costs and billion people have no access to electricity, generation solution in Africa at costs enables developing nations to leapfrog and 2.6 billion lack modern cooking facilities; between 11% and 60% less than kerosene from conventional electricity to advanced more than 95% of this unmet need is in or batteries. The company achieved renewables. Several African countries have sub-Saharan African and Asia, and 84% is revenues totaling $10 million in the first recognized the need to support renewable in rural areas.30 Power generation capacity year of operation, and is projecting $50 energy access: Kenya, for example, has is expected to quadruple in these areas by million in 2015 and $100 million in 2018, funded the solar for schools program 2040, and almost half of the growth will with more than 180,000 units currently while also introducing feed-in tariffs, 0% come from renewables, with mini- installed in Kenya, Tanzania and Uganda.32 import duties, and VAT exemption for renewable energy companies.33 Siemens: Early investment is bringing top-line growth, but smart policy can accelerate the expansion of renewables The global energy landscape may 2010 to $42 billion in 2014. The sector. Although renewable energy be profoundly altered in the coming carbon impact of the Environmental technologies are becoming increasingly decades, with the rise of energy Portfolio has also been significant: in cost competitive, Siemens believes efficiency–a market already valued at 2014 alone, Siemens products helped the next great challenge for its wind $310 billion and steadily growing–as customers avoid 428 million metric tons business will be the transition from the “fifth fuel,” and the rapid growth of of CO2, equal to approximately 50% of growth to optimization, as the company renewable energy generation.34 Germany’s annual emissions.36 and its peers seek to reduce average electricity production costs. Sustained Siemens, a German industrial A key driver of Environmental Portfolio market growth will rely on achieving conglomerate and one of the world’s growth has been the company’s wind cost competitiveness, and will require largest technology companies, has been power business. Siemens identified efficiencies throughout the value chain quick to act on the opportunity. In 2007, renewable energy – and wind power in as well as increased investment in the company developed its Environmental particular – as a growth area in 2004. technical innovation. Portfolio (EP) of products, technology Despite the relative immaturity of the solutions and services that contribute to wind market and a small installed These developing markets are creating environmental and climate protection. base at the time, Siemens acquired significant opportunities for businesses The portfolio incorporates products Danish company Bonus AG, a pioneer that invest early, but future prospects, that offer a 20% energy efficiency in offshore wind energy. In the years and the scale and speed of development, increase over comparable alternatives since the acquisition, the wind power will depend in large part on the attitude or 100,000 metric tons of carbon market grew rapidly, with annual and actions of policymakers. Inconsistent emissions reduction; renewable energy growth reaching above 40% and policy may have presented a hindrance to technologies such as wind turbines generating impressive financial results companies’ efforts to invest in technology and smart meters; and environmental for Siemens: the company’s wind power and innovation: the sporadic nature of technologies such as pollution controls division has grown from a $300 million the U.S. Production Tax Credit (PTC), and water treatment systems.35 to a $6 billion business, with over for example, created an unpredictable 25,000 megawatts of installed wind environment for investors. To create a Since the launch of the Environmental level playing field that provides companies power capacity in operation globally.37 Portfolio, Siemens has steadily a clear, coherent and predictable increased its R&D allocation to this The power industry is heavily regulated, investment case, policy needs to be smart, share of the portfolio. In 2012, $1.9 and Siemens’ decision to be an early stable and transparent to business; with billion was invested there. The company investor in renewables was influenced an ambitious deal in Paris, and greater is already realizing the benefits of its by regulatory incentives, which have clarity in regulation and standards, investment: Environmental Portfolio been essential to growth and enabled companies like Siemens can power the revenue grew from $34 billion in the quick and efficient scale-up of the next wave of innovation. 47 While oil and gas leaders are also in large U.S. solar player SunPower.39 could reduce costs and improve labor investing in lower-carbon solutions, Nevertheless, low-carbon business and efficiency, from virtual warehouses to many seek regulation to move the technologies remain well outside the radio-frequency identification and industry forward core competencies of oil and gas majors, drones and robots. and many have struggled to integrate Unlike the utilities industry, oil and these businesses. Despite low crude prices, global gas companies are finding it less investment in renewables has continued clear how to fit low-carbon business With the decline in oil and gas prices, the to grow, and industry leaders are bringing opportunities into their current industry has become more selective in clean energy back in focus: Statoil, for models. Over the past decade, the oil investments, as it balances the potential example, has created a new division to and gas industry has shown bursts of opportunity to invest in a business that drive business growth in renewables and investment in alternatives to fossil fuels: may eventually replace fossil fuels, and new energy solutions, stating that the BP, for example, invested $8 billion in justifying such investment when it is transition of the global energy systems alternative energy between 2005 and increasingly challenged in the core oil to a low-carbon society will create new 2013,38 and four years ago Total made and gas industry. Many are looking to opportunities in these areas. The larger a $1.4 billion purchase of a 60% stake technology innovation and solutions that oil companies are starting to reassess Statoil: Shaping a complementary low-carbon business to drive profitable growth Attention on the climate challenge and focus on offshore wind, an industry Beyond growing its renewable energy the emergence of new policy frameworks with a promising outlook for technology business, Statoil is a champion for the are creating new business opportunities advances and one in which the company development and use of CCS. CCS is the for low-carbon energy. Growing demand, could apply its core competencies in only technology currently available that increasing investment, and advances in offshore engineering, marine operations, can achieve deep cuts in CO2 emissions technology are opening up markets in HSE standards and project execution. across fossil-fired production and many new energy solutions: in 2014, global Statoil’s current offshore wind portfolio carbon-intensive industries. Statoil investments in renewable energy rose to is located in the United Kingdom, the engages in CCS because it is a tool to $270 billion, a 700% increase in the past world’s leading offshore wind market; reduce the company’s CO2 footprint and decade.42 Investment in carbon capture Sheringham Shoal has been in operation also enhance its competitive position as and storage (CCS)-equipped facilities since 2012, while Dudgeon is planned to a carbon-efficient oil and gas producer. averaged $2 billion per year between be in full operation by the end of 2017. CO2 utilization can be an opportunity to 2007 and 2012, with further investment Together, their 155 turbines and 719 increase field recovery, and industrial of $30 billion per year required by 2020 megawatt capacity will generate an CCS could address the CO2 emissions under the 2C scenario.43 estimated 2.8 terawatt hours annually, resulting from the use of oil and gas roughly equivalent to the annual products and protect long-term demand. Statoil is well-positioned to seize these electricity consumption of 630,000 opportunities by utilizing its long-standing The main barrier to wind power and average homes in the United Kingdom. core capabilities in the oil and gas