The Paris Agreement Asks Businesses to Be Bold

By David Wei, Associate Director, Climate, BSR

Ahead of the historic climate negotiations in December at COP21, BSR and our partners at We Mean Business recognized that the Paris Agreement could be more than a diplomatic settlement among nations—that it had the potential to catalyze climate action by business and other sectors. We developed eight specific policy asks to that end and brought them to Paris. Governments heard our call loud and clear, including all eight asks in the final agreement.

Today, as the Business and Climate Summit 2016 kicks off in London, BSR and the We Mean Business coalition are releasing a new report, “The Paris Agreement: What It Means for Business.” The report brings the outcome of the global climate talks back to businesses and investors to help them seize the opportunities and manage risks in this new regulatory and economic landscape.

As we underline in the report, the Paris Agreement is unprecedented in its scope, a defining instrument for the global environment and the global economy, and having an immediate impact as national climate plans are implemented through domestic laws and regulations.

Through the Paris Agreement, the global community is now acting in unison and agreeing to do so for decades to come—an unprecedented action. Countries covering nearly all territorial greenhouse gas emissions, including all of the major economies, are implementing national climate plans to reduce emissions and build resilience. The two largest emitters—the United States and China—were crucial to securing the agreement, and tackling climate change continues to be a strength of their bilateral relationship. Every company, in every sector and geography, now needs to factor climate policy into its operations, regulatory assessments, and investment decisions.

Just a few years ago, scientists projected up to 4.8°C of warming for the end of the century. The national climate plans developed before the Paris talks draw warming down to 2.7°C. The space between 4.8°C and 2.7°C represents a genuine commitment to safeguard the global environment and, more importantly, the creation of a thriving, clean economy. The Paris Agreement defines our economic destination through temperature, financial, and resilience goals, and establishes processes to drive us toward those goals. To reach the temperature goal of holding warming well below 2°C, with a stretch target of 1.5°C, governments have committed to reaching net zero emissions in the second half of this century.

The report examines how countries have committed to reduce emissions and build climate resilience, sector by sector. These commitments are having an immediate effect on business. As governments build an enabling policy environment, the private sector is responding with increased climate action. The We Mean Business action framework now includes 418 companies with total revenue of more than US$8 trillion, and 183 investors with more than US$20 trillion in assets under management, making nearly a thousand ambitious commitments to climate action. More will be announced at the Business and Climate Summit over the coming days.

The Paris Agreement is creating a new normal in climate action for the business community. In this new normal, every company that is serious about climate should:

• Implement a science-based target to reduce emissions, representing individual companies’ contributions to holding warming well below 2°C.
• Develop a strategy to build climate resilience. BSR is launching a resilience and adaptation collaborative initiative (READI) to help companies craft and action these strategies. 
• Apply an internal carbon price in business decision-making to assist with risk management, financial planning, and meeting corporate climate targets.
• Increase board expertise on climate risks and climate reporting.
• Form industry and value-chain partnerships to reduce emissions and build resilience.
• Engage with policymakers to maximize the impact of the enabling policy environments they are creating.

Over the next few years, climate action from the business community has the potential to help course-correct global emissions and put the world on track to hold warming well below 2°C. In Paris last December, 196 countries were bold. Now it is business’ turn to be bold and be recognized.

This blog originally appeared on BSR. Download the report here.