The question isn't what business can do on climate — it's how to do it

Ahead of COP 21 in Paris, businesses must get more specific about how to achieve global climate action.

On Thursday, hundreds of corporate leaders ended a Business & Climate summit in Paris ahead of the global U.N. climate negotiations slated for December by asking for more aggressive action from government and policymakers.

Business leaders, for their part, pledged to do more themselves by "leading the global transition to a low-carbon, climate resilient economy."

Specifically, the more than 2,000 business leaders from around the world identified three imperatives for success leading into COP 21:

  • The introduction of a "robust and effective" carbon pricing mechanism. Although there was no clear consensus on the mechanism for introducing such a mechanism, carbon pricing was a constant refrain throughout the Business Climate Summit, including from the energy industry.
  • The establishment of a closer alliance between business and governments to make climate policies more mainstream. High-level and regular dialogue between climate negotiators and business leaders is already increasing, as was evident in equal participation in the summit by both policy-makers and business executives.
  • The creation of public funds to leverage private sector finance with the goal of surpassing the $100 billion committed at Copenhagen. Business leaders stressed that de-risking investment in low-carbon investments was critical, especially in developing countries.

Paul Polman, CEO of Unilever, speaking about why business engagement has increased over recent months, commented: "The cost of not doing things is higher than not doing things."

He also noted that solving the climate crisis is a development issue, and without development, there would be no markets for business. In fact, he said, climate is a huge opportunity to find new markets in transitioning to a clean economy. 

The summit claimed to represent 25 worldwide business networks representing 6.5 million companies from more than 130 countries. Discussions are already taking place on staging another summit 12 months from now.

From talk to action

A price on carbon was a major theme of the summit, recognizing that the ability to achieve this goal will depend on how to harmonize the more than 40 pricing schemes currently in force around the world, while ensuring that any mechanism recognizes the importance of supporting developing nations in making the low-carbon transition.

Peter Bakker, head of the World Business Council for Sustainable Development, said carbon pricing would "covert to a global system over time," and would not be solved by the December meeting in Paris.

"We need to be carbon neutral by 2050," said Polman, adding that companies need to commit to 6 percent emission reductions per year to stay within the target of keeping global temperature rise within 2 degrees.

He said that some fossil fuel assets would need to be stranded in order for that to happen, and steps would need to be taken to help energy companies through any related disruption.

Consensus appeared to strengthen during the summit for the need to end fossil fuel subsidies, estimated at $5.3 billion earlier this week by the IMF.

Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, predicted that there definitely would be an agreement at COP 21, and stressed the need for the agreement to include "binding and differentiated" terms.

"Difficulties are still ahead," she said. "The structure of the agreement is clear, but the content — the how — is still being discussed."

"The devil will be in the details," echoed Bruno Lafont, CEO of Lafarge, with the possibility still that there is "not a convergence" of interests needed for achieving the business community's stated goals.  

Even so, some investors, such as Mats Anderson, CEO of AP4, and Philippe Marchessaux, CEO of BNP Paribas-IP, were confident enough to start looking toward the role of COP 22.

"We need to start thinking about what we do after COP 21," Anderson said. Marchessaux added that "COP 22 should be about measurement" of action — no longer about discussion of what that action should be.