What COP21 means for the future of business

Can corporations inspire world leaders to fight climate change through innovation?

A marked feature of this year’s global conference on climate change was the heightened awareness of the role of business in tackling environmental issues and contributing to the green economy.

When the IMF accounts for the cost of climate change and environmental damage it estimates the global fossil fuels subsidy at $5 trillion annually, making renewable energy a much more persuasive option. Much of the debate around carbon pricing at COP21 sought to fundamentally distort investment by charging for the environmental impact of CO2 emissions.

For business, COP21 was about more than just carbon pricing, it also addressed investment opportunities and innovation. John Danilovich, Secretary General of the International Chamber of Commerce, described the final agreement as providing “business and investors the long-term certainty needed to scale up innovation and investment in climate solutions.”

Decarbonising the economy

During COP21, it was announced that Microsoft, Adobe and Google are committing to source 100% of their energy needs from renewable energies by joining 50 other prominent North American businesses signing up to the RE100 campaign.

Coca-Cola demonstrated leadership with initiatives to reduce short-lived climate pollutant emissions as well as signing the Food and Beverage Leadership Statement on Climate Change, uniting global food and beverage companies to address the impact of global warming. Coca-Cola together with companies such as Unilever, pledged to reduce hydrofluorocarbons (HFCs) by 30% to 50% from refrigerant servicing within 10 years via the Global Food Cold Chain Council.

Consequently, finding ways to address emission reductions is proving an increasingly attractive prospect for the global investor community. As the Carbon Disclosure Project’s Head of Supply, Dexter Galvin, pointed out during a talk at COP21’s Sustainable Innovative Forum (SIF15): “CDP has been data collecting for 15 years and investors are now requesting to see that data.”

Innovative solutions for sustainable development

While the dilemma as to whether businesses and governments could afford not to use fossil fuels was predictably a focus of the climate change conference, a pragmatic emphasis on the returns from renewable energy investments revealed opportunities for business in a sustainable future.

U.S. Secretary of Energy Ernest Moniz commented that in the U.S. alone, the fledging solar industry has already created 175,000 new jobs.

The Breakthrough Energy Coalition, which includes visionary entrepreneurs such as Bill Gates, Mark Zuckerberg and Jeff Bezos, pledged to invest in early stage green technologies and support the government backed ‘Mission Innovation’ initiative in countries such as Canada, the United Kingdom and the United States.

Peter Schwarzenbauer, a member of the BMW Board of Management, summarised the prevailing mood when he said: “The time for ‘should’ is over, it’s a ‘must’ that we change now.” BMW’s efforts were recognised at COP21 with the “Momentum for Change” award for its fast charging infrastructure projects in North America. Following COP21, Ford announced that over 40% of their range of vehicles would be available in electrified versions within five years. BMW Group and Ford are clearly showing the way forward as sustainable global companies.

The circular economy, a term for an industrial economy that produces no waste or pollution, has already attracted significant corporate recognition and investment. A notable example being the American label giant Avery Dennison who recently introduced a new adhesive technology to facilitate clean glass recycling. Coca-Cola is also a champion of the circular economy concept. The Atlanta-based company communicated during COP21’s SIF that it has returned over 153bn litres of water to global communities this year alone.

Circular economy discussions looked at three factors essential to its success, namely education, collaboration between businesses and governments, and finally, transparency.

The outcome

One of the biggest challenges foreseen by businesses was the uncertainty of which aspects of any agreement would be enforced. However, COP21 concluded with a pact between over 190 countries that French foreign minister Laurent Fabius explicitly deemed “legally binding.”

Carolyn Fairbairn, Director-General of the Confederation of British Industry welcomed the outcome, calling it “a framework for business to invest with confidence”. Paul Polman, CEO of Unilever, summarised the result as “an unequivocal signal to the business and financial communities, one that will drive real change in the real economy.”

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