1.5-degree Celsius warming is all but here. Here’s how businesses can react

A view of the Bernina mountains which are surrounded by glaciers in Switzerland. The country's glaciers saw a 6% loss of volume in 2022.
Marta Carenzi—Mondadori Portfolio/Getty Images

It was quite the headline this week from the World Meteorological Organization: Global warming of 1.5°C, which the world has been trying to avoid, is all but here.

“Global temperatures are likely to surge to record levels in the next five years, fueled by heat-trapping greenhouse gases and a naturally occurring El Niño,” the U.N. agency that specializes in weather predictions said in a climate update, which I first reported on in Wednesday’s CEO Daily.

Specifically, the agency predicted that one of the next 5 years is almost certain (98%) to be the hottest on record and that there’s a 66% likelihood that at least one of those years, global temperature will rise 1.5°C above preindustrial levels.

If this sounds ominous, it should, because it essentially constitutes the climate scenario the world said it wanted to avoid as part of the 2016 Paris Agreement on climate change.

Does this mean that the fight against human-made climate change is already lost? Are we doomed?

No, says Petteri Taalas, the secretary-general of the WMO. “This report does not mean that we will permanently exceed the 1.5°C level specified in the Paris Agreement which refers to long-term warming over many years,” he said. “However, WMO is sounding the alarm that we will breach the 1.5°C level on a temporary basis with increasing frequency.”

What does this warming “on a temporary basis with increasing frequency” mean for those of us charged with corporate sustainability strategy, and what is the best response to it?

I put this question to Christopher Hewitt, director of climate services at WMO, who first stressed the continued need for climate change mitigation measures. “We shouldn’t ignore the fact that it is getting warmer,” he said, “because if we don’t do anything, it will keep on getting warmer. We all have a role to play. Business is an essential part of it.”  

One of the main challenges, Hewitt said, will be the increased frequency, intensity, and duration of heatwaves, in ways that will involve a substantial part of the economy: Hospitals will need to prepare to handle more heat-related illness, schools and offices will have to improve cooling, and theme parks should rethink their design, or even their locations altogether.

There are consequences on the “cool” side of the world, too, as well as for energy companies. In Switzerland, for example, 6% of glacial volume disappeared in 2022, as a consequence of rising temperatures, in line with the predictions for 2023-2027. “That does not look like good news for winter tourism or hydropower generation,” Hewitt said. Energy companies should respond by, for example, adjusting their energy generation capacity.

Hewitt suggests that businesses across industries—including banking and finance, energy, and hospitality—keep their finger on the climate pulse by keeping in touch with climate and meteorological centers in their regions for timely information on heatwaves, glacier melt, sea ice melt, and more. “Decision-makers [in companies] should go to them […] to understand the impact of how climate is varying, and what factors affect it in the years to come,” he said.

But given the increased likelihood of 1.5°C warming in the immediate future, any business would benefit from taking weather and climate into account, and perhaps even creating a dedicated team, with an eye to “climate-proofing” as much as possible.

What do you think? Do you plan to appoint a chief climate officer? Are you closely tracking weather events and climate trends? As always, I’d love to hear about it.

More news below.  

Peter Vanham
Executive Editor, Fortune


INBOX: Chemical companies create digital exchange for "Scope 3" data  

Nearly 50 of the largest chemical companies in the world contracted Siemens to create a digital exchange for their "product carbon footprint" (PCF) data, the German conglomerate told me in a press note. The idea is that by exchanging their carbon data, the 47 chemical companies will be better able to track and attack their so-called "Scope 3" carbon emissions throughout their supply chain. "A trusted environment where all partners can safely share their PCF data [...] is a vital step and accelerator in driving decarbonization,” said Bertrand Conquéret, president of "Together for Sustainability," which brings together the companies, including AkzoNobel, BASF, Bayer, Dow, DCM, Syngenta, and many others.

TotalEnergies faces climate showdown at Annual Meeting 

Keep an eye out for French energy giant TotalEnergies's annual meeting next week. It will include a vote on a climate activist shareholder Follow This's proposal, demanding the company align itself with the Paris Agreement. So far, Reuters reported, "TotalEnergies forecasts its overall greenhouse gas emissions will not see a big reduction by 2030, given it wants to grow its gas business." The company asked its shareholders to vote against the Follow This resolution. But Institutional Shareholder Services, a major shareholder advisor, backed the proposal, leaving open the possibility of approval. The outcome may point to where climate resolutions are headed elsewhere. 

This is the web version of Impact Report, a weekly newsletter on the latest ESG trends and news that are shaping the future of business. Sign up to get it delivered free to your inbox.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet