Beyond 1.5°C: Critical Business Actions for a Warming World
Last week, we brought together around 50 sustainability leaders from business and finance at an event which considered a vital and urgent question: how can businesses thrive in a world that will likely surpass the critical 1.5°C temperature threshold?
Our distinguished speakers featured leading voices from climate risk strategy, the UK’s climate change adaptation committee, corporate sustainability, and sustainable investment.
Here are the critical business imperatives that emerged:
Accept Reality: The 1.5°C Ship Might Have Sailed
The World Meteorological Organisation has confirmed that 2024 was the hottest year on record, with global temperatures exceeding 1.5°C above pre-industrial levels for a full calendar year. 1.5°C is now looking less and less likely.1
This means businesses still clinging on to outdated temperature targets are building strategies on shifting sand.
Forward-thinking organisations must act now to prioritise comprehensive resilience and adaptation frameworks while maintaining aggressive mitigation efforts.
Confront the Full Picture: Tipping Points Will Reshape Business Landscapes
Even where corporate risk assessments are in place, many dangerously underestimate what crossing the 1.5°C threshold truly means.
The issue businesses face isn’t merely incremental change as we creep over this goal, but potentially catastrophic disruption. One example discussed was the potential to lose 99% of our global tropical coral reefs in a 2-degree world which will threaten livelihoods for c.500 million people. A sobering thought when the migration of 100s of thousands currently causes so much turmoil. Interconnected climate impacts will cascade through supply chains and markets.
And it is extreme events, not averages, that represent the true business threat. Multiple tipping points now in play could render conventional planning obsolete.
Companies treating climate as a distant, gradual threat are setting themselves up for strategic blindsiding. Risk analysis must radically expand to encompass systemic, interconnected disruptions.
Dual-Track is Non-Negotiable: Adapt Aggressively While Cutting Emissions
Even perfect decarbonisation plans cannot prevent locked-in climate impacts. Sea levels will continue to rise for centuries to come, and extreme weather will continue to intensify beyond a world where we reach net zero.
The UK already faces unprecedented risks. Nearly 40% of agricultural land sits at flood risk today. One-third of critical infrastructure remains vulnerable to disruption. Without adaptation, the UK faces a potential 7% GDP drop by 2050.
Whilst the public sector has a crucial role to play, business leaders must immediately establish concrete resilience targets with adaptation plans linked to corresponding budgets.
Treating adaptation as secondary to mitigation is a strategic error that threatens business continuity.
Embed Sustainability in Your Core: Move Beyond the Factory Gates
The era of sustainability as a siloed function is over. Forward-thinking businesses recognise that climate resilience isn’t a separate strategy but the strategy itself and an enabler to achieving successful business performance. If it sits outside, it will always compete with conflicting priorities.
This requires transforming sustainability from solely a compliance function to a driver of competitive advantage. It means extending planning boundaries beyond operational control to entire ecosystems.
Successful companies are deploying solutions that simultaneously address multiple challenges and position resilience as an opportunity, not merely a mechanism of risk management.
Organisations implementing this approach are already reaping rewards.
One example from India demonstrated how addressing local water scarcity through innovative engineering simultaneously secured operational continuity, enhanced agricultural productivity, and built community goodwill – the embodiment of strategic resilience.
Follow the Money: Climate Adaptation is Now a Financial Imperative
The investment community sends a clear signal: climate resilience directly impacts financial performance. Unprecedented capital deployment toward climate solutions will continue. Energy infrastructure requires fundamental reimagining around resilience. Insurance costs are escalating exponentially in vulnerable regions. Cost of capital increasingly reflects climate preparedness.
CFOs ignoring these trends face material financial consequences.
Conversely, companies demonstrating robust adaptation strategies will increasingly gain preferential access to capital and insurance coverage unavailable to those who don’t.
Take Action Now: Seven Strategic Imperatives for Business Leaders
Our expert view considers the following seven key actions as vital for progress:
- Transform compliance into strategy by converting TCFD from box-ticking to resilience-building.
- Catalyse system change by advocating for climate action’s economic benefits.
- Embrace flexible resilience by building adaptability for uncertainty, not fixed scenarios.
- Set concrete resilience targets with measurable objectives and proper funding.
- Mainstream climate risk by integrating it fully into enterprise risk management systems.
- Deploy integrated solutions that address multiple sustainability challenges simultaneously.
- Build regional collaboration by extending problem-solving beyond organisational boundaries.
Crossing the 1.5°C threshold looks to be a likely scenario that we will soon be faced with. The question isn’t whether to adapt, but how quickly and thoroughly.
Companies that transform climate turbulence into strategic opportunity will thrive; those maintaining business-as-usual will face existential risk.
If you’d like to receive a copy of our upcoming report which dives into this issue, please email hello@sancroft.com.