Business and industry representatives from around the world are converging in Bonn this week for COP23—the world’s largest climate summit—to reaffirm private sector commitment to global climate goals and set a roadmap for implementation.
Bonn, 9 November 2017
The 23rd annual Conference of Parties (COP) comes at a time when more companies are committing to leadership on climate action than at any other time in history. As the world business organization, ICC has maintained its full support for the Paris Agreement as it provides the long-term certainty that is needed for companies to plan future sustainable growth.
At the same time, there is a growing recognition of the essential role that business plays in the global climate process. While the Paris Agreement aims to hold the increase in global average temperatures to well below 2°C, current government pledges will only contain the increase in global warming to 3°C or higher. Non-state actors such as cities and businesses have already stepped up to bridge the gap.
Recognising the looming gap between the objectives set out in the Paris Agreement and the track we are currently on, the United Nations has affirmed the need for “urgent action”. As the designated official “focal point” for business and industry within the UN Framework Convention on Climate Change, ICC coordinates business perspective to the UN climate negotiations. Today is Business and Industry Day, a full day event organised by ICC that showcases private sector leadership and action, and provides constructive policy input into the UNFCCC process.
Here are four key priorities for business at COP23:
1. An official channel for business engagement
If it is widely recognised that objectives set out in the Paris Agreement can only be met with a robust and coordinated contribution from business and industry, then the importance of consulting closely with business in the formation, assessment and improvement of countries’ nationally-determined contributions (NDCs) must also be recognised. Business is central to national climate action plans that will affect domestic and international operations, supply chains, planning and investments. This means that business has uniquely relevant insights, technical expertise and case studies that will be critical to ensuring the effectiveness of NDCs.
While business is participating in the implementation of the Paris Agreement, the dialogue could be much more effective. The first priority for business at COP23 is the establishment of a mutually-beneficial interface to include an official and substantive role for the private sector. This could take the form of a structure or channel within the Subsidiary Body for Implementation that functions in a similar way to the Business and Industry Committee to the Organisation for Economic Co-operation and Development.
2. Market-based climate rules
Well-designed market mechanisms can jump-start and support the implementation of NDCs and make the difference in reaching long-term climate goals. Business is ready and willing to make the necessary investment decisions to help drive the economy towards a low-carbon future. However, an enabling policy framework is a prerequisite to major private sector investment decisions.
Common and transparent rules, modalities and procedures must be agreed upon in COP23 negotiations, following the guidance of Article 6 of the Paris Agreement. A necessary first step is establishing a common framework for measuring, reporting and verifying emissions reductions. Business also recommends developing sectoral baselines, standards and approaches for emission reduction levels, in close cooperation with the relevant private sector stakeholders.
3. A commitment to trade-led climate action
There is a key role for trade in designing a policy environment that encourages business to drive the transition to a low-carbon economy. Removing trade distortions on environmental goods such as wind turbines and solar panels can provide a triple win for economic growth, development and the environment.
46 countries are currently engaged in negotiations at the World Trade Organization to eliminate tariffs on environmental goods. COP23 Parties should be committed to concluding this deal. Business believes that the Paris Agreement should be based on clear rules and procedures that avoid setting up trade barriers and are in line with international trade rules. It is not through undermining multilateralism in one global forum that we will make progress in another.
4. A just transition for the workforce
While governments have committed to the Paris Agreement, very few have acknowledged the impact of global climate goals on the labour market or expressed a commitment to ensure a transition for workers that is as smooth as possible. All industrial sectors will be affected by the transition to a low-carbon economy and, as is seen in current debates on globalisation, ensuring broad productive employment is essential to maintaining popular and political support for measuring and combating climate change.
As the primary source of job creation, business is best placed to advise governments on policies that will facilitate the transition of the workforce towards a greener future, whether through re-training or programmes that foster climate-friendly innovation. It is essential that all climate change policy takes into account labour market planning and that business has a key role in this process.