The global community is facing a critical juncture in its efforts to address climate change and achieve the United Nations (UN) Sustainable Development Goals (SDGs). Despite some progress, the pace of change remains alarmingly slow, particularly in the context of the climate crisis and the broader SDGs. There is a significant gap between current efforts and the necessary targets to mitigate climate change.
A key report from PWC, the Low Carbon Economy Index or Net Zero Economy Index, reveals that global efforts to reduce carbon emissions are falling short. The current average reduction in carbon intensity is significantly lower than the required annual reduction to stay within the global warming limit set by international agreements. This gap underlines the urgent need for more drastic and immediate measures.
The annual Accounting for Sustainability (A4S) Summit of the global finance and accounting community plays a pivotal role in addressing these challenges. This congregation of capital market representatives, regulators, accounting institutes, and CFOs from various sectors is crucial for steering financial resources towards sustainable initiatives. Past summits have focused on embedding sustainability in decision-making, transforming sustainable finance, and broadening the focus beyond specific investment vehicles to include entire portfolios.
The transition to sustainable practices involves overcoming various challenges, particularly in aligning commitments to tangible actions. There has been significant progress in corporate and national commitments to net-zero, but the real challenge lies in implementing these commitments effectively. The conversation has shifted from ‘why’ to ‘how,’ with a focus on overcoming the practical difficulties of such a transition.
Collaboration across businesses, investors, society, and government is crucial for making substantial progress. Initiatives like the Glasgow Finance Alliance and the Net Zero Asset Owners Alliance exemplify the potential of collective action. Such collaborations are essential for bridging the gap between government commitments and business actions.
A comprehensive approach is necessary for effective climate action. This includes integrating considerations of climate change, nature, and societal impacts into business and financial strategies. The discussion also emphasised the importance of transition planning and leveraging collective influence to address systemic challenges.
The evolving landscape of sustainability reporting presents its own challenges. The consolidation of reporting standards, like the International Sustainability Standards Board (ISSB), and the adoption of these standards across various regions, highlight the complexity businesses face in reporting their sustainability efforts. The discussion underscored the need for clear and strategic reporting that aligns with both investor and broader societal needs.
The discourse on the state of the planet underscores the pressing need for accelerated action in addressing climate change and sustainable development. It calls for a more profound commitment from all sectors, enhanced collaboration, a holistic approach to sustainability, and transparent reporting. The path ahead is challenging, but with concerted effort and strategic action, significant progress is achievable.
Session speakers:
- Shaun Tarbuck, CEO, ICMIF (UK)
- Jessica Fries, Executive Chair, The Prince’s Accounting for Sustainability (A4S)
