Nations Must Reduce Their Carbon Emissions Now

Note: This was originally posted in a discussion as part of a Boston University Metropolitan College graduate-level course in International Business with Professor Marcus Goncalves.

Climate change is one of the biggest risks for business and society over the coming decades. As the crisis escalates, trillions in lost economic output is at stake (O’Keefe, 2020). The international community, both nations and businesses, must act to be successful and to shape the future.

The Intergovernmental Panel on Climate Change (IPCC) warns of disastrous effects if the global temperature increases by 2 degrees Celsius by the end of the century. We are currently on track for a 3 degree increase with 2019 setting an emissions record for the third consecutive year (Intergovernmental Panel on Climate Change, 2018).

To minimize damage, we must limit the planet’s increase in temperature to 1.5 degrees Celsius. We get there by reducing greenhouse gas emissions by 45% by 2040 and by becoming carbon neutral by 2050 (Guterres, 2019). Some argue to prevent irreversible effects of climate change, we must actually create negative carbon emissions by not only eliminating carbon emissions, but by also actively removing carbon from the atmosphere (Hansen, et al., 2016).

Nations have been grappling with this challenge, and now businesses are too. In 2019, over 600 institutional investors with $37 Trillion in assets sent a letter urging governments to take aggressive action, and asset managers such as Black Rock are integrating sustainability into their investment process. Further, over 800 companies have signed up to reduce their carbon emissions, including Microsoft, which has committed to being carbon negative by 2030 (O’Keefe, 2020).

Cutting emissions is not bad for business, but rather an essential long-term strategy. Geringer et al (2021) write “sustainability is development that meets the needs of the present without compromising the ability of future generations to meet their needs.” With trillions of dollars in lost economic output, the costs of fighting emissions are offset by preventing potential future losses.

Further, socially conscious consumers increasingly want to spend their money on products that promote sustainability, and employees want the same from their companies. Amazon recently committed to achieving carbon neutrality by 2040, but not before their employees walked out to demand action (Ghaffary, 2019).

It is essential that all nations actively contribute to the reduction of emissions. Getting countries to agree to the Paris Climate Agreement was important. However, given the existential threat, all political, business and civil sectors must do more to push us toward a carbon neutral future (Figueres et. al, 2018).

International organizations, such as the World Trade Organization, should become more aggressive in helping drive the push nations to move toward carbon neutrality. While the tradable carbon units shown in the video present a method toward reducing overall emissions, given the situation the world is in, it is time to consider more dramatic carbon taxes to help push the world into more immediate action.

To get countries to move this forward, there should be both penalties and rewards. Nations, especially developing ones, should be rewarded for lowering emissions and promoting sustainability. Developed nations should be penalized when they fail to reduce their emissions. As someone who worked in the energy efficiency industry for four years (including working with client scientists), I am among those who believe the world should address this as the existential crisis that it is. Doing business will become a lot harder if we do not.

References

Intergovernmental Panel on Climate Change. (2018, October). Global Warming of 1.5 Degree Celsius Special Report. Retrieved March 24, 2021 from: https://www.ipcc.ch/sr15/

Figueres, C., Le Quéré, C., Mahindra, A., Bäte, O., Whiteman, G., Peters, G., Guan, D. (2018, December). Emissions are still rising: ramp up the cuts. Nature. London. Vol.564 (7734), p.27-30. Retrieved March 24, 2021 from: https://www-nature-com.ezproxy.bu.edu/articles/d41586-018-07585-6

Geringer, M., McNett, J., Ball, D. (2021). International Business, 2nd ed. New York: McGraw-Hill.

Ghaffary, S. (2019, September 20). “Here’s why the Amazon climate walkout is a big deal.” Vox.com. Retrieved March 24, 2021 from: https://www.vox.com/recode/2019/9/20/20874497/amazon-climate-change-walkout-google-microsoft-strike-tech-activism

Guterres, A. (2019, September 23). Opening Remarks of the Climate Action Summit. Climate Action Summit. New York City. Retrieved March 24, 2021 from: http://webtv.un.org/watch/antónio-guterres-un-secretary-general-at-the-opening-of-the-climate-action-summit-2019/6088742916001/?term=

Hansen, J., et al. (2017, June 8). "Young people's burden: requirement of negative CO.sub.2 emissions." Earth System Dynamics, vol. 8, no. 3, 2017, p. 577. Retrieved March 24, 2021 from: https://esd.copernicus.org/articles/8/577/2017/esd-8-577-2017.pdf

O’Keefe, B. (2020, March 16). “The Business World is Finally Starting to Reckon with Climate Change.” Fortune. Retrieved March 24, 2021 from: https://fortune.com/longform/business-facing-climate-crisis/