While estimates vary by country and industry, often the majority of business-related GHG emissions fall under Scope 3indirect emissions related to a companys operations, value chain, and product usage.32 Mitigating such emissions likely will require an industry-level approach to work with suppliers and customers to find new solutions. That requires first identifying how organizations in the industry can take steps to reduce their carbon footprint. And over the next 50 years, nearly 900,000 jobs could disappear each year due to climate damage. The decisions made by governments, businesses and communities would reinforce our early progress and could unlock extraordinary economic possibilities for the U.S.. According to a new Deloitte report that surveyed 750 executives from around the world, over 80% said their organizations are concerned about such climate change risks as increasingly limited . In short, you are changing the constraints, and within those new constraints, you can still make all your choices as you normally wouldbut with the result of doing business in a more climate-positive way. Environmental stewardship as a leadership imperative, Climate change and the business community, Conclusion: Embracing a stewardship ethos. In the United States, agriculture is conservatively estimated to account for about 10% of the nations total annualGHG emissions33 but has the potential to not only become carbon neutral but to actually sequester carbon.34 Right now, though, farmers and ranchers have little incentive to adopt carbon-friendly agricultural practices such as no-till and planting of cover crops. About Deloitte
At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 2 (2014): pp. But if there is a silver lining, it is this: We have the tools and technology we need to head off the worst outcomes, and a (narrow, closing) window to do so. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn about Deloittes offerings, people, and culture as a global provider of audit, assurance, consulting, financial advisory, risk advisory, tax, and related services. 15Emily Abraham et al., Executive summary of the SECs proposed rule on climate disclosure requirements, Deloitte, March 2022. We work with companies to evaluate and develop sustainable strategies that can help drive toward near-term and long-term results. Whether it be accounting for higher insurance costs due to climate change or potential cost related to a companys carbon emissions, without access to quality data, reporting the progress on a carbon-reduction strategy to stakeholders can be difficult. Our own sustainability, climate, and equity commitments. Public-sector funding and financing can provide the necessary resources for ecosystem-level initiatives to get off the ground. One challenge when integrating climate metrics into an investment process is identifying the material climate-related data from reliable sources so portfolio managers are focused on what is both relevant and measurable. Despite significant geographic variation, "several clear messages emerged from the survey," says Beth McGrath, Deloitte Global Government and Public Services leader. China is estimated to be the world's largest importer of clean hydrogen, requiring 13 million tonnes a year by 2030, Deloitte report says; Asia-Pacific will capture almost 55 per cent of the . The Carbon Disclosure Project collected data on roughly 4,800 global companies that collectively reported supply chain efficiency efforts amounting to 551 million metric tons of carbon and cost savings of US$14 billion, with approaches including smarter packaging, product life cycle analyses, and circular design.28 Research on more than 1,500 companies suggests those that are more carbon-efficientusing the least amount of carbon for a unit of outputare both more profitable and less vulnerable to macroeconomic risk.29. Please enable JavaScript to view the site. Climate Action Summit today brings together officials, heads of state, and global business leaders to discuss how to take more decisive steps to combat it. Report progress to investors, regulators, and other stakeholders, Investment managers can gain efficiencies in the reporting process by housing ESG/climate data alongside traditional financial indicators and datasets on portfolio managers investment research platforms. If global warming reaches around 3C toward the century's end, the . The report from the Deloitte Economics Institute analyzed 15 geographies in the Asia-Pacific region, Europe and the Americas, and found that if global leaders unite in a . Averting calamitous levels of global warming is almost certain to demand action of such breadth, depth, and urgency that company- or industry-level actions alone (even aggregated and accelerated) are likely to fall short. 37377. Jan 18, 2022, 07:30 ET NEW YORK, Jan. 18, 2022 /PRNewswire/ -- Released today, Deloitte's 2022 CxO Sustainability Report: The Disconnect Between Ambition and Impact, reveals that global C-level. 