COP25: A missed opportunity, but business continues to drive ambition
Nigel Topping, former CEO of the We Mean Business coalition
COP25 fell far short of what is needed. The science and the economics are clear – the risk to human well-being and economic stability posed by climate change is growing fast. As a result, hundreds of companies are stepping up their climate action, many of them doing so in line with the goal of limiting warming to a maximum of 1.5ºC. Business groups and investors, representing thousands of companies and tens of trillions of dollars of market cap and assets under management, are calling for governments to strengthen policies and targets to match that ambition.
No major country came to COP25 with a serious commitment to increase its Nationally Determined Contribution (NDC) in the year ahead. This was a clear missed opportunity to show leadership in the transition to the zero-carbon economy of the future, and to give businesses the clarity and confidence they need to invest decisively in zero-carbon solutions around the world.
However, the European Council’s endorsement of the goal of achieving a climate neutral EU by 2050 is an important step for the world’s third largest emitting economy that sets the stage for an increase in the bloc’s NDC next year. Plus, the Climate Ambition Alliance led by the Chilean COP25 Presidency announced an increase in parties committing to or making plans for achieving net-zero by 2050, notably including Canada, which is also to be welcomed.
Thanks to the tireless leadership of many smaller countries in demanding higher ambition and defending the spirit of the Paris Agreement, the outcomes of COP25 did give a nod to the science and the urgency of enhancing ambition to address the growing gap between current trajectories and the shared goal of limiting global warming to 1.5ºC.
The decisions restated the call in the Paris Agreement for parties to each come in 2020 with an NDC that reflects “highest possible ambition.” Having reminded themselves of that next step, there is much work that needs to be done in the year ahead to achieve it.
Continued growth in ambition and action from businesses should give all countries the confidence they need to raise ambition. We must ensure that 2020 is the year that exponential growth in business, investor, city and regional ambition and action breaks through the thick walls of indifference surrounding laggard country governments. The world cannot afford another COP that does not result in a clear step up in ambition.
The negotiations on Article 6 have been kicked to next year. Despite the fact that a strong outcome would have been a much needed boost to ambition, we applaud those parties that held the line on environmental integrity of markets, rather than allowing a weak deal.
Progress at the margins
Despite the overall lack of progress within the talks, an increasing number of governments are recognizing the economic benefits of rapidly transitioning towards a net-zero carbon economy. This is now bolstered by the European Council’s endorsement of achieving a climate neutral EU by 2050, and Canada’s commitment to net-zero by 2050 – via the Ambition Alliance led by the Chilean COP25 Presidency.
Despite a lack of US leadership at the federal level, non-federal actors continue to ramp up action. A delegation that included the largest congressional presence to attend a COP since Paris in 2015, more than 70 US business, city and state leaders, representing the nearly 4,000 signatories of the We Are Still In declaration who remain committed to the Paris Agreement, and representatives of the bipartisan US Climate Alliance all attended to showcase the continued action in the United States.
Their message is clear: the only way to ensure long-term, sustainable economic growth is through a just transition to the zero-carbon economies of the future.
While major emitters India and China have not yet formally committed to increasing their NDCs, both are on track to over-achieve on their existing commitments. They showcased many examples of leadership and progress during the two weeks of the conference – all of which is a strong foundation on which they can put forward strengthened NDCs in 2020.
Momentum and ambition
The increasing momentum from non-state actors on climate action was clearly evident at the summit in Madrid, with hundreds of businesses uniting behind the science and calling for increased ambition from all governments.
The growing group of leading businesses that have signed the 1.5ºC pledge delivered a strong push for bold climate policies at the High-Ambition Day at COP25. The number of companies committed to the Business Ambition for 1.5°C — Our Only Future campaign has doubled to 177, since the first group of 87 pioneering companies were announced at the UN Secretary General summit in September.
The signatories have pledged to set science-based targets that align with limiting global temperature rise to a maximum of 1.5°C above pre-industrial levels and reaching net-zero emissions by no later than 2050 – in line with what climate scientists say is needed to meet the most ambitious goals of the Paris Agreement.
Collectively the companies have a combined market capitalization of over US$2.8 trillion and represent over 5.8 million employees, spanning 36 sectors and with headquarters in 36 countries. They are also equivalent to the annual total of France’s direct CO2 emissions.
The latest cohort of companies joining the campaign includes International Airlines Group (IAG) – owner of Spanish airline Iberia and British Airways, car rental firm Europcar Mobility Group and construction firm Landsec. In addition, the number of companies committed to science-based targets has surged to over 740, over 50 companies in the fashion industry have committed to align with a 1.5ºC future through the Fashion Pact and over 500 members of the B-Corp community have committed to aim for net zero emissions by 2030.
They were joined by a group of investors managing close to US$4 trillion in assets who have committed to converting their investment portfolios to net-zero emissions by 2050, through the UN-convened Net Zero Asset Owner Alliance. While more than 600 asset managers and asset owners, with US$37 trillion in assets, have banded together to urge for action against global warming.
The International Chamber of Commerce (ICC) also made its voice heard at the summit, advocating for higher climate ambition, as did cities from all over the world via the Under 2 Coalition and other groups.
The push for ambition from civil society continued to grow louder, with Greta Thunberg acting as a bold representative for the millions of citizens that have taken to the streets in recent months demanding faster climate action.
Article 6
The lack of progress on Article 6 negotiations, intended to synchronize and fast track the international trading of carbon credits, is disappointing.
However, getting the details right on Article 6 is more important than simply getting a deal done at any cost. Article 6 rules must ensure the environmental integrity of carbon credits and make certain that no reductions are double counted. Companies need to have full confidence in what they are buying and selling. Anything less would be a risk to the value of the credits and the reputation of the companies trading them.
A weak deal now would have undermined the integrity of the entire Paris Agreement and scupper any hope of limiting global warming to a maximum of 1.5ºC.
Leading businesses spoke out in support of a robust Article 6 during the summit, highlighting the importance of integrity. It’s critical that the COP26 presidency uses the business support for Article 6 as it takes over the negotiations in 2020.
“Although a robust Article 6 agreement has great potential to incentivize parties to take faster and additional mitigation action, while supporting sustainable development and increased climate finance, it is imperative to ensure the environmental integrity of the global mechanism,” Jeff Turner, VP Sustainability at Royal DSM, said.
“If not, it can have wide-ranging implications with potential to undermine the Paris Agreement. The key is to ensure robust accounting rules and mechanisms,” he added.
2020: The year of climate action
While the official outcomes of COP25 are disappointing, the wave of momentum coming from businesses, investors, cities, civil society and forward-looking governments is set to grow in 2020 and beyond.
The number of companies committing to climate action, through the We Mean Business coalition partner initiatives is continually growing – having surged to over 1,120 in five years. The ambitious action these companies are taking on climate change is sending strong market signals which drive ‘ambition loops‘ – giving governments the confidence to set bolder climate policies.
In 2020, governments must take note of this groundswell of action from business and ramp up their national climate plans in line with the latest climate science, as a matter of urgency. By setting policies and targets in line with a 1.5°C trajectory, governments give business the clarity and confidence to invest decisively in the zero-carbon economies of the future.