C&W Services acknowledges the necessity and urgency of mitigating and adapting to climate change. Thinking and acting sustainably forms part of our corporate philosophy. As we celebrate Earth Day on 22 April 2021 with the theme ‘Restore our Earth’, let’s reflect on what it means to take care of our earth.
As emphasized in the Paris Agreement, we now need to make “financial flows a consistent pathway towards low carbon emissions and climate-resistance development”. Without the alignment of strategic investment decisions, the 1.5deg C target cannot be met.
According to S&P Global Market Intelligence, “80% of the world’s largest companies are reporting exposure to physical or market transition risks associated with climate change”, while “increasing pressure from shareholders and activists has led to divestment from some carbon-intensive industries”.
Physical climate change risks include exposure to increasingly severe or unpredictable weather events, or broader climatic changes. For example, certain companies own or insure assets that may be at greater risk due to rising temperatures or sea levels. Transition risks include exposure to the regulatory, economic or similar consequences resulting from the transition to a low carbon economy.
In our conversations with clients during the pandemic, it is no surprise that the renewable energy infrastructure sector and healthcare real estate are becoming increasingly popular.
In the built environment, population growth and heightened demand for cooling systems due to higher temperature and acute heat waves are expected to lead to an increase in energy demand of 80% by 2050. Mitigation requires that we improve the insulation of buildings and that we substitute fossil generated electricity with that of renewable solar, wind or hydro means.
We have seen a number of organizations committed to achieve net zero carbon targets. Most companies that we have spoken to "now have basic carbon footprint measurement and monitoring practices in place", such as a policy commitment to act on climate change and disclosure of operational greenhouse gas emissions." However, most companies are still not adopting a truly strategic approach to the issue. The net zero pledges in the built environment sector typically cover operational emissions but more often than not exclude up-stream or downstream emissions from the use of the organization’s carbon footprint. The latter is an important aspect and should be incorporated into any corporate sustainability agenda.
The decade of transition has started, and equity and debt investors can now clearly identify those companies who are serious about taking action on climate change and those that are not. These are companies with long-term climate commitments accompanied by clear milestones and a comprehensive scope that covers all material emissions in a firm’s supply chain.
Rapid and widespread measures need to be taken now. Every year of inaction will result in increased cost and consequences. Now is the time for all of us to take responsibility as citizens, consumers, employees, companies, investors and as human beings of this world and join the global call and coordinated effort to ensure a thriving world for future generations.