The IPCC’s new report confirms previous dire messages, but business doesn’t seem to want to listen

Human influence on the climate system is clear. Scientists are 95% certain that humans are the dominant cause of the global warming that has occurred since the 1950s. The evidence for human influence is even greater than it was just six years ago.

So went the headline findings of the Intergovernmental Panel on Climate Change’s new Fifth Assessment Report, examining the physical science basis for global climate change.

Established by the United Nations in 1988, the IPCC is the leading international body charged with assessing global climate change. The IPCC published its last assessment in 2007 – shortly before the onset of the global financial crisis.

The findings continue. Warming of the climate system is unequivocal, and changes observed since the 1950s are unprecedented. Each of the past three decades has been successively warmer than any decade since 1850. The period 1983 to 2012 was the warmest 30-year period of the last 1,400 years in the northern hemisphere.

The consequences of continuing to emit CO2 are clear, the report says. Not only are we already committed to climate change – due to past, present and future emissions – but further greenhouse emissions will cause additional warming and changes in the climate system. Limiting these changes will require substantial and sustained reductions of greenhouse gas emissions.

Early reaction

So what has changed? Not a great deal, say many businesses and business commentators. “It is more reinforcement of the same message,” says Sandrine Dixson-Declève, director at the Prince of Wales Corporate Leaders Group in Brussels.

She adds: “The Corporate Leaders Group starts from the premise that climate change is here and that it does create a risk to our businesses. Our leaders believe in the science and have already started to assess what the risk of not doing anything is.”  

Iain Watt, principal sustainability adviser at Forum for the Future, draws attention to the almost identical public statements made by business and political leaders six years ago, in response to the fourth IPCC assessment report. “My initial reaction was ‘here we go again’,” Watt says. He is also unsure how well the latest report speaks to the business community.

“It’s not a criticism of the IPCC, but it is inevitable that the way the science comes out, it remains at this stage somewhat abstract. We are still talking about far off time frames and global average temperature increases. What’s missing is: what does two degrees mean for your business and supply chain?” Scientists agree that 2C is the maximum global temperature rise the world’s environmental systems can cope with before the extremes of climate change will begin to occur. 

This question may be answered by the two follow-on IPCC reports expected in spring 2014. The first will assess climate change impacts, adaptation and vulnerability. The second will look at mitigation. Both these reports should speak more loudly to the business community.

Winners and losers

Although the latest assessment report may not provide the answers that some businesses may have been seeking, there are, nonetheless, obvious implications for some sectors.

One of the most noteworthy inclusions in the fifth assessment report is the carbon budget – not previously included in IPCC reports. It provides a carbon emissions ceiling (one trillion tonnes) which cannot be exceeded if the planet is to keep within the 2C warming scenario.

The carbon budget has stark implications for the fossil fuel industry and it has focused attention on “carbon bubble” research being undertaken, notably, by Carbon Tracker, an initiative seeking to improve transparency around the carbon risk embedded in equity markets. A 2012 report by Carbon Tracker found that only 20% of total reported fossil fuel reserves can be burned to meet carbon budgets, leaving up to 80% of assets unburnable – so-called stranded assets.

Mike Childs, head of policy, research and science at Friends of the Earth (FoE) UK, is clear about the implications of the IPCC’s carbon budget. “If we’re going to keep within the 2C warming scenario, we are not going to be able to burn much of the fossil fuel reserves in existence and on the books of fossil fuel companies. It also means reducing methane emissions which has implications for the livestock and food and drink industries.”

Risk and adaptation

The extent to which the business community is responding to the IPCC’s findings is more difficult to determine. While business is still not making the behaviour changes it needs to, Watt believes that one of the positive changes since the last assessment in 2007 is a growing level of business awareness of the long-term strategic risk presented by a volatile climate.

A number of large multinational businesses in the fast-moving consumer goods, retail and agricultural sectors have begun responding to this agenda through supply chain investment, risk analysis and supplier engagement. And for businesses with direct exposure to changing global weather patterns – either through their products or services – climate change has long presented a strategic business risk.

Anglian Water – water provider to six million UK households – is one of those businesses. “There’s no doubt that the changing climate is altering the way we do business, both in terms of how and where we build our assets, and how we operate them,” says Andy Brown, Anglian’s head of sustainability. “We’ve known this for years. It is 20 years since we first incorporated climate change into our water resource management plans.”

Brown adds: “I think most large business know that change is coming, and that it will present challenges of a different nature to any seen before, but that isn’t the same as having an adaptation and mitigation plan that you can just take off the shelf in response.”

For Watt, action is still largely limited to a few vanguard companies. He voices concern that the majority of businesses are still largely focused on reducing their short-term operational footprint, rather than a long-term consideration of supply chain risk and adaptation.

This view is supported by the findings of a recent Carbon Disclosure Project (CDP) climate change report on FTSE 350 companies. The report looked at how large UK-based international businesses are responding to climate change with a specific focus on indirect emissions reporting and supply chain management.

The report found that only a third of responding companies report climate change risks with timeframes of 10 years or more and that almost half do not engage with their supply chain on climate change or emissions at all.

More worryingly – placed in the context of the IPCC findings – the report found that “most businesses have little knowledge of their true exposure to weather and climate change risks across their operations and value chain”.

Adapting to uncertainty

So what comes next? For Dixson-Declève, all eyes are now on COP 19, 2013’s version of the UN’s annual climate summit, coming up in Warsaw. She says: “The big question is, can we now translate the data and alarm that we’re seeing on the science into actions in terms of the negotiation at the next COP?”

For Brown, the latest report simply qualifies what we already know and adds more weight to the argument for action. “It’s not so much a question of doing more, as encouraging others to join us. We are working closely with our customers, partners and our supply chain to encourage everyone to up their game in response to a changing climate.”

If there’s one thing that businesses should take away from the latest report, it’s that they will have to adapt to a lot more uncertainty in the years ahead. But then making sense of uncertainty is what business leaders do well, isn’t it? 

IPCC timeline

1988 – The United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) establish the Intergovernmental Panel on Climate Change.

1990 – IPCC publishes its First Assessment Report

1995 – Second Assessment Report

2001 – Third Assessment Report

2007 – Fourth Assessment Report

2013 – Fifth Assessment Report

2014 – IPCC is due to finalise Climate Change 2014: Impacts Adaptation and Vulnerability and Climate Change 2014: Mitigation of Climate Change.


IPCC’s new report: what you need to know

  • The rate of sea level rise since the mid-19th century has been larger than the mean rate during the previous two millennia.
  • The atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased to levels unprecedented in at least the past 800,000 years.
  • Continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system. Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.
  • Changes in the global water cycle in response to the warming over the 21st century will not be uniform. The contrast in precipitation between wet and dry regions and between wet and dry seasons will increase, although there may be regional exceptions.
  • It is very likely that the Arctic sea ice cover will continue to shrink and thin and that northern hemisphere spring snow cover will decrease during the 21st century as global mean surface temperature rises. Global glacier volume will further decrease.

Source: Headline statements, IPCC Fifth Assessment Report

climate change  Environment  IPCC  report  United Nations 

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