industry. deployment of CCS is the lack of a In May, Statoil created a new business Over the past decade, Statoil viable price on carbon. Many of these area, New Energy Solutions, which will has proved it can generate value projects are large in scale, and there seek opportunities to deliver attractive throughout the asset development, is currently no pricing signal that gives returns through technology and business construction and operation phases. sufficient comfort to investors. The innovation in low-carbon solutions. The Building on these achievements, the development of low-carbon solutions, new business builds on Statoil’s existing company seeks to further develop therefore, will depend on suitable offshore wind portfolio, and reflects the industrial solutions, reduce costs and support mechanisms, and for the company’s aspirations to complement increase competitiveness to grow a time being, only strong public-private its oil and gas portfolio with profitable profitable offshore wind portfolio. partnerships will allow projects to growth in renewables and new energy. Statoil is innovating new offshore wind move ahead. Statoil makes active solutions: the cutting-edge Hywind advisory contributions to the European Statoil sees no contradiction between demo, located off the coast of Norway, Union, national governments and oil, gas and renewable energy; the features the world’s first full-scale international organizations advocating company pursues an all-of-the-above floating offshore wind turbine, a the development of an expedient strategy. Statoil began its renewables technology that Statoil may use for regulatory and commercial framework. business in 2003 when the industry future wind farms elsewhere. was young, and in 2009 decided to 48 The United Nations Global Compact-Accenture CEO Study their portfolios in the context of the While several oil and gas companies Business leaders note the importance energy transition, with the most concrete and emerging collaborations are leading of political leadership to support the action being taken through a focus the way through investment in low- development of new technologies. More on cleaner fossil fuels, natural gas in carbon solutions, they acknowledge than half of business leaders surveyed particular. Almost all majors are focusing that regulation is needed to move the in the utilities sector, and fully 80% of on gas and see it having the fastest industry forward. Our survey suggests those in the alternative energy industry, rate of primary demand growth among that while the industry is considering call for the removal or phasing out of hydrocarbons: BP is forecasting 1.9% the opportunity in these businesses, fossil fuel subsidies, leveling the playing annual growth of natural gas in primary many are unable to deliver given market field for renewable energy sources with energy through 2035,40 and ExxonMobil challenges and the current policy conventional fossil-based industries. anticipates 1.5–1.6% annual growth landscape: 60% of oil and gas producers Business leaders in those industries believe through 2040.41 Natural gas production believe investing in low-carbon solutions the most important policy steps need currently accounts for approximately is critical, but only 48% are actually to be taken at the global level: a strong half of production for Total, Shell, BP allocating significant investment. carbon price, for instance, could redirect and ExxonMobil. Similarly, extractive industries are funding for research and development in being held back: leaders of mining a wide range of technologies and support Business leaders believe broader industry companies, for example, also feel they the installation of new infrastructure. action can accelerate investment: in are underinvesting, with 73% believing Supportive, predictable policy measures our survey, just one-quarter of business they should, versus only 55% already and frameworks could unlock further leaders in the oil and gas industry (28%) doing so. Specifically, the issue of private sector investment and enable the believe their peers are doing enough, carbon pricing remains key to unlocking transformation of the global energy system. while approximately half (48%) agree potential profits from renewable energy: that broad action by business in their earlier this year, a group of major industry will immediately accelerate European oil companies signed a public market opportunities for their companies. letter backing carbon pricing as a means Although the industry has been divided on of reducing emissions and transitioning climate action, companies are beginning to a lower-carbon economy. to collaborate in their approach to clean energy and emissions reduction. Across industries, technological In April, oil companies and governments progress is building momentum came together and signed an agreement as a driver for change that will, for the first time, end the While technological progress is building practice of routine gas flaring at oil momentum as a driver of change, production sites by 2030. Italian governments and policymakers may multinational Eni, for example, has need to further push industries to already made significant progress on seize opportunities at greater scale the commitment, reutilizing the gas to and speed. Business leaders believe benefit local populations: after investing regulation, financial mechanisms and in new infrastructure and processes, the deployment incentives are essential gas that would have been flared is now to remove barriers to developing utilized to provide 60% of total power clean energy technologies; one-third generation installed capacity in the Congo of respondents to our survey report and 20% in Nigeria. Such actions, which that policy and regulation is hindering benefit the environment and strengthen their investment, with 68% of utilities the company’s license to operate, could companies, and 76% of oil and gas be accelerated by policy mechanisms producers, calling for legislative and that will incentivize technology transfer financial instruments to unlock further for low-carbon development. investment in climate solutions. 49 Vale: Innovating low-carbon processes in the mining and metals sector The global mining industry is a Instead, the S11D project uses a pit Vania Somavilla, Executive Director of significant contributor of energy-related crushing and conveying system with fully Human Resources, Health and Safety, greenhouse gas emissions, with iron mobile equipment for mining, crushing, Sustainability and Energy for Vale, and steel manufacturing the largest conveying and the disposal of waste told us that national governments and industrial source of greenhouse gases, via a spreader. The conveying system policymakers should encourage innovation contributing approximately 7% of the occupies 37 kilometers of belt conveyors to enable Vale and other players to world’s emissions.44 Demand for steel, to transport the material inside the mine continue making strides towards lower- driven by the automotive and construction to waste piles and to the processing carbon and more efficient processes, industries, is expected to increase by plant, reducing fuel consumption by and is hopeful that governments in approximately 80% by 2030, from 1.3 70%, and eliminating 50% of associated Paris will further unlock private sector billion metric tons to 2.3 billion metric greenhouse gas emissions. investments and solutions: “We are really tons, with demand also growing for the optimistic about the current scenario A second new solution being deployed mining and processing of iron ore, its for Paris. The discussion is more mature is the Dry Processing of the ore: Vale principal metal component.45 While the than in the past, and governments are has developed new equipment, a mining and metals industry has significant already discussing long-term solutions.” modular screen, for the Carajás ore, environmental impacts on food, energy which has a naturally high moisture and water systems, it is also one of the content. Instead of using high pressure sectors that has the most potential for water to help the screening process, innovation and technological solutions. this new type of screen avoids the Vale, the world’s biggest producer of iron use of water altogether, and reduces ore and pellets – raw materials essential water consumption by 93% compared to the manufacture of steel – is making to conventional wet processing. The significant investments in technological dry process also eliminates the need innovations and initiatives to prevent and to store water and ultrafine ore in a minimize the negative impacts related tailings dam and eliminates dozens to mining. The Carajás S11D Iron Ore of pumps, pipes and motors, reducing project, Vale’s largest project to date, is energy usage by approximately 18,000 focused on the opportunity to expand megawatt-hours per year, equivalent to production while innovating low-carbon the energy supply of 20,000 inhabitants solutions. The project was developed in the region. Further, Vale’s methodology using innovative mining technologies, aimed at incorporating sustainability such as the use of a “truckless” system factors into the standard economic in the mine. In a conventional open-pit valuation process of capital projects, mine, which uses mining trucks and the “Green IRR”, reveals a saving of shovels, 100 trucks of 240 metric ton approximately $30 million in projected capacity would be needed to handle operational expenses for the project. the ore and the waste of the project. 