How can business contribute to climate targets in a profitable way?
Making the Paris Agreement a reality
The annual Conference of the Parties (COP) is a multi-faced animal. On the one hand, there are the formal negotiations where, since this year, details of the implementation of the Paris Agreement are discussed in seemingly endless meetings resulting in slow progress on the key items conferred. This formal side of COP22 in Marrakech concluded after two weeks with the decision to finalise a “Paris Agreement rulebook” on the operationalisation of the Paris targets by 2018, and the adoption of a respective work plan for the next two years. In the COP22 outcome document (“Marrakech Action Proclamation for our Climate and Sustainable Development”), developed countries further reaffirmed their commitment to mobilise USD 100 billion per year by 2020 to support climate action in developing countries, and all countries called on non-state-actors to join them for immediate climate action, building on their achievements to date.
Separate from the formal negotiations, the COP is also one great buzz of climate action. Climate action presented in a wide variety of side-events and climate action discussed among the thousands of participants in numerous different set-ups.
Partly this climate action is taken by governments, albeit that the sum of all actions taken is not yet sufficient to make the Paris targets a reality as our Climate Action Tracker analysis shows. However, climate action is also taken by the business community and over time, this has gained a more and more prominent position at the COP. Rightfully so. While governments can set the right framework and provide the right incentives, e.g. by implementing effective carbon pricing policies, it is ultimately the business community that needs to implement the action. As such, it was great to participate in side-events where new innovative Carbon Capture and Usage technologies were presented and to have truly motivating chats with representatives from a wide variety of sectors.
Chats with clients in the chemical industry asking whether the negotiators realise that product innovations by the chemical industry do provide the solutions needed for a low carbon world. Chats with clients in the steel industry wondering whether there is enough recognition for the fact that also a low-carbon world cannot do without basic materials. But also good discussions with less GHG intensive sectors searching for ways to capitalise on the solutions they already provide: does my CEO actually know how much we already contribute to making Paris a reality?
Maybe I was somewhat biased by the study we launched at the COP, tracking value creation and GHG emissions through all global value chains, the first output under a partnership on carbon pricing we have with Al Gore’s Generation Foundation. Nevertheless, I do have the feeling that at this COP, there was more attention on the role of the manufacturing industry and the wider business community in achieving the Paris targets. This is fully understandable. Our analysis shows that about 60% of global emissions are related to our consumption of materials and food. This implies that active contributions by the manufacturing industry are key, given they are part of the problem and an essential part of the solution.
The interactions I had with the business representatives during the COP allows me to draw one single conclusion. In a way, every company in the world is confronted with the following question:
In making the Paris targets a reality – how can my business contribute in a profitable way?
Finding answers to this question is far from easy. The world is and will continue to be fragmented in terms of the policy framework provided to industry and business in general. Global cooperation mechanisms, such as those envisioned under art. 6 of the Paris agreement will not yet be operational in the near future. Also, the risk that key global economies might step out of what was agreed does mean that for globally competing industries, the issue of diversified ambition potentially resulting in competitive disadvantages for those that do take action, will remain in the agenda.
In our new set-up with Navigant, we remain at your service to support you in finding the answers within the relevant context for your company. Our work on GHG target setting and on vital, undervalued topics such as the circular economy shows that we are at the forefront in providing solutions for a low carbon future.