COP26: What business should watch
Company considerations for the road ahead
By Jim Meszaros
Global climate leaders will meet for two weeks in Glasgow starting on October 31. A successful COP26 will accelerate governments on their path to mitigating climate risks and provide businesses with the clarity they need to invest in and create opportunities for sustainable growth and innovation.
COP26 will be more than a high-level meeting of world leaders. Thousands of leaders from the private sector and civil society will attend or participate virtually to understand how governments plan to act and what future policies and opportunities they will face as the world shifts toward net zero carbon emissions.
Developing countries are asking for $100 billion in climate mitigation funds. Even if that target is reached at COP26, much greater financing will be necessary.
In advance of COP26, here are five outcomes to watch:
National Targets
Carbon emissions are peaking in many advanced countries but still rising rapidly in developing markets. COP26 includes a process for countries to review and enhance their national pledges to limit carbon emissions. Even though pledges are non-binding, they are reshaping global politics and driving industrial and energy transformations across many countries and business sectors.
Climate Financing
Developing countries are asking for $100 billion in climate mitigation funds. Even if that target is reached at COP26, much greater financing will be necessary. Private sector-led climate financing is growing, with financial institutions, investment funds, venture capital firms and others ramping up resources and commitments — sparking innovation and investments that will reduce emissions.
Policy Landscapes
At COP26, governments may clarify how their climate policies and actions will evolve. Businesses want early insight into where climate regulation might be heading so they can factor these elements into their own sustainability and growth plans. Greater certainty is needed on new environmental regulations and mandates, possible trade actions such as carbon border taxes, and incentives for innovation and investments.
Private Sector Pledges
Many companies have signed on to science-based net zero carbon targets. COP26 is an opportunity for companies to provide their specific plans to meet these targets, such as transitioning to renewable energy, vehicle fleet electrification, promoting sustainable sourcing and supply chains, circularity and other initiatives. At COP26, climate stakeholders will be able to see and judge which companies are leading and which are lagging.
Issues in the COP26 Spotlight
Summit host UK wants COP26 to make progress on “coal, cash, cars and trees.” This means actions that will reduce global coal usage, mobilize financing for developing markets, promote the transition to electric vehicles and reduce emissions from deforestation and forest degradation. UK COP President Alok Sharma gave a speech in Paris this month outlining that he expects further commitments to be made at COP26 in these areas, as well as in reducing methane emissions.
At COP26, governments will address what has and hasn’t been achieved since the Paris Climate Agreement was signed in 2015 and update their plans to reach their Paris targets. Regardless of the outcome of negotiations between countries, corporate actions will largely determine whether national emission targets are realized. When the summit concludes on November 12, companies will have to continue to chart their own journey toward sustainability.
As countries strive to meet their national emissions targets, they will impose new legislation, mandates, regulations and trade policies. There are also new ESG reporting mandates expected.
Here is some guidance for companies to consider in the aftermath of COP26 and into 2022:
Review and update climate (and broader ESG) strategies, actions and reporting
Ask tough questions about whether your approach and strategy still fit into today’s rapidly changing landscape — considering new expectations from regulators, investors, employees and customers. Explore opportunities for bolder or more ambitious sustainability actions.
Anticipate and get ahead of new regulations
As countries strive to meet their national emissions targets, they will impose new legislation, mandates, regulations and trade policies. There are also new ESG reporting mandates expected. Monitor the policy landscape to prepare for changes that could impact business operations.
Prioritize a sustainability culture
Putting in place the right practices and reporting structures is important, but success also requires having a motivated workforce with the necessary resources to foster a sustainability culture across your entire workforce and supply chain. A strong sustainability culture can also attract and retain the best talent.
Communicate your sustainability journey
A company’s sustainability journey will generate stories to communicate, both of successes and challenges. Here are five areas of focus:
- Understand what different stakeholders expect of your company and be prepared to communicate differently — and through a variety of channels — to each unique audience.
- Prioritize communications from the company’s top leadership to drive a sustainability culture across the organization.
- Seek input and validation from civil society partners, experts and local communities where you do business.
- Develop listening tools and respond to feedback.
- Regularly report on progress with accurate and transparent data and stories across different channels and platforms.
Guidelines for in-person participation, with rules on vaccines, travel, quarantines, testing, hygiene and the code of conduct can be found here.
Author
Washington DC | International consultant to governments, multinational corporations and foundations on global economic, trade, development and climate issues.
