The route to decarbonisation is uneven and challenging, but we can accelerate the progress
Reaching net zero will be the biggest collective endeavour yet undertaken by humanity. After all, fossil fuels still provide 84% of the world's energy, and the window for systemic change to keep the earth’s temperature rise to 1.5°C continues to dramatically narrow.
As clearly set out in the latest assessment report by the Intergovernmental Panel on Climate Change, we can no longer ignore the science and unequivocal fact that humans have caused climate change. We need to make this decade count and halve emissions by 2030 to stand a chance to reach net zero by 2050, however to do this will require a complete rewiring of the global economy.
Every business is inextricably linked to the impact of environmental, social, and governance (ESG) issues. It stands to reason, then, that a strong ESG offer will not only contribute towards achieving net zero, but it will also generate value. When we say value, this could mean increasing stock liquidity, retaining talent, or even unlocking competitive value. Investors, employees and business partners in organisations around the world are beginning to care about ESG commitments since the effects of climate change are already being felt at a global scale.
The cost of not taking action
An honest assessment of ESG involves the open admission that it will take an investment of time and resources, and that getting it wrong may result in huge value loss. Yet, the risk of inaction is likely to have significantly unfavourable occurrences. Several firms with a poor, or hollow, ESG offer have had their market valuation fall by double digits in the days and weeks after their blunders. Therefore, it is of utmost importance that accountability for progress - or lack thereof - is delivered through transparency.
A clear shortcoming of the COP26 process is the lack of robust follow-up mechanisms to monitor and advance pledges. Reporting on how commitments will be delivered is key to driving real action and avoiding greenwashing. Organisations such as Climate Action Tracker are providing the necessary aggregation of country action to the global level. For businesses, there is a plethora of frameworks and integrated reporting initiatives to align reporting and deliver the necessary transparency. Aligning with these frameworks will be absolutely crucial for organisations to achieve their decarbonisation goals. The TCFD[1] in particular is gaining traction among governments and investors as a way of assessing performance and progress.
The GCC approach to ESG
The GCC region has been at the vanguard of the battle against global warming and climate change, as well as the larger ESG and sustainable investing movements. As a major supplier of fossil fuels to the rest of the globe, the region has a significant stake in developing ways to reduce emissions while still providing the world with the energy it requires. The UAE’s recently announced strategic initiative to achieve "Net Zero By 2050” evidences this commitment and is the first country in the region to do so. GCC nations have set ambitious ESG goals. We are seeing this as part of a worldwide trend of greater understanding about how the private sector may help accomplish crucial national and international goals including decarbonisation, circular economies, and local talent development.
Improving ESG performance is a new way of conducting business and shifts the focus from financial indicators alone. However, success in tackling ESG challenges cannot happen unless companies and governments work together. Although ESG may appear overwhelming, in the GCC governments and major companies have a head start due to robust locally established frameworks.
Helping organisations accelerate ESG
The only way forward is towards a net zero emission future. However, to achieve this, public and private sectors must work together and ensure commitment towards adjusting operations, innovating for cleaner practices, and adapting to the circular economy.
At GHD, we are integrating our environment, social and governance (ESG) priorities into decision-making and operations across our company and embedding sustainable practices into the services we provide to our clients. Our vision is: water, energy and urbanisation made sustainable for generations to come. The most immediate changes we can make is to reduce the impact of our business operations. We’ve committed to achieve carbon neutrality across our business by 2025. As part of this, we’ll be measuring and taking steps to minimise our carbon footprint, water use and waste, and monitoring the carbon impact of our suppliers.
Our projects across the GCC region and the world have been focused on solving water, energy and urbanisation challenges. We recognise the significant threat climate change poses to the security of our water and energy systems and the vitality of our communities. We will continue our support and commitment to making our own operations, and those of our clients, more sustainable as we move towards a net zero future.
For more information, connect with:
Anna Jakobsen
Sustainability, Resilience and ESG – Market Leader (EMEA)
Anna.Jakobsen@ghd.com
T: +44 2030 777 743
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Footnote
E: environmental criteria focuses on carbon emissions and climate change. Every corporation consumes energy and resources; every company influences and is influenced by the environment.
S: social criteria addresses your firm's relationships and reputation with people and institutions in the communities where you conduct business. Labour relations, as well as diversity and inclusion, are all included. Every business exists inside a larger, more diversified society.
G: governance looks at the internal system of policies, controls, and processes that your firm uses to manage itself, make effective choices, comply with the law, and fulfil the demands of external stakeholders. Every firm, which is a legal entity, requires governance.
[1] Taskforce for Climate-related financial disclosures
