Mark Tercek speaking to business leaders

Business Can and Should Do Much More on Climate

It’s the Win-Win Outcome We Urgently Need

Climate change is now front of mind like never before.  Every day we read more horrific news about fires, floods, heatwaves, storms, and other natural disasters with calamitous impacts.  Further, this week the UN published an updated climate report, Climate Change 2021: The Physical Science Basis. The scientists’ conclusions — we’ve already locked in worse outcomes in the near future.  And, unless we start reducing greenhouse gas concentrations in the atmosphere immediately, we are ensuring even worse outcomes ahead.

What should we do?  Of course, the imperative is for ambitious and tough government policy to address climate in leading countries around the world.  But the politics to do this seem very difficult right now. We don’t have time to wait for this to improve. In my view, the private sector — which has stepped up significantly — can and should do much more.  Furthermore, doing so will improve business outcomes.

I spoke recently to a group of senior mergers & acquisitions investment bankers about private sector strategies to address the climate crisis. I summarize my remarks below.  Please let me know what you think — especially if you think I’m wrong about any of this.

Today, I want to focus on three big topics:

  1. Why we need the private sector to step up and more boldly pursue solutions to the climate crisis 
  2. Why doing so makes business sense 
  3. How everyone in the private sector — including senior investment bankers like you — can drive this important opportunity forward 

First, how are we (humankind) doing in addressing the climate challenge?

Badly. We are nowhere close to where we need to be. There are many things we need to do, but the most important priority by far is to reduce greenhouse gas (“GHG”) emissions. 

Every year the UNEP does a useful update on this. They set (and reset) the 2030 emission reduction milestones that we need to reach in order to stay on track toward our critical, longer-term global goals for 2050. 

In 2020 global emissions of equivalent carbon dioxide were about 52 gigatons. 

UNEP forecasts that our current trajectory will take us to about 59 gigatons in 2030. 

That’s a net increase of 7 gigatons. As a reminder, we’re supposed to be reducing emissions, not increasing them. Not good. 

But what if we improve from our current performance and get on track with the conditional targets of the Paris Climate Accord? Then emissions in 2030 will still be about 53 gigatons — still an increase. Still a bad outcome. 

To be on track with the “2-Degree Scenario,” — i.e., limiting global warming to 2 degrees celsius by 2100 — emissions need to be about 41 gigatons in 2030. For the much more widely supported and safer goal of 1.5-degrees, 25 gigatons should be our target. 

That means we’re currently 18-34 gigatons off target. 

Clearly, we are waaaaay behind schedule. To state the obvious, we need to hugely accelerate GHG reductions.