Environment and Climate

By signing the UN Global Compact, companies commit to aligning their actions with Principles 7, 8 and 9. For signatories, this means taking a precautionary approach to their environmental and climate impacts in all their business activities (Principle 7), promoting environmental awareness inside and outside their company (Principle 8), and actively participating in the development and diffusion of environmentally and climate-friendly technologies (Principle 9). After all, to realize the vision of a sustainable global economy, it is essential that companies accept their responsibility for the environment and climate.

The urgency of ambitious environmental and climate protection is made clear not least by the special report published by the Intergovernmental Panel on Climate Change (IPCC) in 2018: according to this report, only if global greenhouse gas emissions fall to net zero by 2050, it will be possible to limit global warming to 1.5°C compared with pre-industrial levels, thus prevent the most devastating effects of climate change on people and nature. Further, the report of the World Biodiversity Council IPBES, published in 2019, clearly states: the conservation of biodiversity and its ecosystem services, such as the provision of food, medicine, and clean water and air, are essential for humanity. Yet, we are experiencing mass species extinctions, with the current estimated rate of loss to be dozens to hundreds of times higher than the average loss over the last ten million years.

Companies play a crucial role in solving these global challenges. In the context of corporate climate management, for example, companies are looking at strategies how to reduce both, their direct and indirect greenhouse gas emissions as well as the effects of climate change on their company. All companies are called upon to participate in climate protection efforts, to increase their level of ambition and ideally, to reduce emissions in line with the 1.5°C target of the Paris Agreement.

Correspondingly, there is great interest on the part of companies in developing a binding and common understanding of what, for example, a net zero economy means – and how to achieve it. With the Science Based Target Initiative (SBTi), the UN Global Compact, together with the World Resources Institute, CDP and WWF, provides the conceptual framework for a uniform, science-based methodology to set emission reduction targets for companies. After all, an effective level of ambition in the context of a holistic climate management is the most promising basis for continuously improving corporate performance in line with the 1.5°C target.

Incidentally, as part of their environmental and climate management, companies also make an important contribution to achieving the 2030 Agenda, since almost all SDGs reference environmental and climate aspects. Many SDGs address them directly, such as SDG 6 with its focus on clean water and sanitation, SDG 13 with goals on climate protection and adaptation to climate change, as well as SGDs 14 and 15, which address life under water and on land.

Corporate environmental and climate management is not only of great importance to people and nature. A steadily growing body of regulatory requirements increases the business relevance of effective management of environmental and climate policy. For example, many product groups relevant to energy consumption are now subject to the Ecodesign Directive, which forms the European legal framework for minimum standards on energy and resource efficiency. The Directive gradually excludes inefficient products with disproportionately high energy consumption from the European single market. Similar regulatory developments toward stricter standards are evident across all sectors and will result in a fundamental ecological transformation of industry, energy supply, agriculture and transport, exacerbated by the European Green Deal, which aims to make the European Union climate-neutral by 2050.

These changes are also impacting sustainability reporting. With the European Green Deal, the EU Commission has committed itself to reviewing the Non-Financial Reporting Directive (NFRD, in Germany the CSR Directive Implementation Act) and adjusting it where necessary. Since the CSR Directive Implementation Act came into force in 2017, many companies are already required to submit a non-financial statement or report in which they must provide information on the social and environmental aspects of their business activities.

However, not only because of growing expectations on the part of legislators and as part of risk management, but above all for strategic reasons, it is advisable for companies to proactively address their impact on the environment and climate. Investment and financing decisions are increasingly being based on sustainability criteria, consumers are consuming more consciously, and practiced values become more important to young professionals than material aspects. A convincing and effective approach to protecting the environment and climate ultimately contributes to positioning companies in a competitive environment.

The UN Global Compact and the UN Global Compact Network Germany support their signatories to future-proof their business with numerous learning and dialog formats.