4 (2019). Once an organizations climate profile is clear, leaders can launch a concerted effort to pinpoint the suite of options available to mitigate emissions, adapt to climate risks, and identify new business models. Social login not available on Microsoft Edge browser at this time. Our sustainability consultants are experienced at identifying opportunities across the value chain and across industries to create potential resource-based financial value. Answering key questions about a warming worldand what we can do about it. Climate change is not a choice. Develop a climate-related data management strategy. Time is running out to act on climate change. 14Deloitte, Creating a climate of change digest, accessed December 6, 2022. To succeed, such an effort almost certainly must be championed by the board and led from the C-suite, with the CEOs visible and vocal support. At the level of the industry, we should collectively change the rules of the gamethat is, the constraints organizations face when effectively competingand how we create value in ways that lead to climate-friendly outcomes. Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the worlds most admired brands, including nearly 90% of the Fortune 500 and more than 7,000 private companies. And to realize the most ambitious impacts at a planetary scale requires the mobilization of a host of actors at the scale of entire business ecosystems, cutting across traditional industry boundaries and often including governments, nonprofits, academia, and others.38 Some critical elements of the solution can be implemented only via large-scale collective action. Global warming will affect every industry and every country, albeit with differing intensities and at different times. View in article, Carbon Cycle Institute, Carbon farming, accessed September 15, 2020. already exists in Saved items. As the causes and consequences of global warming have grown clearer and pressure from a variety of sources has increased, businesses have begun responding across three (not mutually exclusive) dimensions: mitigation, adaptation, and value creation. View in article, Armon Rezai, Duncan K. Foley, and Lance Taylor, Global warming and economic externalities,Economic Theory49, no. Canada Climate & Sustainability Leader. As such, investment management firms may face the challenge of effectively adopting a climate change plan of action that contributes to building a net-zero economy while also meeting regulators expectations for consistency between the claims made about ESG funds and the investment practices of those funds. What is missing is a set of new decision-making paradigms suited to such an unprecedented challenge. View in article, For one of the milder examples, see Ken Gillingham, Carbon calculus: For deep greenhouse gas emission reductions, a long-term perspective on costs is essential, Finance & Development 56, no. This would make it harder for people to live and work due to heat stress, rising sea levels, damaged infrastructure and reduced agricultural productivity. If youre just getting started, all of this may seem overwhelming, at least when compared with a more modest approach. With MyDeloitte you'll nevermiss out on the information you need to lead. These are not either/or choices. View in article, Project Drawdown, Table of solutions, accessed September 15, 2020. As teams work more effectively together toward a common ESG goal that is specific and measurable, making meaningful progress toward their firms climate-related objectives becomes more achievable. CU Boulder and Deloitte will continuously connect work from the Climate Innovation Collaboratory to market applications and support government agencies with collaborative proposals and response efforts. View in article, Robin Pomeroy, One trillion treesWorld Economic Forum launches plan to help nature and the climate, World Economic Forum, January 22, 2020. Deloitte Services LP
The severity and frequency of the impacts are likely to only increase and compound with time even if global mitigation efforts succeed, adding urgency to business leaders efforts to make their organizations more climate-resilient. Climate change is transforming the global business landscape, but many corporate leaders continue to underestimate the speed and scale with which the shift to a low-emissions economy is likely to unfoldand they are failing to recognize the substantial business opportunity associated with the transition. As an emissions mitigation strategy, that might have worked decades ago. Top-down communication of expectations from C-suite leadership could be vital to strengthen corporate culture and ensure accountability, alignment, and commitment across the entire organization.7Whether an investment management firm is making incremental changes to an existing ESG investing strategy or completely redesigning its business model, the CEOs vision can provide a leading guide to successful implementation.8Evidence from the Deloitte Center for Financial Services 2023 investment management outlook survey suggests that when the CEOs vision contains measurable characteristics, accountability increases, and a foundation for the improvement of collaboration across a firm may be created. But tremendous new opportunities to create and capture value would likely materialize as well. If the U.S. chooses to adopt an ambitious, holistic path towards decarbonization it could see net economic gains by 2048, said Scott Corwin, Managing Director in Deloitte