50 The United Nations Global Compact-Accenture CEO Study 51 Food, agriculture Many companies are seeking out opportunities in the transition toward a while boosting outputs. The use of alternative technologies such as drones and forestry— more productive and resilient system and robotics also has the potential Climate-smart solutions that will meet the needs of a growing population while decoupling growth from to further reduce labor and energy intensity, replacing fossil fuel-driven The agricultural sector is facing environmental impact. In our survey, vehicles with electric-driven systems. a majority of companies in the food rising pressures on productivity Data- and analytics-driven solutions are production and forestry sectors believe amid growing constraints being picked up by major agribusiness that there is already a clear business Food, agriculture and forestry—a $19.4 case for action and that investment companies looking to expand capabilities trillion sector responsible for 30% of in climate solutions will be critical and gain access to new markets by global employment and approximately to achieving competitive advantage providing farms with the analytics to one-third of global greenhouse gas in their industries. Those companies optimize inputs and improve yields emissions46 —has a significant economic, that are able to find solutions to the and to optimize their supply chains. social and environmental footprint. challenges of productivity amid growing Across the agricultural value chain, As the economy expands to meet the constraints can seize new opportunities promising technologies are already demands of a rapidly growing population, for innovation and growth. The potential improving agricultural performance: global food production must increase upside for companies able to adapt is mobile information services, when by at least 70% by 2050, while facing significant: industry-wide investment combined with cloud-based analytics, are major resource constraints: one-quarter of $2–4 trillion in low-carbon solutions helping farmers to improve agricultural of the world's agricultural land is is expected to generate improvements techniques and resilience to deliver better already severely degraded due to poor of 11-17% in agricultural production results and are estimated to generate $52 agricultural practices; agriculture is volumes, and yield savings of up to billion in incremental income for farmers increasingly subject to water stress, $14–15 trillion by 2050, while opening by 2020, with nearly 175 million active consuming 70% of global freshwater;47 up new avenues for growth.49 users across the world.51 Information and the sector is responsible for 70–90% technologies also have the potential to of global deforestation.48 Climate-smart solutions can achieve reduce food waste in transit and needless climate and economic imperatives transportation of food products via better In a sector that is both accelerating through enhanced decision making, farmer intelligence on commodity, climate change and becoming market and transportation costs. lower inputs and higher yields increasingly vulnerable to its impacts, pressure is growing for increased Innovation in climate-smart technologies Simultaneously, the same digitally- investment in productivity and resilience is creating opportunities for business that facilitated technologies and information to meet rising global demand. Growing may revolutionize the sector, combining flows are used to communicate demand and resource constraints are climate impact with business success. quantified financial as well as non- already affecting production and are The application of digital solutions and financial performance improvements expected to have a severe impact on advanced data analytics, for example, to customers and consumers, thereby yields of major crops by 2030. A more is improving yields, cutting costs and furthering companies’ ability to secure productive and resilient agricultural increasing resilience: techniques such market rewards for the transparency and sector requires a major shift in the way as precision agriculture use digital sustainability of their value chain. The that land, water and soil nutrients are solutions to collect precise data about Global e-Sustainability Initiative (GeSI) managed to ensure that these resources fields to improve monitoring and SMARTer2030 report estimates that are used more efficiently. optimize inputs, in some cases boosting smart agriculture solutions could boost profitability by $55 to $110 per acre. yields by 30% and generate $2 billion of As the sector faces fundamental The market for precision agriculture additional revenue to companies. disruption, business leaders are turning technologies, including machine-to- their attention to the climate challenge. Companies are further testing new ways to machine connections, sensors and optimize resource use, reduce waste and In our survey, the majority of business satellites to monitor, track and provide leaders across the sector and in parallel cut CO2 emissions, with leading businesses real-time data, is expected to grow to looking to their supply chains to introduce industries—91% of food producers, for $4.6 billion by 2020.50 The benefits to example, and 88% in the forestry and climate-smart business models and business are numerous, including the smart logistics. Currently, one-third of paper sector—believe that the climate improved aggregation and deployment of challenge is significant and that action global food production is wasted, costing information, and analytics that support businesses and households an estimated is an urgent priority for business. reductions in agricultural inputs and their $750 billion every year.52 associated greenhouse gas emissions 52 The United Nations Global Compact-Accenture CEO Study Paul Bulcke Chief Executive Officer, Nestlé At Nestlé, we are determined to play a We have also pledged to reduce food UN Climate Week 2014, we endorsed leading role in taking action for Climate loss and waste, a major emitter of GHG a series of ambitious initiatives on Change. As the world’s leading Nutrition, emissions. We are striving for zero waste; climate change, including the UN Caring Health and Wellness company, we using energy and resources efficiently; for Climate Initiative. This Business believe that to be successful over the switching to cleaner fuels such as Leadership Platform is fully aligned long term we need to create value for our spent coffee grounds in 22 factories with our own explicit commitments, shareholders and for society at the same and wood boilers in factories in France, which reflect our respect for society time. We call this Creating Shared Value Brazil, and Chile; investing in renewable in which we operate, respect for the (CSV), a way of doing business that has energy sources, such as in Mexico where environment, and respect for the future embedded sustainable development in wind powers 85% of our operations; generations. We have also signed up to our activities, brands and products. optimizing distribution networks that the Trillion Tonne Communiqué of the include switching from long-distance Prince of Wales Corporate Leaders Group; Ultimately, our goal is for our products road transportation to rail or short-sea the New York Declaration on Forests; to be tastier, healthier and better for the shipping in