How Business Should Combat Climate Change in Four Phases of Decarbonization
With each passing year, the effects of climate change become harder to deny—or overcome.
Many business leaders have reached an overwhelming consensus. In a 2021 Deloitte global survey, 89% of executives said they believe a global climate emergency is underway. And while 88% believe organizations and governments can limit climate change’s worst effects by taking immediate action, the sheer magnitude of the problem may make it difficult for any organization to know where to start.
Most surveyed executives said their organizations are taking such immediate steps toward net-zero emissions as using sustainable materials (67%) and energy-efficient processes (66%). But fewer are making the more substantial, more difficult changes decarbonization demands, such as committing to developing climate-friendly products and services (49%), requiring their partners to meet sustainability standards (46%), and relocating or upgrading facilities for climate resistance (44%).
If the steps needed to reach net-zero emissions by 2050 seem daunting, consider the cost of business as usual: by making no changes, the U.S. stands to lose an estimated $14.5 trillion over the next 50 years to climate-related damages.
Conversely, collective action toward a low-emissions future could generate as much as $3 trillion for the U.S. over that time frame. But a 50-year decarbonization plan that limits the planet’s warming to close to 1.5°C depends on organizations in all sectors collaborating to create emissions-free ecosystems and embracing climate standards that lead to significant change.
An ambitious four-phase scenario that we created maps out a path to net-zero by 2050 and can help your organization support the effort through meaningful and decisive transformation.
Phase I, Now Through 2025: Bold Climate Plays
The clock is already ticking. The U.S. now needs to be setting bold environmental regulations, investing in research, deploying and scaling emerging technology, and accelerating infrastructure programs that support carbon neutrality.
The costs of such a coordinated undertaking will only escalate through inaction. But the potential benefits are enormous.
Decarbonizing by 2050 could require tripling U.S. investment in transmission infrastructure to an estimated $360 billion, according to Princeton University’s 2021 report Net-Zero America. But upgrading and building more sustainable infrastructure could help bring renewable energy to more customers and lower their energy costs. And with organizations contributing innovations and investing in transforming for a low-emissions future, employment in public services and green construction could also rise.
Together, this effort lays a foundation for accelerating change in the next phases.
Phase II, 2026–2040: Accelerate to Net-Zero
This era of dramatic change calls for the biggest shifts in policy, infrastructure, and customer behaviors. Public- and private-sector joint efforts to speed innovation and build green-industry opportunities would start to reinforce themselves: the wider the adoption of clean energy, the less that energy will cost, and the growing capacity to store energy can help make the grid more resilient.
Phase II calls for investment in the nation’s transition from fossil-fuel dependency. Costs for generating energy from new technologies and infrastructure could reduce gross domestic product (GDP) by an average of 0.2% annually during this period.
But this net-zero scenario anticipates adding 320,000 U.S. clean-energy jobs every year through 2040. And with stronger domestic capabilities, the U.S. economy could gain nearly $14 billion and 100,000 jobs every year through low-emissions advanced manufacturing.
Phase III, 2041–2050: The Turning Point
By now, the U.S. has met the biggest economic challenges of the net-zero effort and rounds a corner. With decarbonization nearly complete throughout the U.S., the cost of the transition would begin to fall while the benefits rise and accelerate.
The net economic gains would not reach all industries or regions at once. For the U.S., the moment when the benefits of decarbonization exceed its initial costs, marking the start of the transformation’s net economic gain—the “turning point”—would take place around 2048. At that point, the U.S. could enter its first net-zero decade in a stronger economic position than it could with lower levels of decarbonization.
Phase IV, 2050 and Beyond: Low-Emissions Future
In achieving net-zero emissions and limiting global warming to near 1.5°C, a fully transformed U.S. economy would benefit from the growth of decarbonized industry—and avoid the most devastating potential of climate change. The government and such private sectors as finance, science, technology, retail, recreation, and tourism would likely see economic and employment gains by the start of Phase IV.
In this scenario, the Southwest would see some of the biggest rewards of the net-zero transformation as a clean-energy hub with industries boosting its economy by nearly $500 billion a year. And the U.S. could support and lead global decarbonization initiatives that enhance productivity while reducing the risks and costs climate change brings today.
Getting Started
The desire to transform is growing. Business leaders’ statements on decarbonization and climate change demonstrate that. Now we should convert that will to action.
The 30-year vision of more sustainable industry and employment growth depends on organizations to contribute and lead. In supporting the emissions-reduction scenario at all four phases, today and in the coming decades, organizations in every sector will likely need to make climate action core to their growth strategies, build carbon-neutral networks, and accelerate systems-level change.
Read Deloitte’s report The turning point: A new economic climate in the United States.