The Glasgow Climate Pact for business: ambition, action and collaboration.Maria Mendiluce, CEO of We Mean Business Coalition
The street and the boardroom are closer than they have ever been on climate.
The Glasgow Climate Pact and recent pledges have kept 1.5°C alive, just. But, to get 1.5ºC out of intensive care we need all these pledges and national plans to be delivered without delay. After the Paris Agreement the message was clear: Ambition, Ambition, Ambition. Coming out of Glasgow, we still need increased ambition, but the call from both the streets and the corridors of COP is the same: Action, Action, Action.
Business leaders travelled to Glasgow in record numbers to ensure their voice and actions would be heard. Many have set science-based targets aligned with 1.5ºC, others are starting their journey to net-zero. The Glasgow Pact has given them the direction of travel. They came with concrete policy asks, which at least in part, have been delivered. These include a commitment by nations to increase their emissions targets to pursue the 1.5ºC objective of the Paris Agreement and rules for a robust and transparent global carbon market.
195 countries now agree that coal has an expiry date, even if that date is not yet agreed. For business, investments in fossil fuels are now far riskier because the market expects them to become stranded assets in the foreseeable future. In the context of high and volatile energy prices, the key opportunity for every nation and industry is how fast economies can transition to renewables and green hydrogen
As delegates head home, these are the key lessons that business leaders can take from Cop26.
We will succeed together, or we will fail apart. People took to the streets calling for urgent, just and decisive action from governments on climate. The number of companies setting 1.5°C-aligned science-based emission reduction targets has now surpassed 1,000. The Net-Zero Standard launched by the Science Based Target initiative (SBTi) enables companies to align their near- and long-term climate action with limiting global warming to 1.5°C. While some saw Cop26 as a story of opposing voices inside and outside, I believe that the street and the boardroom are closer than they have ever been. Their message to world leaders is loud. Action, action, action. The only antidote for the blah, blah, blah.
Action in this decade towards halving emission by 2030 offers our best chance of keeping 1.5ºC within reach. Many forward-looking business leaders are asking a series of vital questions: What do we need to do for our company to be aligned with 1.5ºC? What are the solutions that can be deployed immediately and scale quickly? What are the innovations that could become the market leading products or services of the next decade? Now the challenge is to mainstream this shift in mindset to the broader business community
…but it must be accountable action. Scrutiny and transparency will ultimately benefit everyone, including business because it will build trust with employees, customers, investors and communities. The International Sustainability Standards Board, launched at Cop26 will provide a much-needed global standard for the consistent disclosure of sustainability information across sectors. Reporting will make it easier for investment to flow to truly 1.5ºC aligned businesses, drive competition and a race to the top for leading corporations. It will also make it harder for those major businesses that do not take climate seriously. There will be no longer any excuse nor anywhere to hide.
Ambition will spread through value chains. As more and more companies set 1.5ºC targets, they are looking at their value chain where 50-95% of their emissions are generated. Whether big or small, every business is a part of someone else’s value chain. This interdependence will help drive ambition as businesses feel the pressure to decarbonize to help their suppliers and customers meet their own emission reduction targets. As ever-growing numbers of companies and SMEs seek to cut their emissions with limited resources and knowledge, they need simple, replicable and robust solutions that they can plug and play. The companies that best collaborate with their supply chains to develop solutions that can become widely adopted, will be the winners on this race to zero.
Nature investments – in addition to – not in place of emission reductions. Nature came to Cop26 like never before. Forward-looking businesses increasingly recognise the need to invest in both emissions reductions and nature. The Net-Zero Standard makes clear that companies should be working to cut around 90% of their emissions by 2050 at the latest. However, they should not delay but rather begin now to invest in the nature-based solutions that will allow them to tackle the final 10% of emissions or even go further and become carbon positive compensating all their historic emissions.
The Ambition Loop remains as important as ever. Despite progress made by businesses of all sizes, they cannot alone turn the tide on global heating. We need clear policies and regulation from governments. And business needs to be consistent in their advocacy for ambitious climate policies. The ambition loop between companies and governments is clear, by working together, they can each accelerate climate action, unlocking business leadership and policy ambition. Similarly, the calls for action from wider society are shaping corporate and policy decisions creating the societal changes that make it easier for consumers to cut their own carbon footprint. Our task in the coming years is to turbocharge these virtuous circles and accelerate momentum to the pace needed to avert climate breakdown.
The Glasgow Climate Pact represents real progress within the current geopolitics and consensus nature of UN climate negotiations. Forward-looking businesses will continue to raise their own ambition while calling for more government action such as delivering climate finance to developing countries, transparency, creating a just transition and a meaningful price on carbon that reflects the full costs of climate change.
Cop26 provided an opportunity for businesses to present their plans and discuss with their peers, value chains, policy makers and civil society what it takes and what is needed. They all recognize that this cannot be done alone. Their message is loud and clear: Collaboration, collaboration and collaboration.