Europe; and helping to adapt and the six climate action initiatives of environment. This requires protecting agricultural and production systems to CDP on science-based greenhouse gas the future by making the right choices the changing climate. In addition, we reduction targets, renewable electricity, in an environment where water scarcity, engage with our suppliers to ensure deforestation, climate change information natural resources constraints and compliance with our Responsible and engagement, and carbon pricing. biodiversity decline will be exacerbated Sourcing Guidelines and respect for by climate change. These resources are pledges to preserve natural capital, such We are convinced that different actors vital to feed a growing world population as the “No Deforestation” commitment. have different responsibilities and roles. and the development of our company. We believe that governments have a The ability to source, manufacture We have continuously intensified our crucial task in steering climate change and distribute our products may be work with farmers and promoted more action. We thus want to encourage country compromised by extreme weather events, sustainable agricultural practices to member states to make ambitious, making climate change a material help them manage resources more time-bound commitments and set issue for our business. We are thus efficiently and adapt to environmental action-oriented targets during the COP21 determined to take holistic actions along challenges. Our work to help cocoa and meeting in December 2015 in Paris. our value chain. We focus our actions on coffee farmers adapt to and mitigate water preservation, natural resources environmental challenges has been As a company, I am determined to efficiency, biodiversity conservation, air recognized as a best practice example accelerate our efforts to ensure the emissions reduction, climate change by the United Nations’ Framework sustainable growth of our company and adaptation, and zero waste. Convention on Climate Change to contribute to the achievement of the (UNFCCC). We have also committed to UN Sustainable Development Goals. We are strongly committed to providing designing products that help consumers climate change leadership in the long- lower their own greenhouse gas term. This goes far beyond reducing emissions, such as our new Nespresso greenhouse gas (GHG) emissions, which or Nescafé Dolce Gusto machines. we have halved per kilo of product in the last ten years and expect to further We strongly believe that business is part reduce by 35% in 2015 compared to of the solution and that industrywide, 2005 levels. We apply a product life multi-agency, collaborative efforts cycle approach involving our partners are pivotal to scale efforts and make from farm to consumer and beyond. lasting change. This is why, during the 53 Through addressing this wastage across that rely on agricultural supply chains: GeSI’s SMARTer2030 report estimates the system, leading companies are consumer goods multinational, Unilever, that digital solutions could avoid 20% looking to recapture value by deploying is investing in knowledge-intensive of food waste and deliver economic circular economy models that reduce approaches that optimize resource use benefits worth $1.9 trillion, while cutting resource use and reutilize waste. and reduce waste throughout its supply approximately 5 megatons of CO2 Climate-smart business models can be chain. The opportunity for food waste emissions per year by 2030. deployed across the range of industries reutilization, for example, is significant: Nestlé: Reducing food loss and waste along the value chain Approximately one-third of global food In factories and distribution centers, chain. The company is investing over production is wasted or lost. The carbon Nestlé has set a goal of zero waste CHF350 million in support of the footprint of food produced and not eaten for disposal by 2020. Since 2004, the Nescafé Plan between 2010 and 2020, is significant, estimated at 3.3 gigatons company has made significant progress and an additional CHF300 million for of CO2, with uneaten food occupying towards the target: waste for disposal Nespresso coffee initiatives between 1.4 billion hectares of land, equivalent per metric ton of product has reduced 2014 and 2020. The Nescafé Plan to 30% of the world’s agricultural land by nearly 70%, and manufacturing is a global initiative that supports area.53 In addition to its environmental emissions have been cut in half per responsible farming, production and impact, food wastage has social and metric ton of product; already, 15% of consumption, ranging from on-the- economic implications for the availability Nestlé’s 442 factories have achieved ground support for farmers to the and cost of food, and for farmers’ incomes the zero waste goal. Nestlé’s waste application of plant science to improve and livelihoods. In developed countries, reduction in factories is enabled by the yields and quality. In 2014, the company food wastage is largely concentrated worldwide implementation of Nestlé invested CHF40 million in financial downstream between the retailer and the Continuous Excellence practices, services and assistance for over consumer; in the developing world, waste which translates into doing more 83,000 farmers worldwide. This type is often in the upstream supply chain. with few resources and less waste. of agricultural support has helped to In the production of Nescafé in the further reduce food losses. Nestlé, the world’s leading Nutrition, Philippines, spent coffee grounds Health and Wellness company, has from the manufacturing process are Nestlé also steers on behalf of the introduced a range of initiatives to help recovered as a source of renewable Consumer Goods Forum and together reduce food loss and waste at all stages energy and fertilizer inputs. The with the World Resources Institute of the value chain. At the R&D stage, for process has two components: the (WRI), United Nations Environment example, Nestlé’s plant science initiatives coffee grounds, along with sawdust Program, Food and Agriculture support the development of varieties of and cocoa shells from local industries, Organization, World Business Council coffee and cocoa plants that are higher are used to produce steam for heating; for Sustainable Development, European yielding and more drought- and disease- and the production of ash, a by-product Commission, Waste & Resources Action resistant, reducing the number of of the process, is combined with Programme, the development of a plants lost to disease or climate-related wastewater sludge and turned into major global and recognized protocol issues. Similarly, at the agriculture an organic fertilizer. The initiative’s to measure food loss and waste, in stage, Nestlé provides assistance to benefits include annual savings in a coherent way throughout the food farmers to tackle food wastage at avoided hauling and dumping costs chain. Nestlé also sees governments source, and invests in programs to of 70,000 metric tons of waste, and playing a critical role in furthering train farmers on best practices for the distribution of organic fertilizer to progress by providing information and reducing food waste. In 2014 alone, the nearly 7,000 farmers to improve soil education to raise awareness among company trained more than one-third fertility and increase yields. By the end consumers on the issue of food waste, of a million farmers around the world, of 2014, 22 Nescafé factories were by implementing food-dating systems and in Panama, for example, initiatives already using spent coffee grounds as that prevent food waste, by engaging to avoid losses have helped save 1.9 a source of renewable energy, which stakeholders and partnerships along million kilograms of milk, boosting has resulted in reductions of more than the value chain from farm to consumer, farmers’ incomes. At the consumer 230,000 metric tons of CO2 per year. and by encouraging public reporting on stage, Nestlé wants to help consumers progress to reduce food loss and waste make informed choices through Beyond the scope of its own production in a coherent way through the value credible, substantiated communication operations, Nestlé has made significant chain using the WRI protocol to measure and by providing tips and recipes that investments towards sustainability food loss and waste. can help them avoid food waste. and waste reduction in the supply 54 The United Nations