Clean up climate change? It's just good for business.

If the world's largest companies keep their promises to slow climate change, they could reduce their emissions by the same amount as Germany.

Corporate commitments attracted attention this week following a disturbing report from the Intergovernmental Panel on Climate Change (UNCITRAL), which stated that government policies would not guarantee by themselves the "unprecedented" changes in society needed over the next decade to stem climate change.

This forces businesses to clean up the mess she helped create.

To a greater extent than ever before, the interests of many companies and the planet are in everyone's interest.

[The world has just over a decade to get climate change under control, U.N. scientists say]

"We went from saying" it would be nice to do it, but it would cost us "to say" if we do not do it, we will not be able to grow, we will not be able to have the economy of tomorrow ", has said Andrew Steer, president of the World Resources Institute. "The heads of the company, they realize it."

As Feike Sijbesma, Managing Director of Royal DSM, said: "We have to prepare ourselves.

According to the report, to keep global temperatures rising to 1.5 degrees Celsius above pre-industrial levels, in line with the Paris climate agreement, it will be necessary to create new industries to remove carbon from the environment. And the restructuring of the vast energy infrastructure. which has been built over more than a century.

Historically, companies have been complicit in the global climate problem. An analysis shows that half of the world's emissions since 1988 are attributable to only 25 private fossil fuel companies and states. And many lobbied against policies that would limit greenhouse gas emissions. They did it both directly and with the support of groups who cast doubt on climate change.

Recently, however, there has been a palpable change in the way business leaders talk about climate change.

Sijbesma said, "Some of my investors and banks have asked me what you want to do: improve the world or make money? I said, "Well, both."

UPS moves to electric vehicles. (Charles Platiau / Reuters)

What they do not do

With billions of dollars at stake, businesses have taken the lead in creating sustainable businesses. They are taking steps to reduce their carbon footprint and reorganize their supply chains in a race against the rising waters and temperatures. Others try to reach the ultimate goal: how to extract carbon dioxide from the air and use it or store it.

From Apple to Walmart, from IKEA to Google, dozens of companies have embraced renewable energy. UPS moves to electric vehicles. Costco has installed solar systems on at least 100 of its warehouses, and some sites use solar energy in parking lots. In 2017, Google offset all of its power consumption in offices and data centers by adding renewable energy to the network.

Some of the biggest changes come from what companies do not do. The largest European bank, HSBC, has stopped funding new coal-fired power plants, oil sands development and drilling in the Arctic this year, joining a growing number of investors and lenders to escape ambitious fuel projects. fossils.

Making real progress will be expensive. The US report states that reaching the target of 1.5 degrees Celsius would cost an average of $ 3.5 trillion a year until 2050, nearly $ 1 trillion more per year than the promises made by governments in Paris in 2015.

The essential of the money will have to come from the private sector. Analysts at Bloomberg New Energy Finance estimate that global investment in so-called "clean energy" reached $ 138.2 billion in the first half of 2018, down 1% from the same period last year. 2017. This shift reflects the lower capital costs of PV projects, less dollars spent per megawatt installed; and a cooling of the solar boom in China, said the firm.

Some of the investments are motivated by consumer demand and employee expectations. In many cases, companies find that their own customers and employees prefer to buy and work in climate-sensitive businesses. And, thanks to lower prices for renewable energy, it may be cheaper to be climate friendly than not to do so.

Walmart, for example, has installed more than 1.5 million energy-efficient LED luminaires in more than 6,000 stores, car parks, distribution centers and corporate offices in 10 countries, which has helped reduce the cost of lighting. Lighting hundreds of millions of dollars over the last decade. the company said.

Walmart has also surpassed its goal of doubling the efficiency of its fleet of trucks by 2015. By working with equipment and other manufacturers, the retail giant has saved nearly $ 1 billion and avoided emissions of nearly 650,000 tonnes of carbon dioxide in 2015 compared to 2005.

Sell ​​less, earn more

Many of the largest utilities in the country have realized that they can earn more by selling less, especially when public service commissions can guarantee them satisfactory rates of return.

