Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Impact of COP-21 on businesses
April 2016
Cover photo: Petr Kovalenkov
Imapct of COP-21 on businesses
3
Impact of COP-21 on businesses
From the 30th of November until the 12th of December 2015,...
1
The Paris agreement opened for signature on the 22nd
of April 2016. In order for
the agreement to be enforceable, a mini...
Imapct of COP-21 on businesses
2
How will this effect businesses
The good news is that INDCs show that major economies of ...
3
Conclusion
Now the real work starts for countries and companies. The private sector will
play a major role in this plan....
Armela Kokona
Consulting & Analysis
E: Armela.Kokona@Source8.com
T: +44 (0)20 7752 0706
M: +44 (0)7730 598347
Begum Kurkcu...
COP21-Source8-Final
Upcoming SlideShare
Loading in …5
×

COP21-Source8-Final

  • Be the first to comment

  • Be the first to like this

COP21-Source8-Final

  1. 1. Impact of COP-21 on businesses April 2016
  2. 2. Cover photo: Petr Kovalenkov
  3. 3. Imapct of COP-21 on businesses 3 Impact of COP-21 on businesses From the 30th of November until the 12th of December 2015, representatives of 195 nations convened in Paris for the United Nations Climate Change Conference, also known as COP21, to agree a new global climate change deal. On the opening day, the summit welcomed 150 presidents and prime ministers from around the world, as well as mayors, governors and industry leaders from some of the globe’s biggest companies. On the final day of the conference in Paris, an historic accord was reached that commits nearly every country, wealthy and poor alike, to lowering greenhouse gas emissions in order to avert serious climate change risk. At the start of the Paris Climate Change Conference, Bill Gates announced the “Breakthrough energy coalition” consisting of more than 25 investors from 10 countries, including billionaire philanthropists such as Bill Gates, Mark Zuckerberg, and Richard Branson. The partnership will mainly provide early-stage funding to clean energy companies across a range of sectors, such as electricity generation and storage, transportation, and agriculture. What are the important outcomes of the Paris agreement? • Unlike the Kyoto Protocol, which aimed to limit carbon emissions, and had a reduced number of signatories, the Paris agreement is a global accord and aims to limit global temperature increase to below 2 degrees Celsius by the year 2100, and encourages efforts to keep it around 1.5 degrees Celsius. • For the first time, this agreement sets binding commitments (based on Intended Nationally Determined Contributions (INDCs)) for all countries, both developed and developing. • While developed countries are expected to lead the efforts on climate change mitigation, developing countries are expected to increase their efforts. The agreement describes a set of commitments and procedures on how to: • “prepare, communicate and maintain” an INDC; • provide required information for transparency; • communicate and submit new INDC’s every 5 years; and • ‘’represent a progression’’ beyond the previous INDC and show a party’s ‘’highest possible ambition’’ • COP 21 extends the existing goal of the mobilisation of $100 billion per year green climate fund by 2020 through 2025, with a new higher target to be set for beyond 2025.
  4. 4. 1 The Paris agreement opened for signature on the 22nd of April 2016. In order for the agreement to be enforceable, a minimum of 55 countries, or those responsible for at least 55% of global greenhouse gas emissions, needed to sign the agreement. A historic 174 countries and the European Union signed the agreement on the 22nd . December 12, 2015 COP21 Paris Agreement adopted by 195 parties to the UNFCCC April 22, 2016 Paris Agreement is opened for signing April 21, 2017 Deadline for signing Dec Apr Parties can jon by signing the Agreement and deposting instruments of “ratification, acceptance or approval” Apr Parties can join by “accession” Timeline for signature and ratification of the Paris Agreement When will the Paris Agreement take effect? At least representing at least must join 55 55% parties to the UNFCCC of total global GHGS Source: World Resources Institute Source: World Resources Institute “This is a historic day. This is by far the largest number of countries ever to sign an international agreement on a single day” UN Secretar General Ban Ki-Moon 175 parties signed the agreement on 22nd April
  5. 5. Imapct of COP-21 on businesses 2 How will this effect businesses The good news is that INDCs show that major economies of the world are planning to reduce business-as-usual emissions, emissions that would occur without any efforts to reduce them, between now and 2030. Moreover, all developed economies are planning to reduce emissions by at least 25 percent by 2030, compared to 2005 levels. This can only be achieved by the right combination of policy and regulatory measures, investment in green technology, and an increase in R&D spending on renewable energy technologies. According to the study undertaken by E3G, independent experts on climate diplomacy and energy policy, renewables will form approximately 80 percent of new power generation investment by 2030, which in turn should equate to cheaper renewable energy. Other research suggests