Global Compact-Accenture CEO Study Niels B. Christiansen President and CEO, Danfoss A/S As world leaders prepare for the final efficiency policy measures provide similar when looking at India, where the negotiations of the global climate affordable energy and access, and are industrial sector accounts for more than agreement at COP21 in Paris this an important tool to alleviating poverty 40% of the total electricity demand.57 December, we must remind ourselves of while also improving productivity and the prerequisite for a low-carbon economy: competitiveness. In addition to these We have the products and technologies the implementation and adaptation of the social and economic benefits, more necessary to make significant changes best available technology. efficient energy use can also significantly in energy efficiency. Yet despite the reduce greenhouse gas emissions. strong business case and the ability to We know we need to look at four main fast-track CO2 reductions, the potential sectors: buildings, transport, industry and Energy efficiency is not just a question of energy efficiency initiatives is far from power. In the power sector, for example, of technology. It is a question of mindset, being met. A key question today and in we need to implement more renewable smart thinking, governance and cost- the post-COP21 world remains: How do energy and ensure a more intelligent effective solutions. These solutions exist we accelerate the adaptation of the best grid; in transport we have to continue and can be adopted immediately. available technology? to improve mileage, optimize collective transportation, and in the long run ensure One example is in the building sector. The potential climate impact from a cost efficient fuel switch. But what is The building sector accounts for using less energy is significant and often overlooked is the need for energy approximately one-third of global the world has an obligation to seize efficiency, in buildings and in industry. energy use55 and is expected to account this opportunity. We need to create The International Energy Agency (IEA) for 26% of all future energy efficiency frameworks that make it easier to estimates that compared to renewables, savings,56 primarily related to space overcome barriers such as funding, fuels switching, and CCS, energy efficiency heating and cooling, lighting and policy incentives, knowledge sharing, is the largest contributor to global appliances. In new skyscrapers such as and education. In short; we must make it greenhouse gas (GHG) reductions.54 the Lotte World Tower in South Korea easy to become energy efficient. and in older hallmark buildings such as In Paris in December, world leaders should From a financial point of view, increasing the Empire State Building, significant ensure that the new global agreement energy efficiency is an obvious choice. reductions in energy consumption enables greater uptake of energy efficient Not only is energy efficiency the most and CO2 emissions have already been solutions. According to the IEA, energy cost-efficient means to decarbonizing achieved with the implementation of efficiency should deliver nearly 40% of the global economy, but investments in energy efficient solutions. the required transformation within a 2C energy efficiency also pay themselves In industry, the energy efficiency potential scenario, bringing CO2 reductions and back within a relatively short time. is significant. In China, the industrial significant financial savings. Socially, energy efficiency also provides sector is today the largest electricity Energy efficiency is an obvious solution benefits, such as reduced energy consuming sector in the entire economy, to combating climate change, and we are demand and lower energy bills for equivalent to more than two-thirds of on track when it comes to technology. consumers, increasing disposable total electricity demand. Electric motors But we absolutely need to speed up the income and leading to higher consumer account for 60-70% of the industrial implementation of low-carbon solutions, spending. In developing countries, electricity demand, which creates a and a strong agreement in Paris could improved energy efficiency for utilities strong case for optimizing electric motor serve as a much welcome accelerator. makes more energy available for systems—for instance, through variable distribution to a greater number speed drives which the IEA suggest are of households. In this way, energy made mandatory. The situation is very 55 Climate-smart agriculture food security and climate change This demand for resource-efficient presents a significant opportunity policymaking must be achieved infrastructure, supported by regulatory for business, but companies may at national and international levels. incentives, is already creating struggle to scale without support opportunities for innovative companies Global adoption of climate-smart to invest in urban centers, through the While potentially transformational, such agriculture will require governments development of smart solutions in which innovations may face barriers to adoption. to align subsidies with climate-smart new technologies and connectivity Although the cost of smart technologies practices: in our survey, fully 82% of food are driving greater efficiency and and sensors is falling, the implementation producers, and 71% of companies in the enabling the roll-out of new, lower- and integration of climate-smart solutions forestry and paper sector, believe that carbon infrastructure. While leading may present significant challenges. new legislative and fiscal mechanisms businesses see opportunities in directing Such barriers are even greater in parts will be essential to increasing investment investment toward low-carbon products of the world where farms are often in climate solutions. Scaling climate and services, the scale and speed of small and fragmented and where access applications will require national and development and implementation may to affordable financing is limited. As a local reforms to advance local financing be hindered without clearer and more result, many smart agriculture solutions systems, develop targeted capital support consistent policy support investment are currently only partially implemented, schemes and align farmer incentives: that drives adoption of new solutions and mainly in developed countries. nearly three-quarters of business leaders accelerates the low-carbon transition. across the sector believe that ambitious Many corporations and co-ops are national targets in the Paris agreement Climate-smart buildings: overcoming the challenges of scale will be critical to their company’s climate low-carbon products and through the implementation of climate- strategy and investments. services with clear payback smart solutions to drive up production Leading companies in sectors critical across supplying farm networks. Making a broader shift, however, will require City infrastructure, to the development and transformation national and local governance, legislation, buildings and of urban infrastructure see significant opportunities for growth and innovation. restructured incentives and financial mechanisms to drive the uptake of new transportation—the future The opportunity for business is particularly solutions and enable implementation of urban development apparent in buildings and transportation, at greater scale and speed. While where new technologies and connectivity subsidies are the most common form of Cities are drivers of global consumption are driving greater efficiency and incentive in the agricultural sector, many and emissions, representing 80% of enabling the growth of new, lower-carbon companies believe they reward overuse global GDP and more than 40% of global business models. Demand for efficient and waste, creating a significant barrier energy emissions. Global population infrastructure has created opportunities to the adoption of new technologies growth is forecast to continue to for business to invest in urban solutions and techniques.58 At the other end of concentrate in urban areas through and technologies, with demand often the regulatory spectrum, regulation to mid-century, with 70% of the world’s driven by regulatory incentives. enforce anti-deforestation practices, population expected to live in urban centers by 2050. This unprecedented One of the clearest and most for example, or measures that focus growth will place new demands on urban