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Two Steps Forward

13 big deals that made COP26 the ‘Business COP’

Amid a controversial climate summit, a baker's dozen of initiatives that will affect the private sector for years to come.


GreenBiz Group

I’m not going to weigh in on whether COP26, the climate conference that concluded over the weekend in Glasgow, Scotland, was a success or failure. There is no shortage of opinions on both sides of that equation, a debate that will no doubt rage right up until COP27, in Sharm El-Sheikh, Egypt, next November.

There were some decidedly positive developments: For the first time, nature is firmly on the climate agenda. The critical role of achieving the 1.5 degrees Celsius degree goal is now baked into the negotiations. The event recognized and advanced the role of Indigenous and local communities. It provided a rulebook for international cooperation through carbon markets. And it formally recognized the need to put an end to fossil fuels, even if it didn’t offer a decisive plan to do so.

I’m a Glasgow-half-full kind of guy, so I’ve been focused on the business leadership that permeated the two-week event.

But not everyone agreed. The final negotiated agreement was called "shameful" (Indigenous Environmental Network), "a betrayal to the millions of people suffering from the climate crisis in developing countries" (Climate Action Now) and a "disappointing end" (Sierra Club).

Good COP/Bad COP, and all that.

I’m a Glasgow-half-full kind of guy, so I’ve been focused on the business leadership that permeated the two-week event, about which I previously wrote. But much more has happened since I wrote that, a seemingly long seven days ago.

As the Financial Review put it:

Something has shifted in the business world. The capital is flowing into the energy transition; investors are holding companies to account for their environmental, social and governance performance; and the risks and costs of going green are shifting in the climate’s favor.

That shift is unmistakable. Witness these business initiatives — many in partnership with governments around the world — announced over the past two weeks.

1. Real money

The Glasgow Financial Alliance for Net Zero — GFANZ, for short — spearheaded by former Bank of England Governor Mark Carney, announced it has more than $130 trillion in assets under management, presenting 40 percent of the world’s total financial assets and managed by 450 firms across 45 nations. It was the largest financial commitment by far at COP.

GFANZ members are required to transition their portfolios in line with the Paris Agreement and are being pushed to work towards 1.5C-degree rather than 2C-degree temperature pathways.

2. Reporting for duty

After great anticipation, the International Financial Reporting Standards Foundation announced a new International Sustainability Standards Board (ISSB), which will merge the Climate Disclosure Standards Board and the Value Reporting Foundation. ISSB intends to have the climate standards ready to go by next April.

As BSR CEO Aron Cramer noted, the new body "will advance with the objective of achieving comparable, consistent and reliable disclosures on climate and other sustainability issues." It will "align incentives, promote wider uptake and enable comparability," he said, as well allocate capital by investors to companies that embrace a long-term approach.

3. First-mover advantage

A First Movers Coalition was launched, "a new platform for companies to harness their purchasing power and supply chains to create early markets for innovative clean energy technologies that are key for tackling the climate crisis." Seven chosen sectors — steel, cement, aluminum, chemicals, shipping, aviation and trucking — account for more than a third of global carbon emissions but do not have cost-competitive alternatives to fossil fuels. The eighth, direct air capture, could cut atmospheric CO2 levels to help achieve net-zero global emissions.

Founding members include Airbus, Amazon, Apple, Bank of America, Boston Consulting Group, Boeing, Cemex, Delta Air Lines, DHL Group, Engie, Fortescue Metals Group, Holcim, Johnson Controls, Mahindra Group, Nokia, Ørsted, Salesforce, Scania, Trane, United Airlines, Vattenfall, Volvo and Yara International.

4. Building progress

More than 40 companies signed up to the Net Zero Carbon Buildings Commitment, pledging to take increased action to decarbonize the built environment across their portfolios and business activities, representing annual revenue of $85 billion. By the end of the decade, these companies pledge to reduce all operational emissions of new and existing buildings; achieve maximum reductions in embodied carbon for new developments and major renovations over which they have direct control; compensate for any residual operational and upfront embodied emissions that cannot be mitigated; and advocate for wider emission reductions via their business activities and report on their impact, to enable and accelerate the sector wide transition to net zero.

5. Poised for takeoff

The Sustainable Aviation Buyers Alliance, which aims to bring together the purchasing power of buyers for alternative fuels and to encourage policy support, opened to new members for the first time. Eighty signatories — both airlines and large travel buyers — have committed to boost the use of sustainable aviation fuel, or SAF, to 10 percent of the global jet fuel demand by 2030.

6. In for the short haul

Twenty airline members of the World Economic Forum’s Target True Zero initiative committed to use new technologies, such as electric, hydrogen and hybrid aircraft, to reduce aviation’s climate footprint. The signatory airlines operate more than 800 aircraft and carry more than 177 million passengers a year and hope to use this influence to create market demand for new types of aircraft. The initiative will prioritize short-haul flights, the easiest to electrify, before turning to longer-range flights.

7. Sea change

Oceangoing shipping embarked on a cleaner voyage. More than 20 national governments signed the Clydebank Declaration for Green Shipping Corridors (the River Clyde flows through the heart of Glasgow) to develop zero-emission shipping routes between ports. These so-called green shipping corridors will act as a testbed for emerging technologies. The aim is to establish at least six corridors by the mid-2020s, which are likely to be shorter routes, and to add "many more routes," including long-haul routes, by 2030.

