Business and Climate Summit: Global business comes together in London for action on climate risk
The second annual Business & Climate Summit representing over six million businesses and policymakers worldwide came to a close yesterday in London seemingly undeterred by the turbulence and uncertainty palpable in a city reeling from the U.K. vote to leave the European Union.
It called for swifter government action on climate and the ratification of the Paris Agreement without further delay. As businesses spelt out the practical steps needed, Moody’s Investor Services (parent company Moody’s Corporation NYSE:MCO) announced it would use national climate action commitments put forward as part of the Paris Agreement in its analysis of the credit implications of carbon transition risk.
"The near universal adoption of the Paris Agreement substantially increases the likelihood of coordinated and effective policies to materially reduce carbon and other greenhouse gas emissions over time, which has in turn the potential to become a significant ratings driver in a broad set of industries," said Brian Cahill, Head of the Corporate Finance Group and Public, Project and Infrastructure Finance team in Asia Pacific for Moody’s at the launch of a new report on environmental risk.
"Our baseline scenario is a forecast of the global emissions pathway if all countries were to implement their national contributions put forward as part of the Paris Agreement. While not sufficient to meet a less-than-2°C warming objective, this baseline represents a plausible central scenario, given the current policy commitments of national governments and technology trends,” added Ilya Serov, a senior vice-president at Moody’s..
A subdued tone in London at the start after the Brexit vote was soon ignored and the tone for the summit was set by Christiana Figueres, who as Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) played a key role in obtaining the Paris climate deal last December. She tweaked the well-known motivational U.K. government slogan in preparation for the Second World War of “Keep Calm and Carry On’ by telling the U.K. to “Stay Calm and Transform On” to a low-carbon economy.
London rose to the challenge, at least on the day. “Climate change has not been downgraded as a threat. It remains one of the most serious long term risks to our economic and national security,” said U.K. Secretary of State for Energy & Climate Change, Amber Rudd MP, reaffirming U.K. leadership on action.
“As investors and businesses, you can be confident we remain committed to building a secure, affordable low carbon infrastructure fit for the 21st Century," she added. Ms. Rudd also confirmed that a decision would be taken today on the so-called ‘fifth carbon budget’ which commits the U.K. to a 57 percent cut in emissions by 2032, on 1990 levels.
A global plan for cutting emissions was at the heart of the summit. At its start a report was launched by the We Mean Business coalition and CDP (formerly the Carbon Disclosure Project) with research analysis from the New Climate Institute.
It examined five global initiatives on climate action and found that under current plans, business actions will reduce emissions by 3.7 billion metric tons CO2 equivalent a year, or 60 percent of total emissions cuts pledged in Paris by countries’ Nationally Determined Contributions. However, it says that business emissions cuts could reach around 10 billion metric tons of CO2 equivalent a year, well over halfway to a sub 2°C world, with the right policy environment for enhanced climate action.
“The first priority, I think, is setting carbon price signals everywhere, at levels that reflect the objectives Parties seek to achieve according to their National policies, or Regional policies, as for example for the EU ETS in Europe,” said Gérard Mestrallet, Chairman, Paris EUROPLACE, Chairman, ENGIE SA (EPA:ENGI). Mr. Mestrallet was Coordinator of the COP21 Business Dialogue last December.
Yesterday, as the summit came to a close, under the theme Finance, Innovation and Policy for The Low Carbon Transition, it looked at the scale of action needed. It is estimated that $90 trillion needs to be invested globally in cities, land use and energy infrastructure – doubling current global annual infrastructure investment - between now and 2030 to help secure a low carbon, climate resilient economy.
Governments were urged to translate their ‘Nationally Determined Contributions’ into investment grade policy frameworks as soon as possible and to use carbon pricing as the most efficient way of achieving emission reduction targets.
"Six months on from Paris we are much closer to being able to implement the terms of COP21 than we were at the start. The barriers to investment are lower, the call to action is louder and there is a clear willingness on the part of business and investors to change their ways and adapt their business models. Investors want to invest in sustainable projects and reduce the carbon footprint of their portfolios,” said Stuart Gulliver, Group Chief Executive Officer of HSBC (LON:HSBA).
“With better standardization, enhanced disclosure rules and better incentives for issuing green bonds, the COP21 goals can be met,” he said, stressing the need to work “in unison and at pace with the public sector."
Collaboration was the sentiment in the air as bankers, car manufacturers, oil company CEOs, investors, sustainability experts and global policymakers came together to brainstorm for two days.
As António Pedro dos Santos Simões, CEO of HSBC U.K. put it: “Investors are the ones demanding sustainability now.” The game, it seems, has changed, as the stakes get higher.
Note: Business & Climate summit was convened by The Climate Group and We Mean Business, supported by International Chamber of Commerce, The City of London Corporation, United Nations Global Compact France, World Economic Forum Global Project on Climate Change, World Business Council for Sustainable Development and EPE – Entreprises pour l’Environnement.
Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com