Australian Ethical’s Managing Director, Phil Vernon, explores what we might be able to expect from business at the COP 21 Summit – and there’s some good reasons to be optimistic.
Two degrees: it might not sound like much, but the future of our planet depends on it. In December this year the world will watch expectantly as 40,000 delegates descend on Paris for the latest UN climate change conference, known as ‘COP 21’. The aim of the conference is to seek a new agreement which applies to all countries to keep global warming below two degrees above pre-industrial levels.
Are we optimistic? The conference comes at a time when urgent action on climate change is critical. The world is already changing from the impacts of global warming of only 0.85 degrees. A two degree world is a vastly different world and the pathways to limit warming to this level will require significant change from “business as usual”.
So we shouldn’t get too comfortable with the target we’ve chosen, nor should we underestimate the risks of not achieving it.
The need to get national governments to commit to a target is critical, as they set the legislative and policy agendas of their home countries which drive action. And there is reason to be optimistic about them securing an agreement. The momentum and pledges by countries (ignoring Australia) to date has been hugely encouraging. In one positive sign, no government has questioned the concept of a target itself, a huge step forward from previous conferences.
But the political sphere is just one aspect. Equally as important are other non-government sectors of the “system” such as business, investors, NGOs and non-national governments (such as states and local councils). These sectors are critical in ensuring action is taken whether or not a political settlement is reached at the national government level.
A failure of past conferences has been that in the absence of political agreement many in the system subsequently washed their hands of responsibility. Domestic governments claimed they couldn’t act unless there was global agreement. And business claimed it couldn’t act unless it had clear policy settings from domestic governments.
In Paris, in an enlightened approach, non-Government actors will be showcased as a formal part of the proceedings. For the first time the UN is keeping track of commitments by companies, cities, and investors – and using these to build momentum for reaching agreement. Along the way these players are publicly committing regardless of whether there is a political settlement. And if we wish to take real action to save our planet, having the commitment of business and investment markets is critical. They are dominant forces on the future of our planet and need to recognise their planetary stewardship obligation regardless of the political outcome. They need to set their own targets for emissions reduction to be net zero within a timeframe based on the science and operate their businesses accordingly. Anything less is immoral.
We have seen numerous commitments by business in the lead up to the conference including commitments by large, significant, global players to emissions reductions targets, internal carbon pricing and commitments to renewable energy. In the investment sector there is the Portfolio Decarbonisation Coalition and the Montreal Pledge encouraging investment and pension funds globally to set targets for emissions reductions. Australian Ethical was one of the first in Australia to sign the pledge, the first in Australia to join the Coalition, and is the only (to our knowledge) investment manager to set a science-based target to decarbonise our entire portfolio to zero by 2050, a pathway consistent with the view of Australia’s independent Climate Change Authority.
Efforts by business and investors will be varied in their level of commitment and ambition. But the operational, legal and financial complexities that sit behind making such pledges and operationalising them are large and should not be underestimated. The pledges that have been given to date represent significant milestones. We need to start somewhere. And we need to continue regardless of the outcome in Paris.
As Christiana Figueres, the UN Climate Chief has said, “Everybody has the obligation now to find out where they are going to be 50 years from now. We have run out of time to be asking the other person to come forward first”.