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Tom Bromwich

COP26: Businesses are the guards against environmental inertia

COP26 is a month and a half away and whilst British concern over climate change has jumped 16 points to 32%, awareness of the landmark summit in Glasgow is comparatively low.

Standing for ‘the 26th UN Conference of Parties’, COP26 has one simple aim: To bring governments, businesses, and non-state actors (tribes, NGOs, campaigns) under one unifying cause: To build on progress made in Paris in 2015 in keeping global temperature increase  below 1.5°c.

Advances have been made with 70% of the world’s economy now covered by net-zero targets, and solar and wind energy becoming more widespread as an alternative renewable energy source. The UK government and businesses have taken leading roles over the last 30 years – the economy has grown 78% whilst cutting emissions by 44%, coal has been virtually phased-out, and they were first to adopt the pledge to reduce carbon emissions by 78% by 2035.

The progress made on the 1.5°c aim however, is less encouraging. The World is currently behind where it should be, and definitely not on track to reach net-zero by 2050, as previously outlined in Paris. COP26 will emphasise on forest and habitat protection, monetary ‘climate aid’ for developing countries, and the role businesses will have to play in order to reach these targets.

The world loses an acre of forest every second. Fires, flooding, and pollution destroy forests and habitats as seen in Tunisia, Indonesia, and Brazil, whilst lives are torn apart. COP21 in Paris created an ‘International Climate Finance Commitment’ to help such countries adopt sustainable strategies to reach net-zero. $100bn annually is raised by developed nations, however, in order to truly mobilise finance, businesses must be involved.

In the last decade, businesses have been the epicentre for small-scale action against climate change. Various corporate environmental aims, such as participating in fairtrade, installing solar panels, or initiating renewable energy projects now come under the ESG umbrella (Environmental, Social, and Governance). ESG (particularly ‘E’) will be front and centre of corporate mindsets leading up to, and following the excitement of COP26.

Companies such as Coca-Cola have adopted slogans such as ‘a world without waste’, 100% recyclable packaging, and have already set a benchmark to other companies, by publicizing their aims to reduce their carbon footprint by 25% by 2030. Likewise, Ford has claimed to have invested $22bn in ensuring that all future cars are carbon-neutral.

Companies tend to publish their ESG reports – for most, it is a point of pride and trying to gain a competitive advantage. COP26 will increase pressure on companies to showcase their commitment to the environment and an ESG company report can inspire public and investor confidence in an organisation, whilst also showing an awareness of risk. 

COP26 is aware businesses will be watching – by creating GFANZ (Glasgow Financial Alliance for Net Zero) which is an alliance of 43 banks (representing $28.5tn), 87 asset managers ($37tn), and 37 asset owners ($5.7tn) whom have committed to net-zero targets and shall do so by integrating ESG-appropriate methods into their operations.

Also watching are companies such as the ESG Foundation, an organisation that encourages all organisations to develop an ESG strategy. The Foundation has a freely available archive of ESG reports to encourage all businesses to start monitoring their environmental, social and governance behaviours.

Alongside the ESG Foundation, the All-Party Parliamentary Group on ESG have made it clear that COP26 will be a vital part of solving the problem of rising global emissions. Chair of the APPG, Alexander Stafford MP has said that “we must make significant progress towards our collective net-zero targets[…]we must pay attention to industry, where thousands of jobs and significant segments of our economy are deployed[…] to decarbonise”. Lawmakers, therefore, are all too aware that industry and business must take a lead in the efforts against climate change.

Whilst governments may be the most visual change-makers on the environmental stage, it is foolish to neglect how businesses are doing a great job in driving efforts behind the scenes. Increasing adoption of ESG can propel businesses into a new era of environmentalism, and hopefully, they will become guards against government inertia and a sliding back of commitment

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