The Journal The Authority on Global Business in Japan

Industrial activity is a double-edged sword. It has created modern society, but it also threatens it. Climate change has been a concern for decades and poses one of the greatest risks to our future. Of particular worry is the increasing amount of carbon dioxide (CO2) in the atmosphere. As a greenhouse gas, CO2 traps heat. This causes global temperatures to rise and triggers changes in our ecosystem, such as rising sea levels, diminishing yields of certain crops, and extinctions that affects the food chain.

While a case can be made that CO2 levels rise naturally, the pace seen over the past 60 years is about 100 times faster than the historical record. Left unchecked, this growing abundance of CO2 will transform society—and in turn business—before the end of the century.

SENSE OF URGENCY
Recognizing the threat, 195 nations agreed to the first-ever legally binding deal on controlling climate change at the 2015 United Nations Climate Change Conference. Known as the Paris Agreement, the deal calls for the rise in global temperatures to be held below two degrees Celsius above pre-industrial levels, and aims for a maximum increase of 1.5 degrees.

But the situation may be more dire than previously suggested. A new study published on May 20 in the Proceedings of the National Academy of Sciences of the United States of America finds that unchecked emissions growth could lead to a rise in global temperatures of five degrees Celsius by 2100. This is more than twice the value on which the Paris Agreement recommen­dation is based and could cause ocean levels to rise by more than six feet—double the most recent estimate from the United Nations Intergovernmental Panel on Climate Change. In such a scenario, New York, Shanghai, and other major cities would be submerged. Although the authors admit that this is a worst-case scenario, it cannot be dismissed.

ELECTRIFIED EFFORT
To mitigate climate change and begin repairing the damage done to the planet, CO2 levels must be stabilized. According to scientists, to achieve the goals of the Paris Agreement, emissions of greenhouse gases—especially CO2—must be cut 45 percent by 2030 and 100 percent by 2050.

One key step to doing this is the global decarbonization of the electricity industry. Given that the demand for electricity is rising, this is no easy task. But many companies are joining an effort known as the RE100, a global corporate leader­ship initiative that brings together influential businesses committed to 100 percent renewable electricity.

Launched at Climate Week NYC 2014 with 13 founding corporate members, the initiative is led by The Climate Group, a non-profit organization with offices in London, New York, and New Delhi whose goal is “a world of no more than 1.5 degrees Celsius of global warming and greater prosperity for all.” Partnering with The Climate Group is The Carbon Disclosure Project (CDP) a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts.

GROWING LIST
Since its birth five years ago, the RE100 corporate initiative has spread around the globe and has seen strong growth in Australia and Japan. Some 176 companies have made a commitment to go 100-percent renewable as members of the RE100, and 16 are Corporate Sustaining Members of the American Chamber of Commerce in Japan (ACCJ).

With the G20 Summit taking place in Osaka this month, Japan—currently the fifth-largest emitter of CO2—has an opportunity to take a leadership role on climate change.

Ahead of the G20 Summit, The Climate Group presented the RE100 framework and the business case for renewable electricity to national leaders at the G20 Climate Sustaina­bility Working Group (CSWG) in Japan. Held at the Tokyo Conference Center Ariake on February 14–16, the CSWG was hosted by the Ministry of Foreign Affairs and attended by more than 100 representatives of the G20 and international organizations.

The Climate Group’s local partner, Japan Climate Partners’ Leadership (JLCP), also presented at the CSWG. As a result of the JLCP’s ongoing efforts, the Ministry of the Environment has set a goal of having 50 Japanese companies be members of the RE100 by 2020. Currently there are 16.

One of these is Fujitsu Ltd., which joined in July 2018. Explaining the decision, Hideyuki Kanemitsu, vice president and head of the Responsible Business Unit at Fujitsu, said, “Joining RE100 demonstrates our strong intention to deliver on our Fujitsu Climate and Energy Vision. We expect to see opportunities to collaborate with customers and various stake­­holders through our RE100 membership.”

