What about business?
U.N. climate negotiations get together a wide variety of people: politicians, official delegations, civil society, scientists and, of course, businesses. Last year, COP26 in Glasgow boosted countries’ pledges of emission reductions. It was a good push for many big and small companies to take their more ambitious climate targets towards net zero.
With almost no outcomes on mitigation at COP27, business companies become the essential moving force to address the climate crisis.
A strong focus on net-zero pledges, ESG disclosures, and best practices available for emission reduction will help to compensate poor results of COPs.
“We urgently need every business, investor, city, state and region to walk the talk on their net zero promises. We cannot afford slow movers, fake movers or any form of greenwashing.” António Guterres, UN Secretary General
For some, 1.5°C is very much alive. The companies at COP spoke loudly about the need for governments to make progress on regulations and standards to facilitate the global transition of the private sector. There was also news that the number of companies setting science-based targets (SBTi) has doubled since COP26, with over 1,800 companies having validated targets and 4,000 having committed to setting them.
Loss and Damage fund and business
Although there is no clarity on the Loss and Damage Fund, many experts commented that businesses could capitalise on the subsequent sustainability opportunities in previously underfunded countries. This agreement could open novel markets for companies in infrastructure, manufacturing, capital goods, and more for expansion and business development.
No greenwashing towards NetZero
At COP27, a U.N High Level Expert group release a report about greenwashing and its widespread impacts on successful climate action. The report aims to build on the Race to Zero and Science Based Targets initiative by providing corporates and investors with time-based frameworks to deliver net zero based on short, medium and long-term targets. The U.N. experts provide a list of recommendations to ensure developed net zero pledges do not fall for greenwashing pitfalls.
In the report, experts stress that companies should no longer claim to be net zero if they are still involved in building or investing in new fossil fuel supply or support deforestation and other environmentally destructive activities. Firms should focus on cutting emissions before purchasing carbon credits, which should only be used as a last resort to offset hard-to-abate emissions.
International Organization for Standardization (ISO) presented a NetZeroGuidelines, and Christoph Winterhalter, ISO Vice-President, explained: “We have the foundation, resources and industry experts to take global action. There are already numerous policy tools and standards available that help to address climate change. It is increasingly clear that we don’t need to reinvent the wheel, just realign it.”
Inflation in carbon prices
We all know inflation is on the rise. The International Monetary Fund (IMF) says that the carbon price must go up to at least $75/ton by 2030 for global climate goals to succeed. This discussion also shows a clear path towards emission reduction as soon as possible because it’ll become more expensive.
Carbon offsets are back. What business should be aware of?
Experts noted a significant increase in offset conversations throughout COP27. Offset and renewable energy projects can help offset a company’s internal emissions or be sold to other organisations falling short. At the same time, business companies should be aware of junk offsets. Purchasing credits to support solar or wind projects sounds good for the climate. However, Bloomberg experts consider these offsets largely bogus. Barbara Haya, the director of the Berkeley Carbon Trading Project, views empty offsets as “paying for business as usual” behind a facade of decarbonisation.
Biodiversity is on the rise
Although COP27 wrapped up past weekend, in December, Montreal is hosting COP15, the U.N. Biodiversity Conference.
Nature can’t be viewed as a secondary, less-important challenge to climate; action in one area impacts the other. Companies and governments need to respond and report to relevant frameworks. For example, in 2021, the Taskforce on Climate-related Financial Disclosures (TCFD) announced a new initiative called the Taskforce on Nature-related Financial Disclosures (TNFD). The framework was tested this year and is scheduled to officially launch in 2023. TNFD mimics the structure of TCFD, intending to help companies and local governments report on the risks associated with biodiversity loss and ecosystem degradation.
At Clearstream Solutions, we strongly believe small and big business companies play a dramatic role in preventing irreversible consequences of climate crisis. That’s why we assist organisations in measuring and implementing best-in-class environmental and sustainable practices in their businesses, products and supply chains to prevent a global climate crisis.
Khrystyna Rudnytska
Sustainability Program Associate
Clearstream Solutions
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