immediate opportunities for companies on recultivating degraded agricultural infrastructure, driving demand for new seeking to address the climate challenge land and improved soil management can solutions that can meet the needs of a lies in the provision of new technologies further enhance resilience, yield and the growing population while managing the that can boost energy efficiency in the livelihoods of farmers. impact on the world’s scarce resources. built environment. Despite the well-understood impact that As drivers of global consumption and Investing in energy-efficient and low- global farming has on climate change and emissions, cities will require significant carbon building solutions offers great food security, agriculture has largely been low-carbon investment in the coming potential for emissions reduction: neglected in the international climate decades. The Organisation for Economic household appliances and equipment are negotiations. This year the sector is Co-operation and Development (OECD) responsible for approximately 40% of gaining in profile in the lead-up to Paris; estimates that to accommodate forecast residential energy use, and residential and business leaders in the sector see an growth, more than $40 trillion in commercial buildings contribute over 6% opportunity for world leaders to direct investment for urban infrastructure will of greenhouse gas emissions.60 greater attention to the challenges and opportunities of agriculture, forestry and be required over the next 15 years; under a land use. Business leaders believe that “green investment” scenario, an additional greater consistency between agriculture, $8 trillion to $26 trillion could drive efficiency and low-carbon innovation.59 56 The United Nations Global Compact-Accenture CEO Study Due to advances in mobile technology and creating revenue opportunities of Climate Change (IPCC) identify well- and the growing penetration of machine- $400 billion.62 Leading companies are designed building codes and appliance to-machine connections, ICT-enabled innovating low-carbon products and standards as one of the most cost- smart building solutions are quickly services to capitalize on the opportunity: effective ways to unlock investment: gaining ground as enablers of energy Schneider Electric, for example, is in the United States, the 2005 Energy and resource efficiency. deploying ICT solutions using web and Policy Act required all new buildings to wireless technology to control HVAC, achieve increased efficiencies of 30% by The global smart building market is lighting and metering, reducing efficiency- 2015; the British government announced expected to grow from $7.3 billion in 2015 related retrofit costs by 50%.63 its ambition that all new homes be zero to $36.4 billion by 2020,61 and GeSI’s carbon by 2016; and the EU has set a SMARTer2030 report estimates that Investment in innovative solutions target for all new buildings to be carbon the construction of new ICT-enabled and their adoption is often supported neutral by 2020. These regulations, smart buildings, improvements in the by regulation. Cities are introducing in tandem with consumer awareness, efficiency of existing buildings, and the efficiency standards in public are fueling demand for energy-saving installation of energy-efficient products procurement contracts, driving demand solutions and driving innovation and and services could cut 2 gigatons of CO2 for innovation. Findings by the United advantage for those companies able to emissions from the sector, reducing costs Nations Intergovernmental Panel on expand into these new markets. BT Group: Applying communication technologies to enable smart and resilient infrastructure Information and communications Niall Dunne, Chief Sustainability Officer, The current policy climate in the United technologies (ICT) have a vital role to notes that there is also an upside to its Kingdom has been favorable to such play in reducing demand for resources investments, “As the world is asked to investments, and there is a role for and cutting carbon emissions. Internet do more with less: technology is seen government in providing incentives access and smart phone ownership are increasingly as part of the solution, which promote investment in ICT, such at much higher levels than ever before decreasing the impact of networks while as connectivity. Policy has worked best and the number of connected devices is increasing the abatement potential.” where governments set the overall vision expected to grow to 100 billion by 2030.64 Looking to the future, BT believes that and policy framework, and allow business Enhanced connectivity through ICT could by offering more products that cut to innovate and find the specific solutions: significantly increase efficiency while carbon and resource use, it can help According to Dunne, “The beauty of reducing congestion, emissions, and customers and grow revenues. For connectivity is that you’re delivering social resource consumption. From making example, BT is the major IT partner in impact as well as environmental impact; cities smarter and more sustainable to the MK: SMART project, which gathers for the 4 billion people that are currently making resources easier to track and and analyzes real-time information offline around the globe it can create trace, the potential for innovation is huge. from across Milton Keynes to enable huge empowerment and fundamentally much more efficient use of transport, transform lives by unlocking that BT Group, one of the world’s leading water and energy, expected to cut the creative, entrepreneurial spirit”. communications services companies, city’s water use by 20% and traffic is proactively investing in market- congestion by half. BT is also providing BT is already acting and making facing technologies that enable smart, an online information hub of real-time significant capital investments to resilient infrastructure and align with transport data collected from sensors decarbonize its operations and growth, its business strategy. The BT network for the STRIDE project in the East of but the company sees a need for greater is in 178 countries, powering some of England, which aims to transform urgency from business and governments the largest companies in the world, smart transport and logistics in the in Paris. Dunne notes, “Companies are and that network is becoming core to region, and to demonstrate the business getting better at underlining the upside key business operations; today, most opportunities presented by the Internet of government action and policy in businesses are digital businesses and of Things technologies and services. visible forums, but there is also a need weather-related threats to network Alongside this BT is developing new for very frank and honest discussions reliability present a significant risk apps, enabled by a cloud based system, in private about the critical urgency of to BT’s business success. This risk is to create value for its customers by action – about how climate change is driving the company to design new, providing access to a wide range of literally flowing through our network as resilient networks and infrastructure real-time, accurate data from roads and we speak – and leaving no uncertainty with climate change in mind. vehicles for improved decision making. about what we need from them.” 57 Similarly, city infrastructure funding opportunities to expand the penetration more efficient product lines: in 2014, from central governments and banks is of electric vehicles and address carbon hybrids were responsible for more than attracting a number of companies to direct emissions in transportation. Smarter, 20% of Honda’s total sales, an increase investment toward urban development cleaner vehicles, digitally-enabled of 50% over 2013;67 and Toyota, which products, services and technologies. car sharing and changing consumer pioneered the first mass-produced ABB, the Swedish-Swiss leader in power expectations are pushing many hybrid, the Prius, has become a market and automation technologies, has fully traditional automotive companies to leader, with hybrid sales representing integrated urbanization and future rethink their product lines. The electric 42% of total sales in 2013.68 contracts into its strategy; and Siemens, vehicle market has grown at a compound the German multinational electronics and annual growth rate of 90% between National policymakers are encouraging electrical engineering company, has