COP21: business leadership a key part of climate action campaign

16 Dec 2015Archived News Dr Peter Holt Climate Change Matters

Energetics' CEO Tony Cooper and head of Strategy, Dr Peter Holt, attended the climate talks at COP21 in Paris.  This article provides a summary of the key features of the new climate deal, as well as significant announcements made over the two weeks of negotiations.  For Australian business, it is clear that Australia now lags the world in the push to decarbonise economies, shift energy generation to renewable sources and foster innovation across business to create technology-driven solutions to climate change. 

Key features of the global climate agreement:

  • The goal is to limit global average temperatures to less than 2oC above pre-industrial levels and to “pursue efforts” to limit increases to 1.5oC.
  • While non-binding, signatories are to review national targets in 2020 and then every five years to increase their greenhouse gas cuts. They must  hold regular global stocktakes of progress towards the goal to limit emissions to below 2oC.
  • $US100b a year in climate finance promised by 2020 will be a floor for ongoing assistance to developing nations.  It will be regularly reviewed along with national greenhouse gas reduction targets, and a new financing goal agreed by 2025.  
  • Recognition that many countries will suffer losses and damage from the effects of climate change, but specifically excluding any liability or compensation claims as a result of the agreement.

Key themes:

Consensus amongst participating nations was strong

COP21 saw the biggest gathering of world leaders outside the UN General Assembly.  A strong driver behind the scenes was the “high ambition coalition”: consisting of the US, all EU states and 79 African countries. Marshall Islands’ foreign minister Tony de Brum, led the coalition over the last 12 months enlisting the support of US President Obama. 

Australia belatedly joined the coalition with Brazil, Switzerland, Iceland, the Philippines, the Seychelles, Luxembourg and Canada.  This coalition led a 1.5oC campaign, and their efforts proved to be a game changer with reference incorporated into the final text.

What some commentators saw as remarkable was the ready support of the ‘Like Minded Developing countries group’, comprising of nations such as China, India and Saudi Arabia.  "We think it is balanced," said the bloc's spokesman, representing Malaysia at the talks.  "India agrees. China agrees. Saudi Arabia agrees. The Arab group agrees."

“Big business’ radical climate shift is now unstoppable”

These were the words of US Secretary of State, John Kerry which echoed one of the biggest surprises of COP21 for many observers:  the strength of business support for committing to science based targets, for carbon pricing mechanisms and accelerating the growth in clean technologies and renewable energy sources. 

Business initiatives include:
• In a little over a year, the Montreal Carbon Pledge has been signed by investors controlling more than US$10 trillion in assets.  The pledge requires large investors to commit to measuring and reporting the carbon footprint of their portfolios.

We Mean Business, a coalition through which more than 515 companies and investors have now committed to solid climate actions including science-based emissions reductions.  The group represents $US19.8 trillion assets under management making commitments on climate action.  Australia's Origin Energy became the world’s first energy company to sign up to all seven commitments.  Other Australian companies include AGL, Westpac, ANZ Bank and nab are also signatories.

• The Global Solar Council was launched which is designed to unify the solar power sector and bring together stakeholders from business, politics, and civil society to accelerate the growth of global solar market developments.

• Developing countries are backing solar.  India created an International Solar Alliance, whereby the world’s most vulnerable countries have collectively called for 100% renewable energy.  African nations have created an Africa Renewable Energy Initiative (AREI) to help Africa leapfrog into low-carbon development.

• Google announced they would triple their purchases of renewable energy by 2025, aiming to use 100% clean energy.   During COP21 more than 50 iconic brands pledged to go 100% renewable including Google, Adobe, BMW Group and Coca-Cola.

Science Based Targets.  114 large corporations pledged to reduce emissions in accordance with the 2℃ objective. Ikea, Coca-Cola, Dell, General Mills, Kellogg, NRG Energy, Procter & Gamble, Sony and Wal-Mart are signatories and are implementing plans.  Dell, for example, has pledged to reduce emissions from its facilities and logistics operations by 50% by 2020 (relative to 2011 levels), and to reduce the energy intensity of its product portfolio by 80% by 2020.  Australian companies include Origin Energy, Westpac and Australian Ethical Investment.  

Climate change risk management is a fiduciary duty

Released just before COP21, ‘Fiduciary Duty in the 21st Century’ found that investors are required to integrate ESG issues in order to mitigate risk and identify investment opportunities. Failure to consider all long-term investment value drivers, including climate change, is a failure of fiduciary duty.

Cities to ‘spearhead’ action

So described by the Rockefeller Foundation, the response to climate change adopted by the cities of the world is critical.  Cities and urban areas are responsible for up to 49% of global greenhouse gas (GHG) emissions. In Paris we saw significant developments that were much discussed over the two weeks.
1000 mayors and local leaders from cities including Paris, Las Vegas, Vancouver and Stockholm announced that they would go 100% renewable.
• Finance for cities and regions has been organised at scale, with development banks unleashing billions of dollars ‘in new funding in sector alliances promising to accelerate the development of solar power, green buildings, zero emission vehicles, and various other clean technologies’. 
• Local governments are the largest group making climate commitments on NAZCA (Non-State Actor Zone for Climate Action) platform with over 2200 entries. 
• The 100 resilient Cities of the Rockefeller Foundation, launched in New York supports financially and technically, already 67 local governments and encourages “the most ambitious commitment to city resilience in history“ by adopting the goal that ‘Mayors will allocate 10% of their city’s budget toward resilience building goals and projects, without raising taxes”. 
• The World Resources Institute announced 25 new partners to the Building Efficiency Accelerator, and a coalition including WRI, advanced the Paris Process on Mobility and Climate to position mitigation and adaptation contributions from transport sector.
• The UN announced the Climate Action 2016 conference to deepen and expand action in six focus areas—with cities and transport being key.

Private sector, public sector commitments unlocks billions in clean tech research

• Launch of the “Breakthrough Energy Coalition”, an initiative with Bill Gates, Richard Branson and Mark Zuckerberg committing multi-billion dollars into R&D, with the intention of bridging the so-called “valley of death” which describes the point at which new entrants must scale up to survive and enter global energy markets.  Bill Gates personally committed up to $2 billion.
Mission Innovation was announced which is a commitment by countries to invest more in research on clean energy. 20 countries making the pledge include the U.S., Brazil, China, Japan, Germany, France, Saudi Arabia and South Korea. Each country pledges to double government investment in clean energy innovation and to be transparent about its clean energy research and development efforts.
• Two of the world's largest institutional investors joined the Portfolio Decarbonisation Coalition in which members measure and disclose their carbon exposure (in the form of the carbon intensity of their capital) and to decarbonise a portion of their investments. The Coalition represents 25 investors that are jointly overseeing the gradual decarbonisation of a total of US$600 billion in assets under management.

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