Climate change will be the challenge of our generation and most likely the next. To transition our economy, which, since the industrial revolution, has been based around fossil fuels and carbon, presents a staggering test of resolve for both industry and society. The changes to society needed now to slow global temperature rises are dramatic. To win this fight demands a multi-faceted approach by industry, investors, governments and the legislature. Businesses need to move beyond good intentions and start achieving real results as well as implementing appropriate mitigation.
The economy’s focus is shifting to sustainable models across the board: just as renewable energy will replace fossil fuels, electric vehicles will eventually overtake petrol and diesel cars, air and ground heat will replace gas boilers. Businesses face risks, directly from failure to adopt adaptation measures and indirectly from changing customer and consumer appetites, but opportunities for sustainable businesses should not be overlooked. Businesses should expect increased regulatory involvement. Current and proposed carbon and energy efficiency reporting and transparency regimes are likely to both increase in scope and gain additional regulatory teeth.
Ultimately, traditional businesses will need to pivot to more sustainable activities, and innovative, yet to be discovered solutions will play a key role in this transition. These changes could happen organically through personal, shareholder and investor decisions (in part fuelled by increased corporate transparency, both mandatory and voluntary), or through more direct regulatory action. In all likelihood, it will be a mix of both.