GUIDING HAND
One of the benefits of RE100 membership is a clear frame­work within which to set corporate policy pertaining to renewable energy. The RE100 helps increase corporate demand for and supply of renewable energy through five key efforts:

  • Bringing together major companies committed to sourcing
    100 percent renewable electricity globally in the shortest possible timeline (by 2050 at the latest)
  • Setting the bar for corporate leadership on renewable electricity, holding members to account, and celebrating their achievements to encourage others to follow
  • Communicating the compelling business case for renewables to companies, utilities, market operators, policymakers, and other key influencers
  • Highlighting any barriers to realizing the business and economic benefits of renewable electricity as reported by member companies
  • Working with member compa­nies and partners to high­light and address policy and market barriers to the corporate sourcing of renewable electricity

While adding 34 more companies over the next 18 months may be ambitious, the target demonstrates Japan’s commitment to reducing CO2 emissions and leading on this critical issue.

JAPAN CLIMATE INITIATIVE
Other action that has been taken in Japan is the formation of the Japan Climate Initiative (JCI), which was founded on July 6, 2018, by 105 entities—including companies, financial institutions, local governments, research institutes, and non-governmental organizations representing sectors such as information and communications technology, finance, construction, housing, energy, food, and retail.

The JCI’s goals are to:

  • Transition to a decarbonized society
  • Progressively increase reduction targets
  • Enhance Japan’s commitment to climate change
  • Serve as a bridge between Japan and global efforts

The initiative is based on the idea that transition to a decar­bonized society will generate new opportunities for growth and development. “We believe that Japan can and should play a greater role in the world in realizing a decarbonized society, primarily through promotion of energy efficiency and expansion of renewable energy,” the group says in its founding declaration. “Also, we are firmly convinced that expanding and accelerating efforts toward a decarbonized society and setting an example for international society will bring significant benefits to Japan itself.”

TAKING ACTION
By joining the RE100, companies signal their intent to decar­bonize and switch to renewable electricity. Per RE100 guidelines, this should be achieved by 2050; but many companies want to get there as soon as possible and encourage others to do the same. The average target year for RE100 members to hit 100 percent is 2026, and more than three in four aim to get there by 2030.

ACCJ member company 3M is one of the latest additions to the RE100, having joined in February. The Minnesota-based manufacturing and tech giant is committed to using 100 percent renewable electricity for its global operations by 2050. As is the case with many companies of 3M’s size, completing the transition is a long and complex process. To ensure that steady steps are taken, and the effort stays on track, the company has set an interim target of 50 percent by 2025.

“We are continuing to step up our leadership toward a more sustainable future—in our own operations, and in solutions for our customers,” 3M CEO Mike Roman said of the decision to join.

Helen Clarkson, CEO of The Climate Group, cited the mutual benefit, saying, “By joining RE100 and switching to 100 percent renewable electricity globally, 3M is building sustainability into its business growth strategy and showing the two go hand-in-hand.”

Addressing climate change isn’t new for 3M. Since 2002, the company has reduced its greenhouse gas emissions 68 percent. At the same time, its revenues have nearly doubled. By building sustainability into its business strategy, 3M has shown that making changes that help save the envi­ronment can also lead to better business.

This is but one example of the kind of corporate vision that is necessary to see us through to a healthier, more profitable future.

NEXT STEPS
The more quickly companies hit their targets for decarboni­zation and the use of renewable electricity—while also seizing new opportunities and garnering higher profits—the stronger the business case will be. Companies that are weighing the pros and cons of a rapid switch will begin to follow the lead of those already making renewable energy a key part of their strategy.

Delays could have an unexpected impact—on both the environment and business.

In its presentation at the CSWG in February, The Climate Group used the fall of The Eastman Kodak Company from its dominant position in the world of photography as an example of how failure to anticipate how rapidly external factors will change can catch your business off guard—even if you think you are prepared.

The common misconception about Kodak is that they lost because they didn’t grasp the significance of their own invention—the digital camera—and tried to suppress further development, RE100 head Sam Kimmins explained. But the reality is that Kodak saw the opportunity presented by this new technology. They knew that it would replace film, and they developed a robust plan to transition to digital. But they underestimated the pace of change and the way in which it would take place. Today, the company whose name was once synonymous with photography among consumers, deals mainly with digital printing and other professional services for business.

The world is in a period of transition, teetering between the fossil fuels of yesterday and the renewable energy sources of tomorrow. Both are in play, but only one is sustainable. Access to clean power is not just an environmental issue, but one of economic competitiveness—for companies and countries.

Christopher Bryan Jones is Editor-in-Chief of The ACCJ Journal. Originally from Birmingham, Alabama, he has lived in Japan since 1997.
Expanding and accelerating efforts toward a decarbonized society and setting an example for international society will bring significant benefits to Japan.