IOD SPECIAL TALKS - Climate Change: An Existential Crisis

Ladies and Gentlemen,

It is an absolute delight to be here, President Gen. Nath.

Friends, I am not a stranger to these awards; I have been coming regularly. If you look very carefully at the brochure that was prepared, you will see various pictures of me throughout the ages. I started with dark hair, thin, ready for business. But the last picture is probably going to be this one – grey and fat. Never the less, the reason I keep coming back is the vital work that IOD, India does. It is about helping to build better boards, is about much better corporate governance and the ESG agenda; and that, my friends, as you already know, is going to grow. I will talk a little bit about the role of business in that area.

I will start by taking you all back two years ago to COP 26 in Glasgow. How many of you were there? You will recall that at that point, the world was in the grip of COVID. Our economies were struggling because, quite rightly, as governments and as ministers, we had to make sure that we were supporting individuals and businesses to stay afloat. Of course, the geopolitics were starting to deteriorate. Unfortunately, it got a lot worse. But despite all of this, under the UK’s presidency, we managed to get almost 200 countries to sign up for the Glasgow climate pact. This was a collective effort.

What did we achieve?

We managed to get countries to make bigger commitments on cutting emissions. We got developed countries to make commitments on more finance, particularly finance, to adapt to the changing climate for the developing nations.

We managed to go from 30% of the global economy covered by the net-zero target to over 90% by the time we had finished our presidency. We managed to get every G20 country to sign up for net zero. I am very pleased that India did so. particularly India’s target of 5000 GW of renewable energy

The IEA has estimated that if you add up all the commitments that were made at COP 26, we are heading towards 1.8˚ of global warming.

The IEA has estimated that if you add up all the commitments that were made at COP26, we are heading towards 1.8˚ of global warming. Now what does that mean, just to put that in context?

In the 2015 Paris Agreement, the world agreed that they would do everything to limit global warming to 1.5˚ above pre-industrial levels to ensure that we averted the worst impacts of climate change. We had the same commitments made in Glasgow.

1.8˚ is not 1.5˚. In fact, the impact of 1.8˚ will be devastating for many billions around the world. But to put it in context, before the Paris agreement came into force, scientists agreed that we were headed towards 4˚; post-Paris agreement: 3˚; and post-Glasgow: 1.8˚. So we have managed to bend that curve downwards, but what I said in Glasgow is that we have secured a fragile win, and that 1.5̊ was on life support. The reason I said that is because commitment is important, but delivery is even more important, and that is something that we need every country and every company to make a commitment to deliver on.

Why did so many countries, so different from each other, sign up for this particular issue?

The first was ‘collective self-interest. I went to about 54 countries over a 2-3-year period. I went to many of them twice and many of them three times. I went to India four times, met Prime Minister Mr. Modi, and spoke to ministers around the world to persuade them to do more in this area. They understood the impact of climate change on their lives, on livelihoods, on infrastructure, and what happens when you have persistent global warming.

Let me give you some examples. I was in Barbuda, and I met with communities that were on the frontlines of climate change, who had experienced a hurricane called Irma a few years ago, and the place was still devastated. Their biggest fear was that these climate events were going to get more ferocious and more frequent.

I was in Jakarta to see the sea walls. Many of you have been to Jakarta. Next time you go, go and have a look at the sea walls holding back the rising sea levels. You can literally see that every few years, they add a few meters.

I was in Sydney, and I met with the people dealing with flooding and wildfires; they told me that what used to be one in a hundred events is now one in ten events or one in five events.

There are businesses and homes in Australia where you can no longer get insurance because of the risks of climate change. It is not just in Australia; it is in the US; it is in Europe; it is across the world.

I was in Delhi in 2022, during the time when there was extreme heat, and I met with some of those individuals who have to work outside for a living. We are here in an air-conditioned room. But you all know what it is like in heat, and there is only so much that the human body can take.

Last year at the UNGA, I met the climate change minister for Pakistan, just at the point where a third of that country was under water due to climatic events. That is the same size as the UK. What do you say to someone whose country is underwater? It is a very difficult conversation.

The IEA has estimated that if you add up all the commitments that were made at COP 26, we are heading towards 1.8˚ of global warming.

Here, even in the UK, our friends who live in the UK: Last year, in the UK, we had wild fires-wild fires outside London for the first time. The point is that countries recognize that climate change does not recognize borders. That was one of the reasons they decided to sign up.

Second, the IPCC made it very clear that it is human activity that is unequivocally to blame for rising temperatures.

Thirdly, countries understood the cost. Many of you will be aware of a gentleman who is a great friend of India’s; he is a famous economist, and he sits in our upper house of parliament. He brought out a review some years ago that estimated that the cost of unmitigated climate change, if we do nothing to try to avert the damage, would lead to almost twenty percent coming off global GDP every year.

