Pledging to go carbon zero is currently all the rage for governments around the world.
Back in October 2018, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) estimated that to have even a 50% chance of keeping global warming in check, global emissions would have to hit net zero by 2050.
But perhaps most surprisingly of all, in September 2020 China – currently the world’s largest emitter and biggest climate laggard – announced that it will see peak emissions “before 2030” and will be carbon neutral by 2060.
Even the US is getting in on the act, with President-Elect Joe Biden planning to make the country carbon neutral by 2050.
The Big Shift
This tidal wave of pledges will throw entire economies and the businesses that drive them into radical uncertainty. In fact, almost half of global GDP is now generated by companies operating in nations under actual or intended net-zero emission targets.
But it’s easy to forget that carbon zero doesn’t equal zero climate risk.
Sure, the transition will undoubtedly help get climate change under control. But in the coming years, companies of all shapes and sizes will still be subject to extreme climate-related risks. And most are doing almost no planning for this at all.
Moving to Miami
Imagine a new start-up in Miami. The city is well-known for its ambitious carbon neutrality goals, so the company decides to go carbon neutral. They move into a new office space in the Central Business District down by the water’s edge and purchase a heap of carbon offset credits to account for their footprint. Job done, right? Now they no longer have to worry about climate change.
Wrong. Although the company might have done its part for the environment, it still faces extreme climate-related risks in the coming years.
Miami is the “most vulnerable” coastal city in the entire world, and its business district is in the city’s most exposed position. Over the next couple of decades – far before any country has achieved its carbon neutral pledges – Florida’s $1-trillion economy will be battered by storm surges, hurricanes and considerable sea-level rise.
For a new start up on the waterfront, regular flooding is just one of several radically uncertain events they will face in the coming years. To survive, they’ll need to do more than just reduce their emissions.
They’ll need to learn how to risk think.