Corporate role in Energy Transition

 Corporate role in Energy Transition

 

 

 

The corporate sector can play a significant role in the Energy transition to meet the Paris commitment. While traditionally viewed as a barrier to effective energy transition governance. However, in the wake of the 2015 Paris Agreement, a range of international initiatives have emerged that focus on enhancing the positive role of the Corporate private sector in energy transition governance. These developments reinforce a gradual international shift in the business community to view climate change in financial risk for corporations and for the large institutional investors who invest in them, has the potential to engage corporate law tools, such as requirements for risk disclosure, shareholder actions and the fiduciary duties of company directors. 

 

Over the next five years, climate change is expected to have significant economic impacts on global businesses and may cost global businesses up to $120 billion through supply chain disruptions alone. According to the World Health Organization, some 700 million people are at risk of being displaced as a result of drought by 2030, disrupting local societies and economies.

The good news is that confronting climate change and creating a more sustainable and inclusive global economy presents a tremendous opportunity. According to United Nations’ analysis, transitioning to a more sustainable economy, including investments in renewable energy and sustainable infrastructure projects, could directly produce $26 trillion in direct economic gains through 2030. The renewable energy sector alone is expected to create as many as 18 million net jobs by 2030, including jobs that will replace those lost in the fossil fuel industry. This suggests that taking action on climate change can not only help to mitigate its impacts but can also stimulate economic growth and create new opportunities for people and communities around the world.

The bad news is that, While transitioning to clean energy is essential to addressing the climate crisis, it is equally important to ensure that this transition is done in a way that is socially and economically sustainable. This includes addressing the negative impacts that the transition may have on certain communities, such as the loss of jobs in carbon-intensive industries and the potential for high energy prices for consumers. Without addressing these issues, the energy transition itself may be at risk, as it could face significant resistance from affected communities and stakeholders. To ensure that the energy transition is successful, it is crucial to anchor climate action in the needs of people and communities. This means involving these groups in the decision-making process and ensuring that their concerns are heard and addressed. The private sector also has a key role to play in contributing to this global shift by investing in sustainable technologies and practices, creating new jobs in clean energy industries, and supporting the development of sustainable infrastructure. By working together, we can create a more sustainable and inclusive economy that benefits everyone.

All companies, especially those within energy-intensive industries, can transition in ways that advance not just environmental goals but social and economic goals, too. This is known as the “just transition”. There will be costs, but this inclusive approach to business would make company bottom lines stronger and more resilient as the climate changes. It would also create sustainable value for investors and a broad range of stakeholders.