Tackling the climate crisis: A call to action 

The Intergovernmental Panel on Climate Change (IPCC) has published the fourth and final instalment of its sixth assessment report (the Synthesis AR6 report), revealing that the world is not on track to achieve the Paris Agreement’s temperature goals of 1.5C and 2C. With current policies, global temperatures could rise by 2.8C, rendering many places uninhabitable and endangering up to 3.3 billion livelihoods. However, the report also highlights that the means to reach the 1.5C pathway exist today, but the current pace of progress is inadequate.

The AR6 underscores the rapidly escalating hazards of climate change, including wildfires, flooding, and severe drought, which will further exacerbate food and water insecurity and conflicts. Furthermore, the report suggests that private sector actions could potentially undermine national commitments to the Paris Agreement. The current fossil fuel infrastructure is predicted to lead to a temperature increase between 2.8C and 4C.

While formulating effective policies can be time-consuming, businesses have demonstrated their ability to adapt swiftly during the pandemic. The IPCC report, dubbed the “final warning” on climate change, offers a roadmap for defusing the climate crisis, according to UN Secretary-General António Guterres.

Engaging on climate change

Asset managers play a critical role in accelerating decarbonisation and enhancing long-term resiliency against climate change. Through engagement, fund managers can motivate businesses to reassess decarbonisation targets and advance net-zero goals to 2040 where possible. The report calls for closing the gap between the limited progress on adaptation and the actions required to address the climate crisis. The IPCC emphasises the importance of resilient development, integrating measures that adapt to climate change while reducing emissions and promoting cleaner air and healthier communities.

The AR6 report highlights the need for nature-based and man-made solutions, such as soil restoration, tree planting, and direct air capture (DAC), and encourages the pursuit of net-negative emissions in the long run. 

Financing the transition: public and private collaboration

To support emissions reduction projects, the IPCC urges a six-fold increase in finance by 2030, necessitating a mix of public and private funding. The development of green finance taxonomy, like the one underway in the UK, will help investors and businesses identify and adequately report sustainable activities.

Private sector investments, however, still fall short of what is required. The UN Environment Programme asserts that the public sector alone cannot finance the transformation, and mobilising $3-6 trillion annually to transition to net-zero-emissions and climate-resilient economies by 2050 will require private finance alignment.

In addition to increasing investments in green solutions, businesses should enhance climate-related disclosures to guide the investor community in their decision-making. The IPCC report encourages nations and governments to strengthen their climate finance and innovation efforts and set ambitious net-zero targets. As nations revise their national contributions to the Paris Agreement, the business community must leverage IPCC findings to accelerate, not hinder, climate-related policy advancements.

The latest IPCC report serves as a digestible resource for policymakers ahead of COP28, offering updated recommendations based on science and global trends. As the next comprehensive IPCC report is not expected until around 2030, the current assessment is the final warning to stay within the 1.5C limit of the Paris Agreement. The report’s insights could be instrumental in helping sustainability professionals win over support, and serve as a vital guide in navigating the way to a more sustainable future.

Embark on the journey towards a net-zero economy with confidence by using SI Engage. Our cutting-edge, fully customisable engagement data management system streamlines the process of planning, tracking, and reporting your portfolio companies’ climate and broader environmental impacts.

Don’t miss out on the opportunity to make a difference – contact us today to learn more!


Sign up for weekly insights, including SI Engage and industry news