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Economic Analysis Supports Aggressive Action to Combat Climate Change

Boston Consulting Group’s New Center for Climate Action Finds That Rapid Advances in Low-Carbon Technologies Create a Clear Business Case for Ambitious Carbon Reduction Efforts

BOSTON—The economic costs of unchecked climate change clearly outweigh the economic impact of investing aggressively to decarbonize, according to a new publication by Boston Consulting Group (BCG). The publication, titled “Flipping the Script on Climate Action,” is being released today.

Advances in low-carbon technologies have put emission reductions in most sectors well within economic reach. As a result, in many countries, reducing carbon emissions will actually bolster GDP. The publication is released by BCG’s new Center for Climate Action (CCA), an expert hub designed to help companies, governments and social sector organizations master the technological and economic transformation required to address the mounting threat of climate change.

“Addressing the threat of climate change is a monumental and global challenge for the coming decades—a critical issue for many of our clients and a clear leadership imperative for BCG,” said Michel Frédeau, Global Leader for Climate & Environment at BCG and a coauthor of the publication. “The good news is that dramatic emissions reductions are not only possible, but also make clear economic sense.”

A Clear Economic Case for Action

The publication explores the economic tradeoffs at the heart of the climate challenge. Existing research shows that unchecked warming will reduce global GDP in 2100 by as much as 30%, with significant additional downside risks given the far-reaching ripple effects of warming global temperatures and new evidence continually pointing to larger negative impacts than previously expected.

In a direct comparison, these figures dwarf the economic costs of taking action against worsening climate change. According to BCG research, most countries can already meet around 80% of their Paris 2°C contributions without resorting to new or unproven technologies. As a result, the economic impact of aggressive carbon reductions is likely to be either positive or only slightly negative for many individual countries (around ±1% of national GDP in 2050).

In view of the clear economic case for action, the authors call for government, corporations, and investors to intensify their efforts to reduce carbon emissions. In the absence of an international regulatory framework and a global price on carbon emissions, national governments should take unilateral action, adopting country-level carbon pricing schemes, greentech subsidies, and forceful sector-level regulations. Meanwhile, companies should demonstrate how their business model and operations can become compatible with a 2°C world, accelerate initiatives that are already economically viable or nearly so today, and pilot new technologies that they know will play a growing role in coming decades. Companies in hard-to-abate sectors should take ecosystem action by partnering with competitors, customers, and suppliers on initiatives that promote risk sharing of large investments in the research and deployment of new technologies.

A Comprehensive Climate Offensive

Given the urgent need for climate action, BCG is bringing together the firm’s climate thought leadership, expertise, and tools to form the CCA. The CCA will support the global drive for decarbonization and position organizations for success in a low-carbon world by focusing in three areas: business strategy, operations and stakeholder engagement.  It will also work with governments at the local and national levels and with NGOs and social sector groups to develop and implement strategies for reducing carbon emissions.

As companies reorient their strategy to drive their low-carbon transformations, the CCA will work with them to evaluate business and portfolio impacts under a variety of future climate scenarios. On the operations side, the CCA will help companies identify and realize the most cost-efficient path to reducing emissions in their own operations and in their supply chains, and navigate the policy environment. The CCA will also partner with organizations in their efforts to engage with internal and external stakeholders on their climate change action agenda.

“BCG’s Center for Climate Action is launching at a critical time, when both companies and governments need to accelerate progress on reducing carbon emissions,” said BCG managing director and partner Patrick Herhold. “As we outline in our publication, there is real momentum as companies reinvent their business models and decarbonize their operations. The CCA will engage with business and government leaders and be a catalyst for climate impact.”

A copy of the publication can be downloaded here.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

Sobre Boston Consulting Group

O Boston Consulting Group atua em parceria com lideranças empresariais e sociais, ajudando-as a enfrentar os mais importantes desafios e capturar as melhores oportunidades. O BCG foi pioneiro em estratégia de negócios quando foi fundado, em 1963. Hoje, ajudamos nossos clientes com total transformação, inspirando mudanças complexas, permitindo o crescimento das organizações, construindo vantagem competitiva e gerando resultados de impacto.

Para ser bem-sucedidas, as organizações precisam combinar recursos digitais e humanos. Nossas equipes globais são pautadas pela diversidade e têm profundo conhecimento técnico-funcional em diferentes indústrias, além de múltiplas perspectivas que estimulam a mudança. O BCG ajuda a solucionar desafios por meio da prestação de serviços de consultoria estratégica de ponta, aliada à tecnologia, design, corporate e digital ventures – além de propósito de negócios. Trabalhamos com um modelo colaborativo único que gera resultados e permite a nossos clientes prosperar.

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