Meanwhile, the Getting to Zero Coalition, an alliance of companies within the maritime, energy, infrastructure and finance sectors, identified 10 primary shipping corridors that have a high potential for policymaker action. It also issued a call to action for policymakers to set overarching net-zero targets for the sector with pre-2050 deadlines so that zero-emissions options are the default by 2030.

8. Green hydrogen

A group of 28 companies spanning the mining, manufacturing and financial sectors pledged to grow both the demand and supply of green hydrogen. The pledges will create a demand of 1.6 million tons annually of "lower-carbon intensity" hydrogen. This includes replacing grey hydrogen used in refining, chemical and fertilizer sectors, or diesel fuel used in heavy industries such as mining. This would reduce carbon dioxide emissions by more than 14 million tons a year.

9. Tapping the brakes

A group of countries, companies and cities committed to phasing out fossil-fuel vehicles by 2040, as part of efforts to cut carbon emissions and curb global warming. The Glasgow Declaration on Zero Emission Cars and Vans aims to rapidly accelerate the transition to low-carbon emission vehicles and aims to make "all sales of new cars and vans being zero emission by 2040 or earlier, or by no later than 2035 in leading markets."

Signatories include the U.K., Luxembourg, Rwanda, the Australian Capital Territory, California and three of its cities, Buenos Aires, six South Korean provinces and cities, the Indian Chamber of Commerce and corporate partners Volvo, Daimler, General Motors, Ford, IKEA, Siemens and Uber.

10. Putting down roots

A commitment to halt deforestation while restoring land degradation by 2030 has been described as a landmark moment for nature and has been agreed to by more than 100 nations and 30 financial institutions. This represents more than 85 percent of forests globally.

The pledge is backed by nearly $20 billion in public and private funding, including $7.2 billion of newly mobilized private-sector funding. CEOs from more than 30 financial institutions with more than $8.7 trillion of assets under management — including Aviva, Schroders and Axa — also committed to eliminate investment in activities linked to deforestation.

11. The hard stuff

The governments of Canada, India, Germany and the U.K. pledged to purchase low-carbon-emission steel and concrete as part of the Industrial Deep Decarbonization Initiative (IDDI). These two materials account for up to 16 percent of global energy-related CO2 emissions. The public procurement of steel and cement in these countries represents 25 to 40 percent of the domestic market.

Within the next three years, IDDI aims to have at least 10 countries commit to purchasing low-carbon concrete and steel. The initiative will also help countries align their public procurement policies with their steel and concrete purchasing pledges.

12. It’s a gas-gas-gas

More than 100 countries representing more than two-thirds of the global economy, including the United States, Japan and Canada, pledged to significantly cut emissions of methane, a short-lived but powerful greenhouse gas. The Global Methane Pledge commits signatories to reducing their overall emissions by 30 percent by 2030, compared with 2020 levels. The initiative emphasizes making cuts by tackling methane leaking from oil and gas wells, pipelines and other fossil fuel infrastructure.

13. Coalitions of the willing

Other announcements include:

  • Twelve of the U.K.’s major media brands agreed to increase the amount and improve the quality of their climate change storytelling. The signatories — including the BBC, Discovery, ITV and RTE — represent more than 70 percent of the time U.K. audiences spend watching TV and film.
  • The United Nations Global Compact partnered with the International Chamber of Shipping and International Transport Workers to launch a new Just Transition Taskforce for the sector. It will develop policy and business recommendations for developing the skills and jobs needed globally for a net-zero shipping sector. Some 1.7 million people worldwide serve as seafarers.
  • Four of the world’s biggest retailers — H&M Group, Ingka Group (IKEA), Kingfisher plc and Walmart — came together to accelerate a movement in the retail industry to collectively drive climate actions as part of the United Nations’ Race to Zero initiative. Members aim to achieve net-zero emissions by 2050 at the latest, with interim commitments to halve emissions by 2030. Such goals should be backed up by science-based targets.
  • The $10 billion Global Energy Alliance for People and Planet — backed by the Rockefeller Foundation, a string of development banks, IKEA and the Bezos Earth Fund — committed to "deliver transformational programs to accelerate and scale this energy transition in developing and emerging economies, creating 150 million green jobs and avoiding 4 billion tons of greenhouse gases."

Not bad for a fortnight’s work (plus, no doubt, years of collaboration and negotiation). No one is saying these initiatives are sufficient, but they represent a solid foundation on which to increase ambition and action in this decisive decade.

I’ll give the last word to a COP veteran, former Unilever CEO Paul Polman:

"Glasgow should give us hope: The private sector has moved more in the last few years than in my decades in business. But we should be in no doubt about the courage and ambition now required. It’s a big lift, and the coming weeks and months will be critical as we seek to use the commitments made at the Summit to accelerate change. Can business step up in time? Bluntly, it must."

And, it seems, it has. At least for now.

I invite you to follow me on Twitter, subscribe to my Monday morning newsletter, GreenBuzz, from which this was reprinted, and listen to GreenBiz 350, my weekly podcast, co-hosted with Heather Clancy.

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