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How Governments Can Help Businesses Reach a Zero-Carbon Future

Co-Chair of We Mean Business

Sustainability is rising up the agenda of both businesses and governments. Hundreds of businesses now have ambitious emissions reduction plans, while several countries are declaring climate emergencies. 

The key to getting to a zero-emissions future has to be a collaboration of business and government action, with bold government policies accelerating business progress toward emissions reduction goals. Getting those policies in place now will mean a scaling up of business innovation and investment in zero-carbon solutions. 

10 Years Left

We have between seven and 10 years left at current levels of greenhouse gas emissions before we will have used up the remaining carbon budget to ensure global temperature rise does not exceed 1.5 degrees Celsius. In other words, this is the decade when we must turn the tide on climate change.  

The good news is that there is growing momentum in business. What we need to drive that forward is greater government ambition. Here are five signals of change that governments must get behind.

Set Bold Targets

Business is setting bold, science-based targets aligned with limiting global warming to 1.5 degrees Celsius, such as switching to 100% clean power and committing to 100% electric vehicle fleets.  

A few years ago at IKEA, we used 100% targets widely, from sourcing 100% of our wood from Forest Stewardship Council (FSC)-certified forests to using 100% renewable energy and 100% LEDs for our lighting business. These targets created certainty about what success looks like.  

Don’t leave people confused about whether you’re defending the status quo or backing the future. We need more governments to step up and align their policy ambition with climate science. This will give even more businesses the clarity and confidence they need to set ambitious enough targets and invest in the right ways to achieve them.

Business Can See Where the Future Lies

The future needs to — and will — look different from the past. It will be renewably powered with electric mobility, and we will be eating a more plant-based diet and living in smarter cities. 

Businesses are innovating and investing in these growth areas, and the ones that scale innovation fastest will play a key part in creating this future. Governments should focus on stimulating the outcomes required to win the fight against climate change with clear, long-term and legal frameworks. Many large businesses can and will transition their businesses by embracing new technologies, but there are also many businesses and sectors that are simply too carbon- or resource-intensive to transition. 

Governments need to find ways to back the sustainable innovators, as these will become the job creators of the future.

We cannot afford to defend legacy businesses through perverse subsidies and incentives; alongside clear long-term policies on climate, we need transition plans that support those workers and communities that will be affected. 

Put a Price on Pollution

Most businesses welcome some form of carbon-pricing; many have voluntarily implemented their own internal carbon price to help drive their focus toward low-carbon solutions. 

National carbon prices would help give a clear economic signal about the direction of travel and help shift investment flows in that direction. 

Procurement Policies Drive Emissions Reduction 

A growing number of businesses are using their procurement practices to drive emissions reductions and make their businesses more resilient to the impacts of climate change. More than 200 companies have committed to 100% renewable electricity through RE100. They are generating demand equivalent to the 21st largest electricity consumer in the world and using more power than South Africa.

Businesses are also supporting hundreds of millions of hectares of sustainably certified forestry through the FSC or are driving fair and living wages through their supply chains. Certification has become widespread, from the Marine and Aquaculture Stewardship Councils for fish to the Better Cotton Initiative

The Sustainable Trade Initiative (IDH) has launched collaborative approaches to bring retailers and others together to improve wages in agricultural sectors. There is significant scope for more, and governments can lead by example by implementing procurement policies that favor low-carbon products and services.

Sustainable, Disruptive Businesses Are the Job Creators of the Future

Large incumbent businesses have significant power. Many use that to good effect (witness Google and Apple’s commitments to renewable energy); however, throughout history, when threatened, businesses can fight hard to resist change. Tobacco is just one obvious example.  

Governments need to find ways to back the sustainable innovators, as these will become the job creators of the future. We still have time to make the progress that is needed this decade. With bold and clear policymaking from governments coupled with growing action from business, we can accelerate the wholesale transformation of the economy. There’s no time to lose.  

Stephen Howard

Co-Chair of We Mean Business

Stephen Howard is the co-chair of the We Mean Business board and former chief sustainability officer at IKEA. Prior to IKEA, Steve was founder and CEO of The Climate Group, a global NGO that has built networks of cities, states, regions, and businesses committed to a net-zero carbon world.

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