that within 15 years, solar will be one of the cheapest sources of energy worldwide. Globally, we are shifting towards a low-carbon economy, and with the agreement in Paris, this transition will speed up. As a result, carbon pricing mechanisms will extend globally, and carbon prices will increase after 2020. It is essential to note that energy is the key focus in the conversation about tackling climate change. Thus, countries will develop and implement a range of energy policies that aim to increase investment in energy efficiency, renewable energy, smart grids and storage. Companies will see the need to move away from coal & oil, while natural gas demand will grow and a need for Carbon Capture and Storage (CCS) will appear. In light of the above points, the following major implications of the agreement for businesses can be expected: • GHG accounting and reporting will be mandatory for major industries in all major economies. • Multinational companies will need to comply with different regulations for GHG reporting, targets and mitigation. • A significant focus will shift to the transport / logistics industry increasing efficiency projects through technology, innovation and R&D. • Land use and forestry will be one of the key focus areas that will put many companies under pressure. • The cost of carbon will become increasingly material. o Companies manufacturing raw materials and/or producing/delivering energy to consumers will be under pressure to reduce the carbon intensity of their products or fear risk of losing market share. o Supply chain sustainability will become crucial. Transparency will become significant and companies will start to track their suppliers in a more rigorous way. o Service provider companies will start to feel more pressure from their customers to reduce the carbon intensity of their operations. All of above will lead to greater investment and innovation in clean technologies and increased efficiency, because companies will not want to lose market share or increase the cost of their operations.
  6. 6. 3 Conclusion Now the real work starts for countries and companies. The private sector will play a major role in this plan. As companies become increasingly aware of the importance of this issue, they will need to analyse their risks, and develop long- term commitments to the initiative. At climate talks, more than 5000 global companies, representing over $38 trillion in revenue, declared commitments to climate change. The Science Based Targets initiative (a joint effort of CDP, WRI, WWF and UN Global Compact) announced in the conference that 114 companies including Ikea, Coca-Cola Enterprises, Sony, Procter and Gamble, Walmart, Kellogg and Dell committed to set emissions reduction targets in line with what scientists say is necessary to keep global warming below the threshold of 2 degrees Celsius. The Science Based Targets initiative works with companies to set science-based emissions targets and only approves corporate targets that meet its strict criteria. Unfortunately, only 10 companies’ targets were initially approved, including Coca- Cola Enterprises, Dell, Enel, General Mills, Kellogg, NRG Energy, Procter & Gamble, Sony and Thalys. The remaining 104 have pledged to set and get approval for their science-based targets, with hundreds of other companies citing emissions reduction targets in their annual sustainability reports and 8,000 companies signing up to the UN Global Compact. Other major coalitions of companies pledged their support at COP21, including We Mean Business Coalition (363 companies), American Business Act on Climate Pledge (154 companies), RE100 Initiative (53 companies) and Oil and Gas Climate Initiative (10 companies). Interviews with key stakeholders at major corporations revealed the following: Unilever chief Paul Polman feels that keeping global warming below 2 degrees Celsius presents an opportunity for business. He said, “Achieving a zero emissions economy is the greatest business opportunity of the century,” adding, “the consequences of this agreement go far beyond the actions of governments. They will be felt in banks, stock exchanges, board rooms and research centres as the world absorbs the fact that we are embarking on an unprecedented project to decarbonize the global economy. This realization will unlock trillions of dollars and the immense creativity and innovation of the private sector who will rise to the challenge in a way that will avert the worst effects of climate change.” Google’s Vice President of Energy states, “the cost of doing nothing in terms of risk and climate effects is so dramatic that there’s almost no other viable alternative than a low carbon business model.” In reference to the Breakthrough Energy Coalition, Microsoft founder Bill Gates said, “The increased governmental research and private investment are to address climate change and to reduce the cost of energy, to reduce poverty. We need to move to sources of energy that are even cheaper than the hydrocarbon energy we use today. We need it to be not only clean, but also reliable.”
  7. 7. Armela Kokona Consulting & Analysis E: Armela.Kokona@Source8.com T: +44 (0)20 7752 0706 M: +44 (0)7730 598347 Begum Kurkcu Energy & Sustainability E : Begum.Kurkcu@mitie.com M: +44 (0)7552 288756 source8.com

×