Decarbonisation efforts lag behind climate goals
There is a slow progress toward critical environmental targets despite global commitments.
The world faced its warmest year on record last year, prompting an urgent call for companies to accelerate their decarbonisation initiatives.
Despite significant pledges made at COP28, including the agreement to phase out fossil fuels by 2050 and a commitment to reduce methane emissions by 30% by 2030, experts warn that the pace of change is insufficient to avoid the most dangerous impacts of climate change.
Charlie Knaggs, APAC Regional Partner for Decarbonisation at ERM, highlighted that while COP28 made substantial commitments, the transition from policy to actionable measures on the ground is sluggish.
"We are moving far too slowly to avoid dangerous climate change," Knaggs stated, pointing out that 85% of the world's energy is still fossil fuel-based. The urgent need to reduce this percentage is critical to mitigating the worst effects of climate change.
Furthermore, with regulations proliferating worldwide, companies are grappling with the transition to a new concept of double materiality and the task of determining the appropriate extent of their sustainability reports.
This shift requires businesses to not only consider the impact they have on the environment but also the reciprocal effects of environmental, social, and governance (ESG) factors on their operations.
Penny Murphy, Partner, Partner in Asia for ESG Digital Advisory Lead, emphasised that the demand from investors, stakeholders, and employees for high-quality ESG data has significantly increased. She stressed the importance of improving ESG data management, centralisation, standardisation, and transparency in disclosures to meet this growing demand.
Both Knaggs and Murphy agreed on the potential of ESG to enhance investor confidence, with studies indicating a positive correlation between ESG performance and financial performance, suggesting that good ESG practices can be indicative of overall operational excellence.
Moreover, investing in robust ESG data management can minimise the risk of greenwashing, thereby bolstering investor trust and enabling a performance management approach to value creation.
