What does the latest IPCC report mean for board directors?

Based on a comprehensive review of the latest scientific research and data, the report stresses that limiting global warming to 1.5°C above pre-industrial levels is still achievable, but requires immediate, rapid and large-scale reductions in greenhouse gas emissions. International cooperation, effective policy and governance, and climate finance are key to tackling the climate crisis.

Board Directors play a key role in setting ambitious climate targets and implementing transition plans. The report highlights the link between human activity and global warming, highlighting the risks and impacts for business and the need for disclosure and mitigation measures. Bold climate governance today is essential for the medium and long term, as the costs of inaction are likely to be higher than the costs of action. Businesses that proactively integrate climate considerations into their strategies and operations are better placed to succeed in a low-carbon, climate-resilient future.

Author: IPCC, 2023

The Climate Governance Initiative has summarised the key findings of the report in the following key messages:

1. Assess and disclose climate-related risks and opportunities: Businesses need to conduct climate risk assessments, disclose findings in annual reports, and develop plans to manage and mitigate risks, including within their value chain, considering the increasing risks and impacts from climate change.
2. Embed climate change into decision-making processes: Governance structures of organizations should reflect the urgency of the climate crisis, with commitments to net zero, robust science-based targets, and appropriate incentive schemes. Climate change should be integrated across the entire business strategy and not siloed into specific teams or roles.
3. Move away from fossil fuel dependency: Urgent action is needed to halt fossil fuel infrastructure expansion and scale-up investment in clean energy alternatives. Businesses should switch to renewable energy sources as part of their net-zero strategy and explore ways to transition away from fossil fuel use in operations and value chain.
4. Collaborate with national and international climate actors: Global cooperation is crucial in addressing climate change. Businesses should create partnerships or coalitions with other stakeholders such as NGOs, universities, and the public sector to fund research and develop sustainable practices and technologies. Engagement with all relevant stakeholders should be supported to develop a robust climate transition plan.
5. Capitalize on the low-carbon transition and support climate finance: The transition to a low-carbon economy presents opportunities, and private sector investment and innovative financial mechanisms are needed to mobilize climate finance. Businesses should consider investing in renewable energy, carbon dioxide removal technologies, and nature-based solutions to achieve net zero commitments.
6. Support and advocate for effective climate policies: Businesses should consider how upcoming national and international climate policies and regulations will affect them and push for policies that promote the transition to a low-carbon economy, supporting a sustainable and resilient future for businesses.

Read more about the Climate Governance Initative's analysis of the latest IPCC report here.