COP21: Business on Board

We, as the Canadian public, recognize the urgency for ambitious action towards tackling climate change through global environmental stewardship. Nationally, our newly elected Prime Minister Trudeau brings a breath of fresh air to Canadian politics, inviting provincial premiers to join his Canadian delegation at the COP21, in hopes that Canada’s history of “being a less ­than­ enthusiastic actor” on climate change are behind us. This sentiment to take serious action against climate change is expressed globally, with over 175 countries (accounting for 93% of carbon emissions and 94% of the global population) independently preparing and submitting an “intended nationally determined contribution” (INDC) for national decarbonization ahead of the Paris agreements. Regrettably, our combined global policy pledges fall short; our INDC pathway has a higher than 99.5% probability of exceeding the 2°C target, leaning upwards of 2.7°C by the end of this century. The results are disheartening, but are not written in stone. Paris will do more than set policy pledges; it will bring climate change into the limelight, signaling an inevitable progress towards decarbonization that will set the pace of development for decades ahead.

Why am I optimistic? Paris’ policy pledges will lay the structural foundations towards a major (and high stake) economic transformation. The successful implementation of pledges depend on the active participation of all stakeholders, not only through stronger commitments from governments but critically through bolder action from the private sector as well. The provision of economic instruments (seconded only by regulatory frameworks) are already perceived to be the most effective solution to climate change on a global scale. Thus, in the midst of the political debate, we should not overlook the predominant role the private sector will play post COP21, both as contributors of emissions and as stakeholders in a rapidly changing economic environment.

The case for corporate action on climate change is growing at par with political momentum as we approach COP21. What was perceived as leading behaviour as recently as 2010 is now standard practice; climate change is at the forefront of senior management decisions, internal stakeholders are increasingly incentivized to manage climate issues, emission reduction targets are becoming commonplace, and emissions disclosures of scope 1, 2, and 3 have risen amid growing investor demands. Developments in corporate reporting affirm that the private sector is actively taking action to position themselves for this low ­carbon economic transition; businesses now proactively seek opportunities for green growth as good business decisions and those who falter through inaction may be left in the dust. This progress is not superfluous; increasing the use of renewable energy and reducing carbon emissions through collaborative emission reduction strategies can reduce an equivalent of 3 gigatons of carbon emissions or one third of the existing ‘emissions gap’ between existing targets. To date, the private sector has committed to thousands of climate action initiatives on the UNFCCC Non­State Actor Zone for Climate Action (NAZCA) portal but undoubtedly, more must still be done by both companies and their investors.

Private action will be vital in this low carbon economic transformation and expectations are high that private contributions will be key to its success. Given its influence however, the “gap between recent achievements and future expectations is especially large for national governments and the private sector, suggesting the need for both to significantly step up their performance in the years to come”. So how can the COP21 mobilize the private sector to think and act critically on climate change? First, the COP21 must provide a clear and consistent framework of national policy trajectories. In a recent CEO perception survey by PwC, 75% indicated that second only to consumer preference, an explicitly defined policy framework of a nation’s path (and its associated policies) to low ­carbon economic development, will drive private action on climate change. Second, the COP21 policy delegates must engage business leaders in discourse on climate action. Businesses from all around the world will be represented at the conference, whether independently as attendees and panelists, in affiliation with business coalitions like ‘We Mean Business’ representing 465 businesses and investors, and through constituents like the Carbon Disclosure Project. Campaigns like ‘The Road to Paris’ are also in place to attract and convene stakeholders from business, financiers, and governments through a bottom ­up conversation on opportunities for collaboration across sectors. Undoubtedly, having the private sector on board can be the difference between a successful or perceivably inadequate transition. Thus as we approach the Paris conference we must remind ourselves that no one party can spearhead the fight against climate change; it will require a combined effort from governments, businesses, and like-minded people pursuing a common path toward the impending low carbon economic transformation.

This piece was written by Truzaar Dordi
Truzaar is a MES candidate of Sustainability Management at the School of Environment, Enterprise, and Development – University of Waterloo. His research interests revolve around catalysing the transition to the new ‘green economy’, specifically addressing the financial considerations of these developments.

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