COP21: What’s good for the environment is good for the economy

Climate Change, Inequality

As COP21 continues and the world waits to see if the leaders in Paris can reach a climate saving deal, Ruth Mhlanga, Private Sector Policy Advisor, points to the world’s business communities to play their part. Low carbon supply chains not only help save the planet, but help business stay competitive.

As the world awaits the outcome of the 21st Conference of the Parties world leaders are being watched to see if they will sign a climate saving deal. The workings of business groups at the conference are also under scrutiny. This conference is crucial to giving us a chance of avoiding global temperature rises of 2C, and we are truly going to need all hands on deck if we are to keep that chance afloat.
at the heart of the problem are companies who profits are generated by driving carbon emissions higher
At the heart of the problem are companies whose profits are generated by driving carbon emissions higher. A proposed solution to the carbon problem is carbon pricing, which has seen unprecedented support at COP. Carbon pricing means making sure that emitters of carbon have to pay a cost related to the impacts that their emission shave on the global climate. It can be implemented through a taxation approach or through a cap and trade approach. Indeed the core purpose of carbon pricing is to
change behaviour; any credible calls for carbon pricing need to be accompanied with new business models and new investment paths.

The Prime Minister of Ethiopia pointed out that an important consideration in carbon pricing is that apart from stimulating the reduction of carbon emissions, carbon pricing could potentially be a significant source of finance, and lead to developments in clean technology, which will support climate actions in countries like Ethiopia.

Fossil fuel companies will be most impacted by climate pricing, yet some of them have formed climate groups, which have showed support for carbon pricing and called for ambitious climate deals. Unfortunately, all too frequently we have been burnt by these same companies within the fossil fuel sector, so this spate of announcements
showing support for climate action can only be regarded with scepticism, if not outright incredulity. Especially when it comes to coal, crashing share prices have left most of us in no doubt that the age of coal is over. However, even headline COP sponsor EDF Energy still owns and operates polluting coal plants with no clear end date.

To give the private sector its due, a number of companies have stepped up and off the sidelines and pledged climate action. Through the Lima Paris Action Agenda initiative (LPAA) we can see numerous initiatives tied to important themes such as renewable energy and resilience being highlighted. While there are more companies and they are certainly more vocal than ever before, are these companies the exception or the norm?
Oxfam campaign on climate
The food and beverage industry has come a long way on climate change. Oxfam applauded in 2014 when General Mills and Kellogg’s agreed to meaningfully cut greenhouse gas emissions in their supply chains, after targeted campaigning from our Behind the Brands campaign. Unilever recently announced that it will be 100% renewable by 2030 and phasing out coal by 2020. The run up to COP 21 saw leading food and beverage companies, amongst others, call on world leaders to deliver quick and decisive action on climate change. However, even in the food and beverage sector more needs to be done to reduce emissions in their agricultural supply chains and improve the resilience of smallholder farmers.

Outside this sector other companies have made promising statements, retailer IKEA has pledged 1 billion Euros to help slow impacts of climate change. 2,000 individuals and 400 institutions have committed to divest their money from fossil fuel companies, together representing a remarkable $2.6tn of investments. In addition, the stunning performance of
renewable energy has shown that not only is dropping fossil fuels important and feasible, but that the low carbon future we seek is in reach. 

most companies choose to stand on the sidelines and watch the tragedy of climate change unfold

It is tempting to focus only on the companies and businesses in Paris showcasing different climate initiatives; however this is not the full picture. Unfortunately, most companies choose to stand on the sidelines and watch the tragedy of climate change unfold. This wilful ignorance is propped up by the belief that they can adapt at speed when they need to, but this is a gross underestimation of the complexity involved and time it will take to create the
necessary changes. Supply chains cannot be rearranged at the drop of a hat nor can a business ‘wing it’ during a drought or a flood.

Make history: act on climateClear examples of this are the financial institutions who are woefully failing to account for their investments in fossil fuels. While investors face potentially enormous losses from climate change action that could make vast reserves of oil, coal and gas ‘literally unburnable’, many in the financial community obstinately hold on to and
fund these assets. In doing so they are banking on the world failing to secure a climate deal that keeps us below 2C.

As we wait for the outcome of the Paris talks we should reflect that there was never a choice between what is good for the environment and what is good for the economy. Climate change has made it abundantly clear that acting without due regard for the environment in which we live has catastrophic consequences for people and the economy. The companies and countries that will succeed in the years to come will be those who take strides in low carbon development. Not only because this is the right thing to do, though that should be enough, but that those who embrace both sustainability and
economic goals will gain the competitive edge over those that choose to stand on the sidelines.

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Photo: Celebrities join together in their support of Oxfam’s #eyesonparis campaign


Author: Ruth Mhlanga
Archive blog. Originally posted on Oxfam Policy & Practice.