What business needs from COP26 to deliver on global climate goals
By Sophie Punte, Managing Director of Policy, We Mean Business Coalition
COP26 in Glasgow is a crucial milestone in putting the Paris Agreement into practice in order to keep the 1.5°C trajectory within reach. Governments have a unique opportunity to step up climate action to ensure that we can halve global emissions by 2030. The decisions included in the Glasgow Package will have a major impact on the global economic recovery, jobs and business growth opportunities.
Businesses have a stake in the COP26 outcomes for three main reasons – let me explain.
1. They are already investing in decarbonization
A huge wave of companies are aligning their emission reductions with the 1.5ºC pathway. Almost 1,000 companies have committed to the Business Ambition for 1.5ºC campaign, over 200 companies have signed up to The Climate Pledge – targeting net-zero by 2040, and more than 2,000 small and medium-sized enterprises have joined the SME Climate Hub. All are part of the Race to Zero campaign of the UNFCCC.
This commitment to climate action has grown exponentially since the Paris Agreement was signed in 2015, when just a handful of pioneering businesses set science-based emissions reduction targets. Today, companies with science-based targets are actually delivering real emissions reductions. They have reduced their combined emissions by 25% since 2015, compared with an increase of 3.4% in global emissions from energy and industrial processes over the same period.
And this is the important point. The companies have gone beyond just making commitments. Across the world and in all sectors, they are already taking tangible action. For example, Spain’s ACCIONA has already reached 62.2% use of electricity from renewable sources and reduced total energy consumption from fossil fuel sources by 86% compared to 2017. Australian freight company Brambles has cut its scope 1 & 2 emissions by 47% since 2010, through switching to renewables, increasing efficiency and embracing circularity. And Asahi is already brewing half of its beers in Europe with renewable energy and using 40% less water than it used 10 years ago.
These leading companies are engaging with COP26 to showcase best practice, to share solutions and drive systemic progress. By doing so they are also giving government leaders the confidence to step up and set the policies and regulations that will support their efforts on climate and enable them to go further and faster.
To help businesses get across their messages to governments, We Mean Business Coalition have developed COP26 Policy Asks from Business. This is because business is demanding clearer policies. For example, more than 750 companies have signed a letter to G20 leaders ahead of the G20 summit and COP26, with policy asks on the 1.5ºC ambition, energy, finance included.
2. COP26 decisions will affect business
What do businesses want to see from the governments that’s being discussed at COP? A lot is on the table, including the 1.5ºC ambition, climate finance, adaptation and resilience.
The one thing that stands out is Article 6 of the Paris Agreement. It’s complicated but important for business: it directly engages the businesses and investors in implementation activities and projects in which they can invest. There are major implications for carbon markets and border tax adjustments.
The development of robust carbon markets underpinned by environmental integrity and aligned with the achievement of Sustainable Development Goals (SDGs), is a huge opportunity to accelerate climate action at the global level. Negotiators need to reach agreement on strong rules to implement Article 6, which can support governments to take additional mitigation action and provide incentives to business to invest in cost-effective emission reductions.
To maximize cost efficiency and support additional mitigation action, these rules should do three things: prevent double counting of emissions reductions, protect the environmental integrity of NDCs, and enable the transfer of mitigation outcomes between Parties’ NDCs. These rules must also support meaningful carbon pricing policies and mechanisms that reflect the full costs of climate change, as part of a broader mix of policy instruments to support clean technology investments and innovation.
3. Business wants to see ambitious policy beyond COP26
Business can cut emissions fast, but with supportive policies they can go even faster. The key decisions that will help businesses turn their ambition into concrete action may either end up in the Glasgow Package or be announced as separate statements or declarations.
The most important points for business will be agreements to phase out coal and fossil fuel subsidies; targets for sales of new zero-emission light- and heavy-duty vehicles; making climate-related financial disclosure mandatory for corporations, in line with the TCFD recommendations; and reversing nature loss and deforestation.
Why we’re really at the COP with the businesses we work with is to call for an increase ambition to achieve the goal of limiting global temperature rise to 1.5ºC. This is vital to ensure that the first Global Stocktake, scheduled for 2022-2023 will comprehensively report on strong collective progress towards the long-term goals of the Paris Agreement. This stocktake will inform what governments put into their next round of national climate plans (NDCs) in 2025.
At COP26 we are looking for clarity on how non-government stakeholders, including businesses, are included in the stocktaking progress. We see this as essential to both accurately take stock of global progress on emissions reductions as well as come to meaningful recommendations for government policy going forward. This will be one of many topics under discussion between companies, civil society and policymakers at the Business Pavilion for Climate Ambition in the Blue Zone of COP26.
Business action and innovation is what will enable us to halve emissions by 2030 in order to limit global temperature rise to 1.5ºC. But this can only happen if the COP process supports those businesses with the right level of climate ambition to get on that pathway now.
Find out more about what the We Mean Business Coalition and our partners are doing at COP26.