Business opportunities in the new economy: Renewables and regeneration to ensure business sustainability

The Paris Agreement and climate science indicate that we have two years to keep the global temperature increase below 1.5°C, a figure that according to the World Meteorological Organization has already been exceeded between February 2023 and January 2024. The need to reduce emissions from our economic activities and move to low-carbon and regenerative business models has never been more urgent.

In markets such as the European Union, there are important advances in establishing the rules for a new economy. The Corporate Sustainability Reporting Directive (CSRD), the Border Carbon Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR) are triggering new expectations and demands on Latin American companies in terms of their emissions management and reporting. Companies that live up to these new requirements will enjoy competitive benefits such as access to European markets and avoid fines for non-compliance versus companies that are not yet measuring and reducing their emissions and exploring models that not only care for, but regenerate ecosystems.

Beyond regulation, there are opportunities to lead and gain competitive advantage in this transition. Investment in renewable energy, natural capital, regeneration and adaptation to climate change are some of them. 

In terms of renewables, in 2023 global investments targeted for the energy transition were $1.77 trillion, 61% greater than those for fossil fuel supply ( Bloomberg, 2024). Companies can now invest to improve their low-emission energy resilience. According to the International Energy Agency, global renewable energy generation capacity increased by a significant 50% in 2023 and its cost is now lower than fossil fuel power generation. This trend will continue to improve, given that during COP28 it was agreed to triple global renewable energy capacity by 2030. In Peru, solar and wind power generation are becoming more important. They currently represent between 6% and 8% of generation and the government has set a goal to increase this to 20% by 2030. 

If we talk about the importance of nature for business, we must begin by accepting that we all depend on nature: companies, cities, society and the economy. 55% of Latin America's GDP depends on it (Biodiversity Convention). Moreover, let us remember that the oceans, forests and soil absorb half of global greenhouse gas emissions. According to KPMG, protecting nature and biodiversity could generate business opportunities worth 10 trillion dollars a year and create more than 400 million jobs worldwide. Regenerative agriculture stands out as one of the main strategies of large food and agriculture companies. retail.

On May 29, 30 and 31, during the Latam 2024 Forum nexos+1 will decipher these and other sustainability trends that companies must have on their radar to be competitive in this new economic era.

Published in Gestión Newspaper.