All roads lead to Paris

19th November 2015


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Sarah Miezitis

Ahead of the UN climate summit, Catherine Early gauges opinion from IEMA members and businesses

Heavy in politics and technical jargon, the UN climate negotiations may seem a long way from day-to-day business operations. Although it is yet to be seen how strong an agreement will be, optimism is high that there will be some kind of deal in Paris (COP21), so businesses will need to prepare for more stringent regulations in the years ahead.

"If you're a chief executive, you've got 15 years of tightening regulations," warns Jon Williams, partner in sustainability and climate change at PwC.

Many businesses still view climate change as a long-term issue, he says. More than half of chief executives surveyed this year by PwC said their board discussed climate change and extreme weather risks only after they were affected by them. To Williams, this reveals a tendency to view the issue through the lens of crisis and risk management rather than strategic business planning.

Eliot Whittington, deputy director of the Prince of Wales Corporate Leaders' Group (CLG), says the extent to which companies are engaged with what is going on at the COP21 talks varies and can depend on the sector in which they operate.

A multinational energy company is likely to pay far more attention than a general services company, Whittington says. But he adds: "From whatever level an organisation is looking at it, they want to know how this will affect the policies they operate under."

According to Whittington, the number of businesses in the vanguard of tackling climate change has grown dramatically over the past 18 months, particularly in the consumer goods sector: "More and more businesses are engaging more seriously. What's been apparent is a much louder voice from companies that are already affected by climate change or see it coming soon."

IEMA's climate change network has been conducting a webinar campaign to mobilise other members on climate action. Nick Blyth, IEMA's policy and practice lead for climate change, says: "One thing that's going to be really important is keeping momentum after Paris.

"Implementation of the climate pledges will be important, and we're very interested in how the monitoring and verification will work."

Network member Anna-Lisa Mills, group sustainability manager at Innovation Group, says her company, being in the insurance sector, is concerned. There have been lots of internal meetings to discuss the implications of climate change on the business and the group's chief executive, Andy Roberts, co-signed a letter supporting Bank of England governor Mark Carney's speech in September on climate change, she says.

"Our clients are all paying for the impacts of climate change. We want strict targets and that's why we're calling for action," Mills says.

Another network member, Jae Mather, director of sustainability at the Carbon Free Group and partner at Responsible World, says there are far more business leaders attending the Paris talks than there were at the Copenhagen round in 2009. "This should make a big difference. There's an undercurrent that things are going to change, a sense of inevitability," he says.

There remains a sustainability skills gap at the top of businesses, but Mather says: "Ultimately it doesn't matter whether business gets this or not, the inevitability of market failures from climate change is coming. It will make business models obsolete."

Williams believes that COP21 could be a tipping point for the low-carbon transition and urged IEMA members to seize the opportunity. "Now is the time to do that internal lobbying so that the board understands what could happen after Paris," he says.

Copenhagen vs Paris

Campaigners had high hopes ahead of the Copenhagen climate summit (COP15), but the talks were widely seen as a failure, amid diplomatic chaos and distrust among global leaders. But commentators are confident that the Paris talks, from 30 November to 11 December, will be different for many reasons.

  • The US and China are now both engaged. Before Copenhagen, these two major sources of greenhouse-gas (GHG) emissions were not cooperating on climate action. They have since made major commitments that have helped to build mutual trust as well as encourage other countries to act.
  • Countries have pledged climate action ahead of Paris. In Copenhagen, national pledges were unclear or non-existent, creating distrust and frustration. At the time of going to press, more than 150 countries have submitted climate action plans, known as intended nationally determined contributions (INDCs).
  • More climate legislation is now in place. Ahead of the Copenhagen summit in 2009, only a handful of countries had implemented climate legislation. Now, 75% of GHG emissions are covered by legislation.
  • Climate action is beneficial to the world economy. A series of studies, including from the New Climate Economy collaboration, has provided significant evidence that tackling climate change is good for the global economy, while business as usual will be bad.
  • Unprecedented growth in renewables. Global renewable energy capacity, including hydro, has grown almost 40% since Copenhagen, with significant cuts in cost.
  • More voices are calling for action. Environmental campaigners were the most vocal proponents of a global climate deal in 2009. Pre-Paris, those urging action include mainstream businesses, investors, world leaders, the Pope, Islamic scholars, senior Buddhists including the Dalai Lama, and powerful voices in finance, such as the governor of the Bank of England, Mark Carney, and IMF managing director Christine Lagarde.
  • French diplomacy. The French government has already garnered widespread praise for the way it is coordinating the talks. French diplomats globally have been ordered to make climate change a priority. Political leaders are to attend the talks on the first day, rather than at the end, to prevent the chaos of Copenhagen.

Key issues at the Paris negotiations

  • Differentiation - This is the difficult issue of whether to treat developed and developing countries differently. It cuts through most elements of the deal. In the past, responsibility for climate action has fallen on developed countries, but many favour changing this now that many developing countries are growing at pace. At the UN climate talks in Lima last year, countries agreed that those "in a position to do so" would take more action, but disagreements over this re-emerged in Bonn at the end of October during talks on the draft text for a global agreement.
  • Finance - This is one of the most contentious elements of the deal. Some developed nations, including the US, want to broaden the number of countries contributing to an international climate fund, while the G77 group of developing nations believes that only developed countries should provide finance. There are also disagreements between these two groups over whether private finance should be included, or just public.
  • Long-term goal - This will set the direction of travel for future emissions reductions. After the culmination of the Bonn talks, three options remained in the text, but each contained several sets of choices such as whether there will be a percentage target and date for peaking of emissions.
  • Ambition mechanism - This will establish a regime to work towards keeping global temperature rise below 2°C, above which scientists warn of potential catastrophic climate change. Key questions include: How often should country pledges be reviewed? How will emissions reductions be monitored and verified?
  • Market mechanisms - These include taxes, emission-performance standards and emissions trading. A deal in Paris is not expected to spell out a specific scheme. However, many businesses want recognition of the role of market mechanisms in reducing emissions and a framework for linking schemes from different countries -such as the EU emissions trading system and the US regional GHG initiative. The wording of the post-Bonn text clarifies how countries can cooperate on markets, with proper accounting of transfers and avoiding the double-counting of emissions reductions. It also creates a sustainable development crediting mechanism.
  • Loss and damage - This refers to the compensation developing countries will receive for climate change impacts that are difficult or impossible to adapt to, such as sudden events like major storms, as well as slower impacts, such as soil becoming too salty for agriculture. Some negotiators want this section removed from the text altogether.

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