Getting Started on Climate and Energy

In this blog, we share insights from our series of Getting Started Guides that address issues related to climate and energy. These two guides form part of a larger series of issue-based Getting Started Guides that aim to support the development of an embedded sustainability strategy that we will release over the coming months.

About our Getting Started Guides

Anchored in research, each guide tackles a specific sustainability sub-issue to help you (and others in your business) build a foundational understanding and understand the work ahead. We explain each sub-issue along with relevant trends, system thresholds, key concepts, actors, and pair that with resources to help you along the journey. We also outline common corporate goals and internal interim targets to show how companies are working on addressing the impacts of their operational and value chain activities.

Getting Started on Climate and Energy

This set of Getting Started Guides addresses the focus area of Climate and Energy and includes two guides:

• Climate Risk Preparedness and Adaptation

• Climate Mitigation (Decarbonisation and Carbon Removal)

The need for climate mitigation and adaptation

Human activities have fundamentally altered our climate. The burning of fossil fuels, large-scale deforestation, sweeping land use changes, and other activities have released vast amounts of greenhouse gasses (GHGs) that trap heat into our atmosphere and cause long-term increases in global temperatures.

The impacts of climate change are becoming increasingly complex and difficult to manage – in the short- to mid-term, we will experience impacts related to sudden onset extreme weather events like floods, droughts, heatwaves, fires, and windstorms, that are increasing in intensity and frequency. Over the mid- to long-term, additional impacts will derive from slow onset processes like sea level rise, glacier loss, forest dieback, and desertification. Together, these changes put our environmental, social, and economic systems at risk.

The findings from the Intergovernmental Panel on Climate Change (IPCC) are clear: if we hope to avoid the most catastrophic effects of climate change, we will need to take decisive action to limit long term global average temperature rise to 1.5°C. Alarmingly, we exceeded 1.5°C of warming on an annual basis for the first time in 2024, and with emissions continuing to rise, we are on track for more than a 3°C rise in global heating by 2100.

No business will be immune to climate risks and impacts. The direct consequences of physical climate risks are becoming increasingly apparent to businesses. They will damage assets and value chains through increasing material costs, supply chain disruptions, declining labour productivity, and more. They will also affect the communities and ecosystems businesses are embedded in and depend upon. Transition risks related to the shift toward a low-carbon economy are equally compelling – as more people and governments experience destructive climate impacts, societal expectations for business action on climate have and will continue to rise.

Businesses must develop a detailed understanding of the urgency and magnitude of the climate-related risks their business will face and develop and implement a credible climate transition plan to reduce their risk exposure and buffer against the quickly approaching climate shifts.

Climate scenario planning can help businesses to understand their climate-related risks and opportunities and understand the pace and scale of the investments needed to protect their operations and foster supply chain resiliency. Credible action will require attention to carbon mitigation and adaptation. While rapid emission reductions are a necessity, companies will also need to invest in drawing down atmospheric carbon levels through nature-based solutions or credible carbon removal technologies. Companies will also need to contribute to local climate adaptation efforts that support the resiliency of the social systems and structures to impacts already underway, from enhancing local disaster risk preparedness to contributing to the implementation of regional and national adaptation plans.

Our Getting Started Guides on Climate and Energy help to explain key concepts and outline the work required. To give you a sense of what they cover, we share some insights from the two guides below.

Getting Started on Climate Risk Preparedness and Adaptation

Climate Risk Preparedness and Adaptation: A Getting Started Guide provides insights on a range of risks that climate change poses to human wellbeing, economies, and businesses. It highlights the urgent need for companies to go beyond the often-prioritised mitigation efforts to engage in adaptation to ensure resilience to climate impacts already unavoidable under our current scenarios.

Common long-term goals include identifying, assessing, characterising, and managing climate-related risks in operations and value chains; supporting climate adaptation and resilience efforts; and building a resilient supply chain. These are often accompanied by respective mid-term commitments to integrate climate-related risks into governance, risk management, and decision-making processes; evaluating opportunities to offer adaptation products, solutions, and/or services; lending, investing, and/or facilitating funds towards diverse adaptation measures across value chains; and more.

Taking action on climate risk preparedness and adaptation begins in year one with understanding climate risks and adaptations needs in the regions where your company operates and screening operations and assets for climate-related risks. Year two involves embedding climate risks into decision-making and risk management processes and year three includes developing more formal adaptation plans and beginning to implement strategies to address specific climate risks and opportunities. Lastly, year four covers extending your efforts to your value chain to understand climate risks and support climate adaptation efforts as well as engaging in local climate adaption initiatives to contribute to broader resilience.

Getting Started on Climate Mitigation

Climate Mitigation (Decarbonisation and Carbon Removal): A Getting Started Guide addresses the need for urgent and transformative climate mitigation. It explores key decarbonisation and carbon removal pathways, highlighting the importance of combining rapid emission reductions with credible investments in carbon removal to limit long-term global average temperature rise to 1.5°C. It offers an understanding of key concepts such as Scope 1, 2 and 3 emissions, net-zero, carbon offsets, and alternative insetting approaches, and provides guidance on developing a credible climate transition strategy.

A common long-term goal is committing to achieving net zero emissions in Scope 1 (direct operations), Scope 2 (electricity, steam, heating, and cooling), and relevant Scope 3 (value chain) categories by 2050 or sooner. This is frequently paired with mid-term targets for Scope 1, 2, and 3 reductions in line with the Paris Climate Agreement, purchasing 100% renewable energy, becoming carbon negative through carbon removal projects, and more.

Taking action on climate mitigation begins in year one by conducting a risk assessment, establishing baselines for the company’s carbon footprint, prioritising areas for action, and early investments in high-opportunity climate mitigation initiatives. This is followed by identifying best practice, setting long-term and interim emission reductions targets in line with a 1.5°C or below scenario, and developing a credible climate transition plan. Year three expands your investments in climate mitigation initiatives, aligned with your transition plan. Year four includes extending your efforts further into your value chain, including deeper supplier engagement, investing in supplier decarbonisation through insetting approaches, and exploring opportunities for carbon removal.

This was just a summary of the more detailed guidance provided by the Getting Started Guides on Climate and Energy.