One of my key takeaways from Climate Week in New York City was the strong business momentum in climate action happening across the U.S.
More companies than ever have ambitious goals to decarbonize their businesses and help limit average temperature rise from reaching catastrophic levels. These same companies also have board-level oversight of climate action and are beginning to adopt transition plans detailing how they will meet their goals. In the past year, companies have increased their investments in sustainability and begun implementing technology solutions to help them achieve their climate goals.
The U.S. Inflation Reduction Act (IRA) has accelerated these investments even more, creating new opportunities and financial incentives for companies to align their capital expenditures with their goals. The IRA provides a range of tax credits for decarbonization efforts, thereby driving corporate investment in carbon capture, and other innovations that will help reduce emissions across heavy-emitting industries.
A new analysis released today from Climate Action 100+, an investor initiative to ensure the world’s largest 168 corporate emitters act on climate, of which 46 are based in North America, affirms this business momentum. It finds that most emitters have now set goals to reach net zero by 2050 or sooner —a significant accomplishment given that only five focus companies had published net zero goals when the initiative launched in 2017.
Nearly all focus companies have put board-level oversight of climate risk in place, demonstrating that corporations, like investors, recognize that climate risk is a material business risk.
The Net Zero Benchmark also shows that heavy-emitting sectors including electric power and transportation are starting to make inroads in decarbonizing. U.S. auto manufacturers Ford and General Motors have set out strategies to achieve their medium-term emissions goals and they have begun to disclose absolute emissions reduction targets while reducing their emissions intensity over the past three years.
Three U.S. electric power companies—NextEra, WEC, and Xcel—have been reducing their emissions over the past three years in line with a 1.5-degree pathway, the threshold to limit average temperatures from rising.
The U.S. has made progress on a path to decarbonization. In 2023 US GHG emissions were 18% lower than in 2005. Earlier this year, a new study revealed that U.S. emissions have been falling for two decades – a downward trend most likely to continue due to current federal and state policies and the ongoing decline in the cost of renewable energy.
While all of this is positive, it is still not enough. That same study, Taking Stock 2024: US Energy and Emissions Outlook, found that the U.S. is not on track to meet its goal to reduce overall emissions by 50% from 2005 levels by 2030. And, globally, we are expected to pass the 1.5-degree threshold in the next few years.
Extreme weather events fueled by warming continue to strike more intensely and frequently, wiping out entire economies and communities. Just look at the last few weeks, Hurricanes Helene and Milton devastated large urban areas in Florida and much of the southeastern U.S., where the impacts, including the increasing financial and economic costs, will be felt for years.
The bottom line: The clean energy transition is not happening fast enough. Businesses need to turbo charge their actions at a scale and pace far greater than past actions.
Here are some clear next steps for business:
- After setting science-based emissions reductions targets, Climate Transition Action Plans, or CTAPs, must become the norm. Companies have all the guidance they need to develop and publish them, and companies such as General Mills, National Grid, Mars, and PG&E have shown it is possible. CTAPs are increasingly important in the face of landmark U.S. regulations requiring disclosure of emissions and climate risks and the actions being taken to reduce them. Companies should get a head start now as investor calls will get louder for U.S. transition planning requirements.
- Fully leverage the benefits of the Inflation Reduction Act and supporting regulations aimed at curbing emissions and state-level clean energy, transportation, and building sector policies that can get the U.S. back on track to achieve its climate goal.
- Develop Just Transition plans to support workers and communities adversely affected by their decarbonization efforts. These plans should be developed in consultation with workers, communities and other key stakeholders. Companies can start by committing to retain, retrain, redeploy and/or compensate workers impacted by their decarbonization efforts and also to develop new projects in consultation with affected communities and seek their consent.
- Companies must also align their lobbying activities to help achieve a regulatory system that supports profitability and sustainability.
A cleaner, more sustainable economy is achievable. It is doable. But entire sectors must increase the speed of innovation and action to get us there, and the government must back up this transformation every step of the way.
Mindy Lubber is the president and CEO of Ceres, a Boston-based nonprofit advocacy organization accelerating the transition to a cleaner, more just, and sustainable economy. She is a founding Steering Committee member of Climate Action 100+.