added 2011 and 2015, with electric vehicle and investment in electric vehicle a fourth priority sector—infrastructure and hybrid repair costs falling dramatically technologies. The Chinese government, cities—to capture the opportunity of city to below those of conventional gasoline for example, recently launched an growth and infrastructure investments.65 cars, prompting more consumers to initiative to provide incentives and see the economic benefit in purchasing financial support to non-automotive Transportation: clean efficient vehicles: Accenture research companies to finance electric vehicle technologies and sharing models suggests that 53% of consumers in the startups. The initiative has spurred transforming transport U.S. are considering buying an electric or Chinese investors such as internet hybrid vehicle.66 In response to consumer company Tencent and investment firm The rise of advanced mobility Hillhouse Capital to build the electric demand and changing standards, solutions and the sharing economy are vehicle company NextEV. automotive companies are investing in disrupting global markets, creating new InterCement: Committing R&D towards innovative and disruptive cement production Concrete is a key component for Approximately half of cement production, InterCement is innovating construction activity and the second CO2 emissions are produced from in the areas of thermal substitution most widely consumed substance the chemical reactions during the and CCS/U, with plans to invest $1 on earth after water, with cement its production of clinker, the principal million into experimental crops, thermal primary ingredient. The cementing component of cement. To produce biomass treatment technologies and the industry alone is responsible for 5% clinker, limestone is heated to 1400°C cultivation and production of renewable of global man-made CO2 emissions, and its calcination emits CO2 directly, energy, which all aim to replace the and has experienced massive growth making it a highly emissions-intensive fossil fuels traditionally used in cement alongside global urbanization: world process. For each ton of clinker production. The company is further production grew sevenfold from 133 production avoided, approximately innovating the carbon capture process by million metric tons in 1950 to one 0.8 ton of CO2 is not emitted. Using deploying microalgae with an investment billion metric tons in 1983 and has substitutes to reduce clinker production of $2.3 million over four years. continued to rise to well over 4 billion by 300 megatons, the global cement metric tons since 2013.69 industry has the potential to reduce While recognizing potential economic CO2 emissions by approximately 240 benefits, the company seeks policy InterCement, one of the ten largest megatons per year.70 InterCement is support to accelerate its efforts. Since cement producers worldwide, is investing in this opportunity, with plans the current scale is not large enough innovating solutions to reduce to develop an eco-efficient concrete, to cover the significant costs of capital greenhouse gas emissions and which will use a new type of cement investments, low-cost financing is grow new low-carbon business with a modified chemical composition. a key requirement to enable further opportunities. By 2023, the company As a result, the company expects to progress. Policies that stimulate aims to reduce clinker in cement from reduce emissions by 17% with the added circular economy could also aid more 72% to 60%, reduce net-CO2 emissions economic benefits of lower production rapid development and adoption of new, by 40% in cement and 50% in concrete, costs, reduced water consumption and low-carbon products. increase thermal substitution to improved concrete performance. 42% and replace 15% of natural raw materials with alternatives. To achieve Cement production is also highly energy- these goals, InterCement focuses on intensive, and the burning of fossil fuels R&D in new products and processes to heat the limestone indirectly results for cement production. in CO2 emissions. To tackle this side of 58 The United Nations Global Compact-Accenture CEO Study The company is focused on e-vehicle companies such as Zipcar (owned by revenue from extended use. Disruptive innovation, with plans to build a powerful Avis Budget Group) and Car2Go (Daimler business models can also reduce or electric super vehicle in 2016 and AG) or the development of new sharing eliminate the up-front costs of low-carbon eventually roll out high-performance capabilities and business units. As the products and propel the growth of new electric vehicle sedans. Other Chinese car sharing and electric vehicle markets markets. Many companies are shifting manufacturers, such as Alibaba and grow, opportunities in electric mobility to product-as-a-service models to drive Xiaomi Technology, are also responding are attracting the attention of investors: adoption of low-carbon technologies. to government incentives and looking to Morgan Stanley recently doubled its grow the electric vehicle market.71 price target for Tesla based on the The arrangement eliminates the up-front potential for smart technology to speed costs of the conventional “buy and own” These companies continue to pioneer the development of self-driving cars. business model; instead, customers new models, such as point-to-point car pay for the time or usage of products sharing, which allows users to pick up Innovative businesses are through a lease, rental or pay-for-use and drop off cars in any legal parking disrupting traditional models arrangement. Philips Electronics, for space, and on-demand taxi-like services to seize opportunities, but they example, signed a ten-year contract such as Uber and Lyft are disrupting with the Washington Metropolitan Area need policy support sectors and transforming consumer Transit Authority to provide LED lighting attitudes toward car buying. Across the infrastructure and and controls for 25 parking garages transportation sectors, leading companies (13,000 fixtures), enabling the company Though aspects of car sharing have are investing in new circular business to capture share in the market for LEDs, existed for decades, in the past 15 years models to reduce their asset, capital, which is expected to grow 12-fold to $25 the concept has grown into a rapidly and energy intensity. Circular business billion over the next decade. This project spreading mobility market, dominated models, enabled by advances in materials could provide energy savings of 68%, by traditional car rental companies and recovery and product design, reutilize or $2 million per year in costs and avoid manufacturers entering the market products and materials, using fewer 11,000 metric tons of CO2 emissions.72 through the acquisition of fast-growing virgin materials and generating additional Braskem: Pioneering positive-carbon plastics for everyday applications The global polyethylene (PE) market has been innovating with renewable raw Despite the potential for Green PE to is the largest polymer business materials and green plastics, including capture new market share, the product worldwide in terms of volume, with PE the development of green polyethylene. faces significant barriers to scale up its representing 40% of resins used in a “Green PE” is 100% recyclable and is adoption. Because it is a new process, variety of applications from refuse bags produced from renewable sugarcane- its production process is more expensive to automotive parts. Each metric ton based ethanol: importantly, because the than conventional PE, and it can grow of conventional PE produced releases sugarcane captures CO2, each metric only as much as the market accepts it, approximately two metric tons of ton of Green PE produced removes more which requires increased interest and CO2 into the atmosphere, creating a than two metric tons of CO2 from the acceptance among end-users. As early challenge for global players seeking to atmosphere which means a contribution movers in the market, Braskem has grow market share while reducing their toward climate change mitigation. borne the risk of developing Green PE; as environmental impact. the company looks to scale production Green PE has potential for significant and evaluates new investments, it will Braskem, the leading thermoplastics business benefits for Braskem. Because seek partnerships with governments and resin producer in the Americas, aims sugarcane has the