1.5 °C is dead. What now for business?
It’s a common mistake in corporate sustainability to treat future-oriented climate change targets set by international agreements as the goal for climate action in itself – as though things will be okay as long as we meet those targets. In reality, the physical impacts of climate change are already locked in.
Recently we were reminded of this when the World Meteorological Organisation confirmed that 2024 was the hottest year on record, capping a decade in which every year has been in the top ten. For the first time, global temperatures have likely exceeded 1.5°C above pre-industrial levels for a full calendar year. The long-held ambition of keeping warming within this threshold is now, according to scientists, “deader than a doornail.”
This was not unexpected in scientific circles. Yet for years, policymakers and business leaders have continued to anchor their sustainability strategies around 1.5°C.
Of course, all efforts to reduce global warming must continue. Every fraction of a degree will count. But with the 2030 objective now seemingly out of reach, businesses must also reset and prioritise resilience, adaptation and strategic leadership in what is already an increasingly fast changing landscape.
There are some key steps that businesses can take towards achieving this.
Adapt supply chains urgently
The purpose of setting the 1.5°C target agreed in Paris in 2015 was that beyond this limit, critical tipping points will be breached that will lead to devastating and potentially irreversible consequences for several vital systems that sustain our planet.
We are already seeing this. Research shows that the effects of climate change have already impacted nearly half of UK businesses. A similar proportion have been hit by extreme weather events that have led to increased operating costs.
Within this context, one of the most immediate challenges is to secure supply chains against climate risks by understanding which commodities and regions are most vulnerable.
Leading companies such as Marks and Spencer have already begun this process with comprehensive climate risk assessments, using data to forecast how water shortages, biodiversity loss and extreme weather will impact sourcing over the next decade.
They’re also developing long-term supplier partnerships to enhance resilience, rather than simply switching vendors when risks emerge, and investing in regenerative practices and sustainable sourcing to protect raw material availability and maintain stability.
This approach not only safeguards supply chains but strengthens relationships with key partners, ensuring stability in the face of increasing uncertainty.
Integrate climate risk into financial and strategic planning
The rate of climate change means disruptions are not isolated incidents that can be managed on a case by case basis. They are systemic disruptions with long term financial implications. Businesses must move beyond reactive measures, and, equally, beyond compliance exercises and integrate climate considerations into core strategies.
Key steps include embedding climate risk into financial modelling, ensuring exposure to physical and transition risks is accounted for in business planning. Crucially, these risks are increasingly characterised by extreme occurrences, much more than by stepwise incremental change.
Equally businesses should align investment decisions with climate resilience goals, prioritising infrastructure, technology and business models that withstand the environmental reality.
Just as importantly businesses should lean into the insight found in the interlinkages between climate and land, water, nature and social phenomena, all of which will be evolving in parallel.
Businesses that fail to adapt will face intensifying cost pressures, regulatory scrutiny and reputational risks. Those that lead in transparency and risk management will attract investment and maintain market stability.
Move beyond individual action to industry-wide solutions
No business can fully insulate itself from climate instability. The interconnected nature of climate risks means that sector-wide collaboration is essential. Companies that once treated sustainability as an internal target or reporting concern must now engage with competitors, policymakers and industry partners to drive systemic resilience.
Strategies for cross-industry leadership include examples set by organisations like Reconomy – a business that is advocating for sector-wide change and a circular economy that drives risk mitigation.
Other options include partnering with governments and research institutions to develop science-based adaptation strategies that benefit entire industries or regions.
By shifting from individual sustainability efforts to collective climate resilience, businesses can help ensure long-term stability in an increasingly volatile world.
The business imperative: adapt or fall behind
Sobering though it is, the failure to limit global warming to 1.5°C is not a moment for despair. We knew it was coming. Rather, it is a motivator for businesses to accelerate the action that will help safeguard their future prosperity.
As much as anything, climate action is now about business adaptation and innovative thinking in an era of environmental and economic transformation.
Businesses must ask themselves: Do we want to lead, or do we want to risk being left behind?