USs ESG Strategic Growth Offering. While urgent action is. Climate Action, Resilience and Sovereignty: Governments and companies need to align climate strategies with newly emerged geopolitical paradigms, The economic opportunity of climate action in the US. 7Benjamin Finzi et al., How the CEOs leadership in digital transformation can tip the scales toward success, Deloitte Insights, 2022. Climate change mitigation refers to efforts to reduce or prevent emission of GHGs at the source, as well as efforts to remove existing GHG emissions from the atmosphere. How do we make the workforce transition, work for all? Climate change adaptation refers to the process of adjustment to actual or expected climate change and its expected impacts. View in article, Paul Woolley, Short-term thinking is undermining sustainable business models, Financial Times, April 17, 2019. Climate change is no longer a scenario, but instead becomes the baseline for the economy. Then comes the potentially most difficult task: convening erstwhile competitors to collectively change the rules of the game. Deloitte Report: Inaction on Climate Change Could Cost the US Economy $14.5 Trillion by 2070. Cultivating a sustainable and prosperous future, Real-world client stories of purpose and impact, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. 2 (2012): 32951. Tax credits and other incentives can influence consumer and business behavior, putting a broader range of activities into the category of things that pay for a companys top or bottom line. Understanding the rising importance of sustainability and the immense threat of climate change, Deloitte built upon past research by engaging more than 2,000 CxOs across 21 countries to examine . He is the author or coauthor of four best-selling and critically-acclaimed books, including The Innovators Solution. Two Deloitte economists and a sustainability leader discuss relevant economic and business challenges ahead, and executives' critical role in addressing risks and . But what if we valued it differently? Kafia Hosh
For what is likely the most definitive statement, see Intergovernmental Panel on Climate Change, Global warming of 1.5C, accessed September 16, 2020. Such efforts should go beyond defensive moves meant to assuage stakeholders or guard against climate-related risks to the business, and often limited to what the company itself can do to adapt to or mitigate climate change. Learn how Deloitte Open Talent centers the ongoing needs of contractors and highlights the best projects available across all our businesses. View in article, Arjan Trinks, Machiel Mulder, and Bert Scholtens, An efficiency perspective on carbon emissions and financial performance,Ecological Economics, 2020. And, according Deloittes research, the regions hardest hit by unchecked climate change would have the most to gain. Deloitte's outlook, based on the Hydrogen Pathway Explorer (HyPE) model, explores the emergence of a carbon-neutral, inclusive green hydrogen economy in the coming years. View in article, Carbon Disclosure Project, Closing the gap: Scaling up sustainable supply chains, 2018. View in article, Task Force on Climate-Related Financial Disclosures, Second TCFD status report shows steady increase in TCFD adoption, June 5, 2019. Even as organizations act with urgency to limit further warming, we are locked in to a hotter climate for the foreseeable future.13 The repercussions are widespread and are already being felt in the form of longer droughts, more severe and frequent flooding and wildfire events, rising sea levels, and a host of other changes in the natural environment upon which all enterprises ultimately rely.14 Companies should assess how those changes might affect their business and take steps to reduce their exposure to climate-related risksby, for example, relocating vulnerable links in the supply chain. Climate is an issue that transcends company, industry, even society and country. Deloitte Services LP
This message will not be visible when page is activated. In others, where the changes could affect competitive position, success requires real leadership and perseverance, and the carrot of publicly crediting adopters should be used liberallywhich, by extension, could create pressure for laggards to opt in. View in article, Our World in Data, accessed September 2020, based on data from Bernhard Bereiter et al., Revision of the EPICA Dome C CO2 record from 800 to 600kyr before present, Geophysical Research Letters 42, no. And we increasingly see a business community ready to act quickly to mitigate, adapt to, and create new value amid climate change, with bold initiatives being announced seemingly weekly.4. It necessitates new processes, yes, but also a shift in mindset throughout the workforce, its suppliers, and its customers. This once-in-a-generation transformation could add nearly 1 million more . Even if trusted sources are identified, accessing the data itself may be a challenge. The United States turning point on climate change, Infrastructure, Transport & Regional Government, Telecommunications, Media & Entertainment, Read more on how Deloitte helps organizations toward a more sustainable future.
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