highest energy business to share the opportunity. The to outperform the world’s largest productivity compared with other ethanol company believes government needs chemical companies by 2020, providing sources, chemical products that use it to play a stronger role in supporting innovative climate solutions. The as a raw material have great potential early movers by providing incentives company’s strategy is three-pronged: to be part of the solution. The product is that will reduce the cost of investment to use more sustainable resources and identical in its potential applications to and engage consumers: carbon pricing processes; to have a more sustainable conventional PE: Braskem’s “I’m Green” systems, for example, can influence the product portfolio; and to offer value seal is being applied by manufacturers price of these products, benefiting those chain solutions for a more sustainable and retailers, such as Johnson & with lower-carbon intensity and driving life. Braskem spends more than $90 Johnson, Kimberly-Clark, Bimbo and consumer demand for a product that million annually in innovation and Tramontina among others, which are supports development while decoupling technology and one main area of focus looking for sustainable solutions. growth from environmental impact. 59 A number of governments have recognized the benefits of circular business models and have begun encouraging companies to adopt circular practices. By increasing the cost of landfilling waste, for example, the competitiveness of circular products is enhanced, incentivizing companies to introduce reverse cycle options: the EU Waste Framework Directive increased landfill costs for construction and demolition waste, incentivizing recycling and reuse of construction materials and minimizing construction process waste. Although leading businesses see opportunity in investing in low-carbon products and services, the broad transformation of urban centers may require clear and consistent policy support. Opportunities are evident across sectors, but business leaders see a need for regulation and standards to drive adoption: in the housing sector, low-carbon products and services are generating payback on climate-smart buildings, but policy is needed to support market uptake; in the transport sector, policy has started to drive the green growth agenda, as ambitious emission reduction programs continue to bolster the business case for the development and adoption of new solutions. 60 The United Nations Global Compact-Accenture CEO Study Toward Transformation: Closing the Gap Business leaders believe climate change is an urgent priority for their companies, but they are not doing enough to scale the solutions needed for a prosperous future. Our research shows that climate change is presenting both challenges and opportunities for business, as leaders recognize an epochal shift toward a low-carbon economy. Business leaders are moving to This year, with the launch of Agenda In the context of Agenda 2030, this innovate climate solutions and adopt 2030 and the global Sustainable year’s CEO Study shows a striking low-carbon business models, and Development Goals (SDGs), the United shift in business leaders’ attitudes companies in every region and in every Nations has laid out a pathway over and commitment, with a majority industry sector are already realizing the next fifteen years to end extreme of companies now looking beyond opportunities for growth and innovation poverty, fight inequality and injustice, an incremental approach rooted in in addressing the climate challenge. and protect our planet. Action by corporate social responsibility to one However, even as leading companies business will be essential to the success motivated by the opportunities to scale seek competitive advantage in their of the global goals, and the successful innovative solutions. Many challenges industries, there remains a gap between implementation of the SDGs will lie ahead: in the assessment of business ambition and execution. strengthen the enabling environment leaders themselves, companies are not for doing business and building markets doing enough to invest in the solutions Closing the gap will depend on unlocking around the world. of the future, and are not yet living up further investment, and business to their own expectations of corporate leaders see a vital role for policy in For all companies, the SDGs provide leadership on climate change. enabling the innovative potential of a global aspiration and common the private sector. In the run-up to the direction that can stimulate innovation, To advance the role of the private sector Paris climate conference, leaders are investments and positive engagement. in tackling the greatest challenges we calling for a clear, consistent policy As companies look to grow and innovate face, we must forge a new compact landscape to overcome barriers and low-carbon solutions to the climate between business, governments and civil enable the scale up of investment in challenge, they can lay the foundations society, to work together to unlock the low-carbon technologies with greater of achievement across the individual potential of the private sector in delivering confidence. Business leaders are looking SDGs. Climate solutions contribute to the our shared vision for a prosperous to governments and policymakers to global goal toward combating climate future. This is a critical moment to work support their industries in their efforts change, but they also offer opportunities together and embrace business as a to seize low-carbon opportunities, for business to have a meaningful transformative force: together, we can creating business value and laying the impact on the wider set of goals across build a better future for all. foundations of a low-carbon economy. sectors: new energy technologies are Broad, transformative action will creating opportunities for companies to require greater collaboration, reduced ensure access to affordable, reliable, uncertainty, and a level playing field – sustainable energy for all; climate-smart areas where business sees government agriculture solutions help to achieve playing a critical role. food security and promote sustainable farming; and new low-carbon technologies for cities will build resilient infrastructure and promote inclusive and sustainable industrialization. 61 Acknowledgments Study Leads Additional Satoshi Abe, Ricoh Group Atsuko Kinemori, Ricoh Group Lila Karbassi Acknowledgments Koji Miyoshi, Ricoh Group Peter Lacy We would like to thank the Yasuhiro Oshima, Ricoh Group Rob Hayward following leaders for their Jens Christian Dinkel, Siemens additional input and insights: Lead Authors Ralf Pfitzner, Siemens Andreas Horn, BASF Jenna Trescott Jan Rabe, Siemens Thorsten Pinkepank, BASF Margaret Fenwick Sebastian Schunk, Siemens Luciano Guidolin, Braskem Fan Gao, Statoil Authors Luiz Gustavo Ortego, Braskem Catherine Maloney, Statoil Jorge Soto, Braskem Marielle Tourel Arunavo Mukerjee, Tata Group Niall Dunne, BT Group Amanpreet Talwar Liesel Filgueiras, Vale Siân Wynn-Jones, BT Group Sofia Shellard, Vale Sponsors Anna Louise Højbjerg Henrichsen, Vania Somavilla, Vale Danfoss Jean-Marc Ollagnier Francesca Ciardiello, Eni Bruno Berthon The authors would like to thank Luigi Sampaolo, Eni the following people for their Contributors Cristina Saporetti, Eni insights and assistance: Sean Cruse Shandi Modi, IDEAcarbon Julie Adams, Jason Allen, Flavio Alves, Carrie Hall Seren Nelson, IDEAcarbon Dirceu Azevedo, Melissa Barrett, Paul Barsamian, Philipp Buddemeier, Angelo Nobuko Asakai Nitsch Veronique, IDEAcarbon D’Imporzano, Marcelo Fortes, Pranshu Ynse de Boer James Wakefield, IDEAcarbon Gupta, Paul Gurney, Jen Hawes- Alexander Holst Luiz Eduardo Rielli, InterCement Hewitt, Chris Howarth, Kris Hvidsteen, Justin Keeble Seiiti Suzuki, InterCement Bernd Kreutzer, Thomas Krick, Anurag Lodha, Luke Mann, Harry Morrison, Paz Guanghai Li Andrea Biswas Tortajada, Nestlé Nachón, Sergio Nicolini, Jayoung Park, Jessica Long Javiera Charad, Nestlé Jo Penney, Laetitia Ray, Carron Sass, Christian Frutiger, Nestlé Hugo Seymour, Arata Shimizu, Andreas Pascal Gréverath, Nestlé Schuler, Piyush Singh, Clau Sganzerla, John Olav Syrrist, Guillermo Viguera, Kevin Agnew, RELX Group Philip Wiig, and Serge Younes Márcia Balisciano, RELX Group 62 The United Nations Global Compact-Accenture CEO Study References 1. “Business & Climate Summit 13. 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