Climate Change, Corporates and Capital Markets

20th October, 2022

With the transition to a low carbon economy, momentum is building for businesses to embrace the opportunities and solutions to support action on climate change. Success for both countries and corporations means achieving net-zero Greenhouse Gas (GHG) emissions no later than 2050. This is essential to limit global warming to a maximum 1.5˚C. Keeping up to speed with best practice on net-zero and how to back the best solutions at board and operational levels is an ongoing challenge. Based on the Climate Change, Corporates and Capital Markets event that Davy Horizons hosted on the 29th September 2022, this paper outlines key insights from policy makers, investors, business leaders and practitioners on best practice for managing climate risks, reporting progress and financing net-zero solutions.

What's inside...

Climate action failure is the number one risk in the top ten 2022 World Economic Forum Global Risk Report.
Record numbers of companies are committing to net-zero emissions targets and reporting on progress, driven by regulation and shareholder demands.
Over 3,780 companies, representing over one third of market capitalisation ($38 trillion USD) are now committed to the Science-Based Targets initiative (SBTi). 1,379 are committed to the SBTi’s new Net-Zero Standard launched this year.
Essential elements for SBTi alignment are GHG reduction targets across scope 1-3, net-zero transition plans, supply chain decarbonisation, investing in net-zero solutions and published progress reporting.
For investors, the Sustainable Finance Disclosure Regulation (SFDR) is driving capital allocation to high ESG performers. SBTi is now the cornerstone of both the business and global asset management net-zero pathway.
A suite of new mandatory disclosure requirements on ESG, and in particular climate change risk, mean major changes are coming for corporate climate and ESG reporting.
Challenges on energy security, rising energy prices and fossil fuel energy infrastructure shifts will make the next five to ten years turbulent. However, the long-term goals of net-zero emissions by 2050 hold firm with over 90% of global GDP now committed in theory to net-zero. The COP27 climate summit in November 2022 is expected to push country ambitions more, as current commitments still mean a global temperature increase of 2.7˚C2.
For Ireland, legally binding targets to reduce GHG emissions 50% by 2030 mean a 7.5% annual reduction impacting all sectors of the economy.
Many of the solutions needed for achieving net-zero emissions are known. Attracting capital to these is essential for scale and presents growth opportunities in the green economy.
With this context, companies need to act now to plan for new ESG disclosure requirements, decarbonisation actions and climate finance.