COP21: Business reacts to historic climate deal

14th December 2015

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Richard Bromley

Businesses have been given a clear signal that the future economy will be low carbon, according to business experts, scientists and campaigners as 196 countries agreed a global deal to tackle climate change.

Many groups saw the long-term goal expressed in the agreement as critical to boost business involvement in the transformation to a low carbon economy. The stated aim of the agreement is to "hold the increase in the global average temperature to well below 2˚C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5˚C above pre-industrial levels." The deal also states that emissions should be net zero in the second half of the century.

Michael Jacobs, senior adviser at the New Climate Economy project, said: "This gives a very clear trajectory of where the economy is going and sends a very powerful signal to the world's markets."

The 1.5˚C goal was inserted following a powerful campaign by countries most vulnerable to climate change and civil society. "This increases pressure on governments and business to accelerate emissions reduction," Jacobs said.

Emissions reduction pledges submitted by 184 countries have been estimated by various studies to keep temperature rises to around 2.7˚C. The Paris Agreement sets out a system whereby countries will increase ambition over time, returning every five years to report back on mitigation, adaptation and finance.

Edward Cameron, managing director of non-profit organisation Business for Social Responsibility said that the five-year review system would be good for business as it is in line with the innovation cycles of many companies.

Many commentators said that the Paris talks marked a shift in business integration in the UNFCCC process, with involvement in the process rather than merely on the sidelines in a trade fair, as previously.

Craig Bennett, chief executive of Friends of the Earth, said that the Paris talks had been marked apart from previous ones by showing that it was no longer possible to talk about business as "one amorphous mass".

"The business lobby is more split than it's ever been between those significant sections of the community that realises that we have to tackle climate change and that there's a good business case for doing so, and those dinosaurs that are still trapped in their old business models and don't know how to cope with this so will resist the change that's required," he said.

Business involvement in climate change is not mainstream yet but it is starting to move towards that, he said.

However, there was recognition that the emissions reduction goal expressed in the Paris Agreement was extremely challenging. There has been a growing movement for companies to set emissions reduction targets based on science, with 114 announcing pledges to set such targets during the Paris talks.

But these were based on the previously stated global aim to keep temperature rise within 2˚C. "I don't know how rapidly that could be shifted to a 1.5˚C goal because the level of internal planning and buy-in that gets you to a science-based target, especially for those large multinationals with complex supply chains, is arduous," Cameron said.

Companies with science-based targets are likely to need to road-test their plans, and then ramp up the ambition once they are comfortable with them, he said.

Claire Jakobsson, EEF's head of climate policy said that while the agreement is to be applauded, more needs to be done to ensure that the competitiveness of UK manufacturing is not damaged.

"Until such a time when comparable actions are being taken, we must continue to have strong measures in place to ensure that investment, jobs and emissions are not simply off-shored to the detriment of both the UK economy and the global environment.

She called for a major focus on investment in research and development so that UK industries can compete in an increasingly carbon constrained economy.

Business is not mentioned explicitly in the Paris Agreement, as some in the sector had hoped. However, it does recognise the importance of engagement "of all levels of government and various actors", which could include business.

Jon Williams, partner in sustainability and climate change at PwC said that the agreement would broaden the pool of businesses acting on climate change. "Significant shifts in energy, heavy industries, transportation, real estate and agriculture will be expected in the coming decade. Companies will need to factor future climate regulation into their business models both from an opportunity and risk perspective," he said.

Corinne Le Quéré, professor of climate change science and policy at the University of East Anglia and director of the Tyndall Centre for Climate Change Research said: "The emissions cuts promised by countries now are still wholly insufficient, but the agreement as a whole sends a strong message to businesses, investors, and citizens that new energy is clean and fossil fuels belong to the past."

Nick Blyth, policy and engagement lead at IEMA said: "Any agreement was always going to have compromises, but importantly this one includes ongoing review and offers a pathway for escalating change. IEMA members are well placed for the 'business end' for now taking momentum forward. The need for environmental and sustainability skills is stronger than ever."

Some NGOs criticised the agreement for not allowing vulnerable countries to claim compensation for impacts of climate change that could not be adapted to under what is known as "loss and damage". The US and the EU had strongly resisted this being included in the deal.

However, others warned that the lack of wording in the Paris Agreement did not prevent developing countries suing companies for the impacts of pollution they have caused. Earlier this month, a human rights commission in the Philippines agreed to look into whether large international fossil fuel companies are violating the human rights of its citizens by driving climate change.

"This is not the end of the fight around liability, it will put polluters on notice and be continued in other fora," according to Tim Gore, head of policy at Oxfam.

Jacobs said: "It is open to anyone in law to bring an action for damages. However, we haven't had those cases bought so there's no idea whether there's any court that would find that there were damages, so it's just an open question for the future."

The agreement also provides a framework for market mechanisms such as carbon pricing to be used as part of the solution to climate change. Provisions agreed in an earlier draft of the agreement remained in the final version, and enables national emissions trading schemes to be linked, and rules to account for the transfer of international emissions reduction units.

The agreement will be open for signature next April, and will come into force in January 2020.

IEMA has been running a climate change campaign #IEMANoCOPOut, which included a series of webinars. Click here to catch up on Jae Mather, director of the Carbon Free Group, discuss how the profession can take action on climate change. Click here to join IEMA's climate change and energy network.


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