DSM CEO Feike Sijbesma: Running the race togetherFeike Sijbesma, DSM CEO and CPLC Co-Chair
Through the 2015 Paris Agreement, nearly 200 world leaders committed their countries to addressing climate change, recognizing that we could not allow the adverse effects of climate change to continue to grow, passing the bill to the next generation. It is clear that the public sector cannot successfully combat a challenge of this magnitude on its own, however, and that actors across our societies will have to step forward. That’s why businesses are committing to do their part, alongside scientists and NGOs.
To succeed, the road ahead must be paved with more than good intentions. By putting a price on pollution and heat-trapping gases, governments can help unlock trillions of climate-finance from companies and investors in the private sector. Integrating real incentives into our economic system will allow us to take a critical step toward harnessing and optimizing the financial means, innovative power, and actions of the business world when it comes to funding the transition to a low-carbon future.
Over the course of this past year, we have seen tremendous progress on carbon pricing, culminating in the One Planet Summit convened by President Macron of France, World Bank Group President Kim and UN Secretary General Gutteres in Paris at the end of 2017. China’s launch of an emissions trading system (see page 9 of the CPLC Leadership Report) marked another milestone. To ensure more effective price levels, the European Union committed itself to, among other measures, a gradual withdrawal of excess emissions allowances. A promising initiative to align and link carbon pricing systems in the Americas has emerged (see page 34 of the aforementioned report).
As Xie Zhenhua, China’s former chief climate negotiator, and I wrote last year: accelerated implementation of meaningful carbon prices across the globe can turn the notion of the “tragedy of the commons” into an “opportunity of the commons”.
Three points on the role of business are key to making further progress:
First, the Carbon Disclosure Project (CDP) revealed that 1,400 companies are currently in the process of putting a price on carbon inside their company, essentially “future-proofing” their businesses. The Carbon Pricing Leadership Coalition (CPLC) remains committed to improving, co-creating, and aggregating essential materials and opportunities to help companies learn from their peers on best practices in the implementation of internal carbon prices.
Second, at a global level, last year’s One Planet Summit in Paris saw over 50 companies calling for meaningful carbon prices that “provide direction towards a well-below 2-degree world”. Similarly, the WEF CEO Climate Leaders called for a price towards (at least) $40 per ton. I urge all business leaders to echo this message in their policy engagement at national levels. Now is the time to engage visibly and constructively: in the run-up to COP24, governments are focusing on the implementation of the Paris Agreement and on raising their national ambition levels.
Why is this so vital? In the absence of a global entity to manage our atmosphere, a “universal price” won’t emerge soon. It is therefore our collective responsibility to design a global patchwork of national carbon price policies. Fortunately, the CPLC is here to help us sew those patches through policy dialogue, knowledge development, and a variety of action-oriented projects across sectors and regions.
Third, the greater our coordination and the more governments catalyze one another’s pace of action, the lower the competitiveness concerns will be for businesses. That said, we must ensure a well-informed conversation on the degree to which these concerns are likely to occur in the real economy, as well as on where and how they can be addressed. In the coming year, the issue of competitiveness will be a key topic that the CPLC will help convene valuable discussions on.
Indeed, accelerating our actions isn’t about creating a race to the top rather than a race to the bottom. Rather, it’s about unleashing a joint race forward. Not against each other, but against time. After all, Mother Earth is an uncompromising negotiation partner, and the clock is ticking relentlessly.