Here in the UK, we have an independent office budget responsibility. That estimated that unless we tackled these issues, by the end of the century, the UK’s national debt would be 300% of the size of the economy. Friends, that is not sustainable. That is not a legacy we should be looking to leave for future generations.

Countries have also understood that climate change just makes other risks worse. Food security, water security, and migrations: Last year, there were more people displaced in the world because of climatic events-32 million-than were displaced due to conflict-28 million. We know there are terrorist groups like ISIS and Al-Shabaab that use scarce resources, changing climate, things getting worse as a recruiting sergeant to get people to sign up for their heinous agenda. Therefore, countries understood that the cost of inaction was far greater than the cost of taking action now.

So, two years later, where are we now? We are 1.2˚of global warming above pre-industrial levels. This year was the hottest summer on record. I just saw that early today, a statement that this is heading towards being the hottest year on record ever. Those warnings keep coming. The World Meteorological Organization (WMO) brought out a report in May where they estimated that, on the balance of probabilities, in one of the next five years, we would breach the 1.5˚ limit. It does not have to be permanent, but what it shows to all of us is that unless we act, the vital sign of 1.5° will start to ebb away.

So, is there hope? Can we keep 1.5˚ alive?

Yes, we can, but that window is closing. We are starting to get to a point where global emissions are starting to flatten, but the reality is that to keep on the right path, we need to cut emissions by over 40% by 2030. That is not long to go. So that trajectory needs to come down a lot faster.

I am very pleased that Dr. Tayeb is here, representing the UAE, because the UAE, of course, is going to be hosting COP 28. Many of you, I suspect, will be going.

So, what do we want to see come out of that? What I want to see coming out of that is a response from countries to the fact that we are not on target. I want to see higher commitments in terms of cutting emissions. I want countries to set out what they are going to do on a sector-by-sector basis, and this is where business can help. It is no good to say that a country is going to be net-zero by 2050. As a company, we are going to be net-zero by 2050. You have to set out what you are going to do in the energy section and in the agriculture sector, and that is what needs to come forward.

We also need to quicken the pace at which renewables are being rolled out across the world. The estimate is that we should be reaching three times the level of renewable capacity by 2030 that we have now. In parts of the world like Africa, it needs to be six times this much. We also need to get an agreement on the phase-down of unabated fossil fuels. Now I know this is controversial. Of course, this is controversial, but this is not about turning the tap off overnight; this is a transition. We also have to recognize that 75% of all global emissions are energy-related, and until you deal with this particular issue head-on, things will not improve.

We tried. I tried it last year at COP 27; we got 80 countries to agree on the wording and the phasing down of fossil fuels. In fact, India was with us as part of this discussion. I hope it will happen at this upcoming COP.

Finally, we need to see progress in finance. To deliver a net-zero transition in the global economy, it is going to require about $125 trillion. That will come from the private sector. There is obviously a wall of money that is waiting to be deployed, but we need to make sure that as the private sector invests, it is able to get a return. The one thing that I ask for and the one thing that I think all of you can deliver as business leaders is to ensure that you price climate risk in every single financial decision that you take. If you do that, we will make progress.

So, we come to the role of the business. You are the ones who deliver; you are the ones who deliver through technology; you are the ones who deliver through your clients and through your customers, and many of you have recognized that this pursuit of net zero is one of the biggest economic opportunities that we have ever had. Many of you who employ the younger generation will know that it is not just your clients and customers; young people particularly want to work for organisations that believe in sustainability and ESG. It is a winner when you want to attract high-quality people, and it is good for the bottom line as well. That is why we managed to get over 5,000 global businesses to sign up for the UN Race to Net Zero campaign going into COP 26; that has risen to 8,000. We managed to get $132 trillion of assets signed up to net zero in COP 26. I can tell you that 80% of our largest listed companies will sign up to net zero by 2050.

Change is happening because governments are requiring transition plans be put in place covering your scope one, scope two, and scope three emissions. You are going to have to respond, and that will go across jurisdictions as well.

I know that this meeting is going to discuss some of the key themes that will also be highlighted at COP 28 on health, food, nature, and adaptation, and of course, I wish you well with the deliberations that you have left for the next couple of days. The final thing I want to say is ‘Congratulations’ to all the winners here. As we heard, these Awards have a 30-year pedigree, and that is impressive. They are an emblem of success. They are a testament to the hard work of the winners, but also to those who participated. The sharing of best practices, I think, is a fabulous idea, so you learn internationally what works.

Ultimately, it is going to need all of you to help deliver this commitment to net zero for individual countries, but also for your businesses.

I just end with this: this is an existential threat that we face. When you go home this evening, look at your kids and look at your grandkids, because by making the right decisions, what you are doing is securing a future for them.

*Excerpts from the ‘Chief Guest Address’ delivered by The Rt. Hon. Sir Alok Sharma KCMG MP, President of COP26, Member of Parliament for Reading West Govt. of UK at the ‘Golden Peacock Awards Nite’ of IOD's London Global Convention held on October 17, 2023 in London.