Climate action: how can we revive the 'Spirit of Paris'?

Under this Italian Presidency, the G7 has a unique opportunity: to revive the ‘Spirit of Paris’ by taking decisive action to mitigate climate risk and the negative environmental impact of our actions.

We are approaching two years since the signing of the Paris Agreement. The clock is ticking. At the 43rd G7 summit in Taormina at the end of this week, our world leaders must insist that financial disclosure around climate reality is essential to ensure businesses do their part to hit the Paris targets.

Since Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, first announced an industry-led Task Force on Climate-related Financial Disclosures (TCFD), there has been a great deal of collaboration and discussion on how to improve access to climate data and awareness of climate risk. That was essential – as Michael Bloomberg, Chair of the TCFD said, climate change is the biggest threat facing the world today.

We have the TCFD’s recommendations, which are voluntary. They are intended to help organizations identify and disclose the very information that is needed by investors, lenders and insurance underwriters to appropriately assess and price climate-related risks and opportunities in business. Adopting these recommendations across industries will help us make markets more efficient and economies more stable and resilient. It is not in our interests to delay.

Our changing climate is a business issue, and one on which we cannot afford to procrastinate any longer.

Nowhere is this clearer than at the intersection of technological change and climate risk. We face choices that will dictate our competitive future as businesses, but crucially also our daily lives as individuals – something that is starkly evident in our growing concern for the quality of the air that we breathe.

Globally we are in the middle of a technological transformation. Alongside it, the scale of the disruption of the energy transition needs to be acknowledged, as a matter of urgency.

There are still major contradictions in our collective thinking about business models and climate risk. We are watching wind and solar parks being built at an unprecedented rate – but there are still those who are subsidizing the use of fossil fuels.

It is critical that we do not waste time on old business models in the face of scientific evidence of the risks they are associated with and their impact on the environment. Global decarbonization is essential in the longer term, and moreover it is good business. Renewables are simple to build, quick to bring to market, flexible in scale, and their costs are coming down quickly because of a huge technology boom, making them able to work around the world without subsidies. By comparison, with legacy technologies having a much longer time to market, and with an amortization profile of 20 years or more, we tie ourselves to the lose/lose choice of stranded assets, increasingly high environmental risk profiles, and dependence from volatile commodities.

In getting over this hump in the road, businesses should follow the Science Based Targets initiative launched in 2015 with guidance to set GHG emissions reduction targets in line with a 2°C decarbonization pathway.

We need to give fresh life to the spirit of the Paris Agreement, which included new and reinforced collective action. The Energy Transition we are facing is not the first, we had many transitions in the past two centuries, however there is a critical difference in the speed of this energy transition from those the world has witnessed in the past. Concerted and accelerated action from all players – governments, industry and civil society – is needed to meet the challenge of climate change.

An opportunity for leadership on a global level lies in co-operation across those boundaries that have traditionally separated countries as well as different stakeholder groups.

Transparency and disclosure is key, bringing accountability and focus, but also catalyzing opportunities for cooperation. This is why I joined a group of business leaders representing companies with $4.9 trillion in assets and $700 billion in revenue, in expressing my strong support for the TCFD recommendations.

I urge all businesses to join us in our endorsement of the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosure and I call upon the G7 to show the world it is serious in leading the way forward in dealing with climate change. The TCFD’s recommendations to the private sector can usefully serve to underpin and support public-sector action. The implications of climate change across all economic sectors should be disclosed to the public, alongside the actions governments plan to take to mitigate risk. Because when it comes to climate risk in 2017, every citizen on this planet is a shareholder.