Setting business priorities on the slow road to COP targets

The stocktake, launched last year at the COP26 UN Climate Change Conference in Glasgow, Scotland, will first be conducted in 2023, and then at five-year intervals.  Following is a summary – from my point of view – of the key topics raised and suggestions put forward at the WBCSD session. The event was conducted under Chatham House rules. 

In the run-up to the next global climate summit – COP27, which begins next week in Sharm el-Sheikh in Egypt – the World Resources Institute reports that, so far, just 24 of the 194 countries party to the Paris Agreement on climate change have announced new or updated emissions-reduction targets since last year’s COP26 meeting. 

If those targets are met, they lead to a combined improvement of only 7% in terms of emission reductions by 2030: a fraction of the 45% reduction by 2030 we need, according to an Intergovernmental Panel on Climate Change (IPCC) assessment report released earlier this year. 

“The time to act is now,” said one participant. “We must scale up ambition. Large companies are being called to assess their impact on biodiversity. Governments are being challenged to integrate biodiversity into policies and regulations. And we must involve smallholders, indigenous peoples, youth, women, and the science community.” 

A theme running throughout the meeting was the need for collective action across and between societies. “As the economy depends on the flow of natural systems, loss of biodiversity affects us all. That means that collective action is needed across governments, the private sector, communities, and individuals,” she said. “Businesses have a critical role to play in this to show that business as usual is no longer a viable solution.” 

The meeting also highlighted the need to focus on nature, equity, and climate action, and to develop clear regulations and accountability mechanisms, while also unlocking public finance to de-risk and scale innovation within value chains. 

Innovation and engagement 

A panel with representatives drawn from across Asia, the Middle East, and Europe addressed the concrete collective actions that can be taken to accelerate the shift towards a net-zero, equitable and nature-positive world. 

The need for new ideas was high on the list, along with the need for total engagement from companies. For me, this means that the future will require more innovation and creativity: old formulas need to be rethought. 

I believe developing the innovation culture required will call for a major change in how companies behave, perhaps with CEOs who spend 20-40% of their time on innovation, units that sit next to them at the highest level of the company, and chief entrepreneur officers, and processes that put everyone in a position to come up with ideas. In my view, companies must make it safe for teams and individuals to think differently. 

The role of young people was stressed as a source of change: “In Asia-Pacific and Africa, there are more than one billion young people who can take action contributing to the sustainability development goals. They can work with companies on data issues, technology issues, actions issues, evaluation. Youth can stimulate corporate action and investment and engagement,” said a participant. 

Another noted the continuing difficulties in levelling the playing field between state and non-state actors. “A fertile idea here is public-private partnerships putting together investment packages. Fortunately, we’re starting to see movement in this area, and it should pick up further,” he said.  

Still misaligned 

To date, progress hasn’t happened to the extent needed. “We have directional but not magnitude alignment,” said one participant. “Capital is not engaged on the same level of other leaders. Is that because there’s not enough money to be made? In renewables, yes, it works, but for the core energy transition, with its high capital expenditure, the pressure that is put onto executives on generating returns and on quarterly results in public companies – I don’t think we’ve unlocked that conversation,” he said. 

Connected to this was the “triangle of inertia” arising from business waiting for carbon pricing or other emissions-related rules, policymakers waiting for citizens to accept such policies, and citizens waiting for products or services to be cheaper than current fossil-fuel derived products, added another participant. 

An answer to these obstacles, according to one participant, was reversing the traditional hierarchy of action from global bodies, through governments to communities and citizens. “We need to reverse that order and start with citizens. If they understand [the issues], if they are empowered, then the urgency [for change] can start from the bottom up.” 

The need for stronger accountability frameworks was highlighted to create pressure to ensure that commitments are being kept. “Innovation is great, but we also need to look at social and institutional innovations, not just tech ones,” he said.  

COP questions 

Breakout discussions considered two questions to be addressed at COP28, in Dubai, UAE: What should be the key priorities for policymakers to support private sector action towards the climate, nature and equity agenda, and what are the key challenges that companies still need to be addressed to scale sustainable value chains and industries? 

One suggestion was to focus on areas where incremental progress might open the way for subsequent bigger steps to be realized, such as stepped-up disclosure requirements or oil companies grouping together to reduce methane emissions. 

Building on great groundwork laid by initiatives such as SBTI (Science-Based Target Initiatives) and others, the participants saw a growing space for companies looking to reduce emissions, along with making governments more aware of voluntary efforts in carbon markets and how these could dovetail with official programs.  

Common needs for decarbonization in manufacturing, hydrogen as an energy source, and the better use of already existing data were all also named as issues needing to be addressed, especially in forms that smaller firms could take advantage of.