The Paris Agreement And Its Impact On Corporate Climate Action

  • OCTOBER 13, 2023
  • //
  • ESG

Climate change continues to be top of mind for corporations’, consumers, and regulators. The range of key influencing groups include U.N., the WEF and other spokes entities for climate continue to urge we are in a crises and business as usual approach will no longer work.

While there is a lot to be concerned about, I thought it might be helpful as well to look at some of the positive outcomes and progress that the focus on climate change has driven.

For example, today we can see the outcomes of government and global policies that have fueled the innovation of electric cars, solar panels, and wind turbines. These policies and subsidies have enabled innovation to be cost effective.

The cost for clean energy such as solar is now over 90% cheaper than it was last decade. Batteries are 90% cheaper and wind is reported to be 66% cheaper, and 14% of new vehicles are now electric (and targeting in certain geographies like Europe or China to hit 20%). This doesn’t mean that we could relax, but there has been some positive progress made.

The Representative Concentration Pathways (RCPs) are the result of a groundbreaking partnership between climate scientists from different disciplines, including integrated assessment modelers, climate modelers, and emission inventory experts. The RCPs were projected models developed to represent different possible warming outcomes at the end of the century. The RCPs range from very stringent climate policy (RCP 2.6) to no climate policy at all (RCP 8.5). RCP 8.5 results in close to five degrees of warming, RCP 4.5 is just below three degrees, and RCP 2.6 represents the Paris Agreement goal of limiting warming to 1.5 ºC.

There were some interesting behaviors that began to emerge in the time of the global financial crises when emissions significantly dropped for the first time in developed countries. Emissions generally align with economic strength and GDP, but we began to see for the first time in 2014 that coal use remained flat and even declined a little bit even as the economy recovered.

Certainly, the falling cost of clean energy and government policies to help subsidize / rebate and encourage clean energy innovation has been a positive contributor coming out of the 2015 Paris agreement.

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