Accelerating the Climate Transition: Long-term thinking for near-term action

What progress has been made thus far? What would help accelerate progress further? And where would policy action be most helpful? Our new paper, Accelerating the Climate Transition, seeks to address these questions through insights from the Sustainability Executives Survey, alongside desk research and expert consultations.

The paper sheds light on how firms are approaching this transition and points to common challenges and opportunities – areas, that is, where concrete action in the short-term will deliver the most benefits. It also connects these survey insights to the broader debates currently shaping climate policy and examines how we as an insurer can help our customers – both in the private and public sectors – navigate the transition.

Companies are already taking action on transition

Overall, our survey found that 77% of respondents already have a transition plan in place, with the strongest-performing sectors being finance (88%) and energy (85%). The heavy manufacturing, consumer goods and agriculture industries are not far behind at just under 80%.

The firms surveyed around the globe are starting to deliver on the net-zero transition, with technology advancements as the key delivery lever. Boards and investors are seen as the most important influencers for the transition.

But there are common challenges across sectors and regions

The most important barrier to developing a net-zero plan – named by 50% of companies surveyed – is costs and scale of capital expenditure. Achieving the net-zero transition by 2050 will require an unprecedented reallocation of capital – an estimated $275 trillion of investment in physical assets. But neither the public nor the private sector can bear the costs of the transition alone.

The lack of feasible and scalable technological solutions comes as the second main challenge for businesses in their climate transition. The scaling-up of existing technologies, such as renewables, is expected to drive emission reductions to 2030. Accelerating the development and roll-out of new technologies will be key for subsequent decades.

This calls for an innovation pipeline that needs deeper collaboration among business leaders, governments and research institutions, as well as long-term funding for programs that may take years to pay off.

Finally, 44% of companies surveyed raised the issue of regulatory challenges. The lack of clear standards, methodologies and policy certainty were seen as key challenge in the net-zero transition. Public policy advocacy plays a critical role in breaking down barriers to transition (i.e., incentivizing investments in innovation).

Resilience and adaptation are critical to success of transition

The paper also shows criticality in addressing prevention at the very same time as transition. Without the ability to ensure resilience, transition won't happen. In parallel, there is significant appetite for risk insights and advice on how to manage physical, operational and transition climate risks, and this is where the insurance industry has a role to play.

The survey shows that building resilience is a legitimate concern in the transition. In particular, companies across sectors indicated concern about supply-chain risks as they navigate the transition to net-zero.

Conclusion

In summary, the paper indicates that companies across sectors and around the globe are committed to net-zero and are already pushing ahead with the delivery of the transition. But there is no room for complacency as greenhouse gas emissions continue to run ahead of a net-zero trajectory.

Find out more in our just released paper