An election year puts climate change front and center for businesses

Last week we learned that 2023 was the hottest year on record.

Concerns about temperature data from both the Met Office and the EU's Climate Change Service come as we face worst floods in the UK, bushfires across North America and prolonged drought in East Africa.

This extreme weather puts lives and livelihoods at risk in the UK and around the world. It presents business and the city with serious challenges, but also opportunities to better shape the future.

In this general election year, while there may be some differences in the pace of change needed, there is a political consensus that businesses must play their part in the solution.

Regardless of the outcome of the election, 2024 must be the year we turn the corner and take action to reduce the carbon emissions that drive climate change.

Transitioning to net zero isn't easy. We still lack cost-effective alternatives to all processes that depend on fossil fuels.

But while all businesses seek to reduce emissions, the carbon offset market allows businesses to offset fossil fuel use.

This is done by purchasing carbon credits from projects proven to remove or avoid carbon dioxide from the atmosphere.

In practice, this could be forests or mangroves grown to absorb carbon, or projects to replace high-polluting cookstoves with cleaner, more efficient technologies in developing countries.

Businesses are already realizing the merits of voluntary carbon markets; Truly Eight of the world's 10 most valuable brands Companies like Apple, Google and Microsoft already use carbon credits or have committed to do so.

This mindset also leads to a virtuous circle of sustainability. Studies show that companies that participate in voluntary carbon markets are 1.8 times more likely to reduce their own emissions year-on-year.

As the costs of carbon credits are expected to rise rapidly in the coming years, investing early makes good financial sense.

The recent UN COP28 climate conference in Dubai was a key moment for the voluntary carbon market, with an increased focus on high-integrity, high-quality carbon credits.

A growing number of global leaders and businesses now recognize that the path to net zero cannot be achieved without carbon markets, including the United Nations, the World Bank, the WTO, the UK government and the new Lord Mayor of London. Michael MainelliThey all recognize carbon credits as a key component in transitioning to net zero.

Across the pond, the US State Department announced it has partnered with businesses such as Mastercard, Bank of America, Morgan Stanley and Walmart on its Energy Transition Accelerator. It will encourage the decommissioning of fossil fuel assets and promote clean energy deployment. We need to see a similar commitment in the UK.

Carbon credits offer a once-in-a-generation opportunity to tackle climate change in a quick, sustainable and cost-effective way. But for carbon markets to realize their full potential, efforts must increase. Ideally, we will see a doubling of global emissions over the next year.

By Rich Gilmore City AM

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