COP27: Five things companies need to know after this year’s UN climate summitMaría Mendiluce, CEO, We Mean Business Coalition
This article was first published in Business Green.
1. Business knows that 1.5°C is a limit not a target
At COP27, over 100 businesses joined our call to stick to the 1.5°C temperature limit alongside The B Team and other civil society leaders. This call contributed to keeping 1.5°C in the final text.
Historic progress was made with countries agreeing to channel financial support to vulnerable communities that are already suffering devastating impacts from climate change. It was disappointing however that nations are still not cutting emissions fast enough. The deal struck in Sharm El Sheikh provided little towards changing that trend. A missed opportunity for governments to define plans to tackle climate change with business and scale up emission reduction efforts in line with limiting temperature rise to 1.5°C. Only this will limit further loss and damage.
2. Business sees the benefits of phasing down all fossil fuels fast
More and more businesses are working to phase out all fossil fuels. What became clear at COP27, was that governments need to face the crude reality that to limit temperature rise to 1.5°C, there is no room for new fossil fuel supply projects, as the International Energy Agency states.
It was encouraging to see the group of countries led by India, calling for a phase down of all fossil fuels. We look for leadership from India to take this conversation forward in its presidency of the G20 in 2023. And while it was disappointing not to see it reflected in the final deal, it must be agreed at COP28.
National governments can still support the thousands of companies switching to clean energy and encourage more to follow suit with policies to increase renewable energy and energy efficiency.
Renewables are now cost competitive, or cheaper than fossil fuels. 62% of new renewable power generation in 2020 had lower costs than the cheapest new fossil fuel option. A boost in electric transportation is already displacing more than a million barrels of oil per day – a figure that will increase further as EVs are set to make up half of all new cars bought in the US by 2030.
This is why hundreds of companies are already committed to 100 per cent renewable electricity procurement, increasing energy efficiency and already profiting from doing so. However, they need governments to speed up permitting process and grid connection for new installations of renewable power to achieve their goals.
Collaboration between the energy workforce, business and government is crucial in driving a just transition to the clean energy future. It’s essential that we protect communities by reskilling the workers most impacted by the fossil fuel phase out.
A great example of this kind of collaboration was the pledge by a coalition of countries including the U.S. and Japan for $20 billion of public and private finance to help Indonesia shut coal power plants. This initiative will mean emissions from Indonesia’s power sector will peak in 2030, seven years earlier than currently forecast.
3. Business welcomes greater transparency in reporting on net zero goals
The UN’s High Level Expert Group (HLEG) on net-zero announced their recommendations at COP27. These changes will bring greater integrity, transparency and accountability to the net zero pledges made by companies. make greenwashing easier to detect and allow companies that are really delivering on climate action to stand out from the crowd.
The recommendations are aligned with We Mean Business Coalition’s 4A’s of Climate Leadership framework which includes guidance to companies on target setting through the Science Based Targets initiative and SME Climate Hub.
Companies can align themselves with the HLEG by using the Coalition’s new guidance on how to develop a climate transition action plan.
Whilst the private sector needs to increase accountability for its voluntary commitments, companies also expect governments to get their own house in order. Nations are still way off track on their emissions reduction efforts to deliver on the 1.5°C limit they have committed to. Scrutiny, transparency and integrity are welcome across all parts of the economy, but action in the coming months needs to focus relentlessly on the policies needed to cut emissions from the world’s biggest emitters.
4. Business is getting on with the job of cutting emissions
At COP27, companies were sharing numbers on the investments they’re making and the emissions they’re cutting. Probodha Acharya, chief sustainability officer at JSW Group, discussed how the company’s cement – with a carbon intensity of 300 kg CO2 per tonne – makes it the lowest carbon cement company in the world. Not too long ago emissions were around 900 kg. Natasha Santos, Vice-President and Head of Global Stakeholder Affairs and Strategic Partnerships at Bayer spoke of the 200 million hectares now covered by farmers in their supply chain using regenerative practices.
Companies teaming up to send demand signals is also a growing trend. First Movers Coalition members ETEX, General Motors and RMZ Corp Vattenfall announced a commitment to use 10% near-zero cement and concrete by 2030. Delta Electronic, Valeo and Coca-Cola Europacific Partners were among new signatories of the Accelerating to Zero Coalition working towards 100% of their fleets being zero emission vehicles by 2030.
And public-private collaboration to drive emissions cuts was evident in a proposal by the US government – the world’s largest purchaser of goods and services – that all federal contractors must set science-based targets and disclose their environmental impact through CDP, following in Norway’s footsteps.
Cemex, Holcim and Titan became the first cement companies to set 1.5°C-aligned science-based targets. Mission Possible Partnership launched its 2030 Milestones, detailing the necessary actions needed this decade to decarbonize heavy industry.
Since the 1.5°C pathway is impossible without protecting and restoring nature, there was welcome evidence of more companies including nature in their climate plans. H&M and Volkswagen became the latest to join the Lowering Emissions by Accelerating Forest finance (LEAF) Coalition, bringing the group’s financial commitments for the purchase of high-integrity emissions reductions credits to over $1.5 billion. To support companies in their investments in nature, We Mean Business Coalition launched a partnership with the Voluntary Carbon Markets Integrity initiative (VCMI), supporting companies to follow VCMI’s Claims Code and helping to ensure carbon market investments strengthen global action towards achieving the goals of the Paris Agreement.
We are seeing great progress from companies, however in the next year, as part of the business stocktake, we need to be able to accurately assess the impact of companies on cutting emissions.
5. Business looks to Dubai to deliver a breakthrough at COP28
In 2023, the UN begins its formal Global Stocktake process. This will identify the actual emissions cuts that countries have made since the Paris Agreement was signed and allow us to accurately understand progress towards cutting emissions in half by 2030.
With COP28 hosted by United Arab Emirates (UAE), the stakes are high because we need to see a clear push for phasing down fossil fuels and transitioning to clean energies. This will require a credible net zero roadmap for the oil and gas industry.
To deliver a successful COP28 outcome, the UAE team should work with those companies taking meaningful climate action with science-based targets and learn from the businesses that have made the transition to renewables and are thriving today.
We welcome the commitment of UAE authorities to work with business to deliver an inclusive and ambitious COP28 and stand ready to collaborate to support this.