PSEG, one of the country's largest utilities, based in New Jersey, unveiled last month a $ 4.1 billion, six-year plan to fight climate change, two-thirds of which aimed to increase energy efficiency. An additional $ 300 million will go towards the creation of 40,000 new charging stations for electric vehicles. By the end of 2017, New Jersey had only 517 public charging stations.

"I really believe that if we give all our attention to solar and wind, we should focus more on energy efficiency," said Ralph Izzo, CEO of PSEG.

Physicist training, Izzo said that the moment to act had come because carbon dioxide already present in the atmosphere will not dissipate for centuries.

"We have to improve our game," he said, "and that's what we intend to do."

The largest oil companies in the world, including BP, Shell and Total, have mobilized $ 100 million each to create a fund called the Oil and Gas Climate Initiative, which invests in small businesses that are working on technologies that can significantly reduce emissions. ExxonMobil and Chevron have recently joined the group.

This amount is beside the commitment of the big oil companies to oil and gas: $ 100 million represents less than two days of investment spending for Royal Dutch Shell, for example.

"We can not continue on this capital-driven carbon spree and hope that voluntary action will solve the climate crisis," said Erich Pica, Friends of the Earth manager. "The fossil fuel industry can not get out of this problem that it has created by throwing pennies for small projects to preserve its public image."

Nevertheless, Pratima Rangarajan, chief executive of the Oil and Gas Climate Initiative, said the money was a start and a way for large companies to find useful technologies.

The fund invested in Clarke Valve, whose co-founder, Kyle Daniels, said that if his company's valves were installed in natural gas wells, they could capture 50% of methane emissions, a potent greenhouse gas who fled.

Larry Fromm, executive vice president of Achates Power, said his company has discovered how to make an internal combustion engine more efficient by 30 to 50 percent. He added that Achates had installed one of its engines in a Ford 150 pickup truck, the country's best-selling vehicle, and that its fuel efficiency was identical to that of a Honda Accord. According to Fromm, Achates has sold its technology to the US military and ten automakers.

Investor pressure

It is not easy to know what all this adds to. But the researchers focus on some answers.

Current commitments by companies that produce and use electricity could generate between 2030 and 935 million tonnes of carbon dioxide equivalent emissions by 2030, according to Angel Hsu, director of Data-Driven Yale. By comparison, emissions from Germany, the largest emitter in Europe, rose to 935 million tonnes in 2016.

But the potential is much greater. Hsu calculates that if major initiatives to reduce emissions can maintain the registration of large companies, additional gains of one billion tonnes could be achieved by 2030.

All companies do not move in a straight line. Mars, the chocolate giant, has announced that it will reduce its emissions by 27% by 2025 compared to 2015 and 67% by 2050. But last year, greenhouse gas emissions of the company increased slightly due to the growth of certain business segments.

Even among companies that recognize climate change, uncertainty is at the root of many big questions: how much? What bad? When?

These are the kinds of questions on which the insurance industry is based. And yet, Hurricane Katrina suffered economic losses of $ 125 billion in 2005 and $ 213 billion in the three major hurricanes of last year.

[Here’s why hurricanes are rapidly exploding in strength]

"Usually, insurers are interested in historical data and assume that the near future is the same or similar to what happened," said Ernst Rauch, head of climate research at insurance giant Munich Re. "With climate change, this is just not the case."

In some cases, insurance costs more to businesses and homeowners near the coast or in floodplains. But large insurers also have new opportunities to secure properties facing growing climate risks.

Robert Litterman, co-founder of a hedge fund called Kepos Capital, has made his career calculating probabilities and building sophisticated models for investors. In the world of funds, he is known as "quant".

But lately, Litterman has been forced to leave his comfort zone. The problem? Investors continue to ask questions about climate change.

"Many investors want to understand the implications of a low-carbon economy," he said. Quantifying it is difficult. And they are worried, he added, that a major climate transition "could take place much faster than expected".

"If you're looking at this problem from a risk management perspective, you're looking at the worst case scenario," Litterman said. "And the worst scenario is really, really bad."

WRI's Steer said that to avoid this result, the resources of businesses and governments should be mobilized.

"It's wonderful what [companies] do, he says. "But we also need governments. So to speak, they are two blades of scissors. There is no sense in having one.

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