Trees
The BBC notes that leaders from more than 100 countries – with about 85% of the world’s forests – promised to stop deforestation by 2030 at COP26. This is seen as vital, as trees absorb vast amounts of CO2.
Similar initiatives haven’t stopped deforestation, but this one’s better funded. However, it’s unclear how the pledge will be policed.
What matters from a corporate perspective is simpler; taking a detailed look at supply chains and ensuring that products and processes aren’t contributing to deforestation in the developing world.
This, like many environmental processes, is tough. Global supply chains are complex and transparency and indeed governance do not easily translate from board rooms in the UK to the claustrophobic streams of the Amazon.
Corruption, violence, bribes and government involvement in supply chain deforestation are by no means uncommon in the developing world.
The recommended approach for many corporates will involve partnering up with big global supply chain watchdogs, who will have the expertise and the experience necessary to both advise corporates and provide the evidence they require that supply chains are sufficiently robust.
The likes of the Roundtable on Sustainable Palm Oil (RSPO) can help corporates tread this complex path, measuring and proving out their supply chain transparency and seeking more sustainable alternatives to supply chains fraught with risk.
And most importantly, emissions
The BBC explains that at COP26, it was agreed countries will meet next year to pledge further cuts to emissions of carbon dioxide (CO2) – a greenhouse gas which causes climate change.
This is to try to keep temperature rises within 1.5C – which scientists say is required to prevent a “climate catastrophe”. Current pledges, if met, will only limit global warming to about 2.4C.
The direction of travel has resoundingly been set; corporates and global governments alike must tackle emissions with both pace and pressure.
The ultimate reality is that any corporate which fails to analyse its emissions and accept its strategy must illustrate a concrete bottom line towards ongoing, hastening emissions cuts is likely to be driven out of business.
Making the initial cuts on emissions is relatively simple for businesses. Quick fixes like procurement of renewable power, LED lighting or a rationalisation of corporate fleets towards electric vehicles should be some of the early steps.
The challenge is that the initial steps are simple. As emissions cuts hasten, so the relative work involved in driving them down further increases exponentially.
This means that early adoption of the COP26 emissions cuts principles is essential. Without such early adoption, corporates may find themselves stranded, having started their journey too late and used up the quick wins just as carbon taxation and other penalties on poor performance really being to tighten.
Did COP26 do enough for business?
The CBI represents 190,000 UK firms employing seven million people. It believes that despite its painfully slow progress, COP26 should be seen as a watershed moment. And a justification, if another were needed, for step-change as opposed to incremental and immediate action as opposed to long term goals.
Any corporate worth its salt needs to hear these words. CBI cites we’re seeing market signals such as Shell’s decision to pull out of the Cambo oil field development, based on the economic case no longer being strong enough and Ford’s stock price soaring on announcing its $30bn investment in EVs.
The number of businesses signing up to the Race to Zero Campaign and associated science-based targets commitments to near-term targets and Scope 3 emissions reporting are also cause for optimism.
No analyst can securely predict any future. But the smart money is reckoning on momentum from COP26 only increasing next year at COP27. Business as usual is simply no longer an option. Not merely for the sake of the environment, but because in today’s new world, profit comes only with environmentally sustainable purpose.
Speaking just days ago, COP President Alok Sharma said climate change threatens catastrophic economic damage. He said car manufacturers such as General Motors, Volvo and JLR have committed to all of their new car sales being zero emissions by 2035 or earlier.
He quoted Larry Fink, writing to the chief executives of companies in which Blackrock invests. “It’s been two years since I wrote that climate risk is investment risk. And in that short period, we have seen a tectonic shift of capital. Sustainable investments have now reached 4 trillion dollars. Actions and ambitions towards decarbonisation have also increased.”
The message appears unequivocal. Corporates must listen.
SEE ALSO: What is a Net Zero Office?