4 Reasons Why Your Company Should Care About COP26
The 26th Conference of the Parties (COP26), taking place from 31 October to 12 November 2021 in Glasgow, will be a crucial event. It is the first time the 197 signatory members of the UNFCCC (United Nations Framework Convention on Climate Change) come together since the 2020 deadline for countries to ramp up their climate efforts in order to meet the targets of the Paris Agreement, agreed on at COP21 in 2015.
Why is COP26 so important? Because frankly, we are running out of time. The latest report of the Intergovernmental Panel on Climate Change (IPCC) stated that the earth’s global temperature will rise by more than 1.5 degrees in the next two decades. But no need to panic, we can still turn this around. And that is why COP26 is so important as it can help the countries agree on concrete climate action to significantly reduce emissions and reach net zero by 2050.
But what does COP26 and the outcome of the conference mean for your business? In the run up to the conference, we summarised the most important things you should know.
What will COP26 focus on?
The COP26 summit has four main goals:
1. Secure global net-zero by the middle of the 21st century & keep global temperature increase below 1.5 degrees
Countries need to come up with ambitious 2030 emission reduction targets, aligned with reaching net zero by 2050. To deliver on those targets, countries will need to accelerate the phase out of coal, speed up the switch to electric vehicles, encourage investments in renewables and reduce deforestation.
2. Adapt to protect communities and natural habitats
The climate is already changing and will continue to do so. The COP26 action plan for this goal involves the protection and restoration of ecosystems, investments in flood defence, warning systems and resilient infrastructure.
3. Mobilise finance
To deliver on the first two goals, developed countries must keep their promise to mobilise at least $ 100 billion in climate finance per year - so far, governments have fallen short of this. On top of that, international financial institutions have to contribute to this goal and work towards unleashing the trillions in private and public sector finance required to secure global net zero.
4. Work together to deliver on the targets
Climate action is a team effort, so all countries have to collaborate to tackle the climate crisis. At COP26, the countries have to finalise the Paris Rulebook (the detailed rules that make the Paris Agreement operational) and accelerate climate action through collaboration between governments, businesses and civil society.
4 reasons why your company should care about COP26
COP26 clearly has the potential to impact businesses in many ways. Here are 4 reasons why companies should pay attention to the summit and its outcomes.
1. COP26 will most likely lead to new climate regulations
COPs have undoubtedly influenced the development of environmental regulations over the past years. A total of 2,037 environmental laws have been passed since the first COP took place in 1995.
Businesses should therefore pay attention to COP26 as it might give them an early insight into where regulations might be heading.
2. COP26 will boost the green finance market
Global sustainable investments have reached a high of $30 trillion in 2019 which is a 68% increase since 2014. With COP26’s goal to mobilise finance to reach net zero, we can expect the summit to boost the green finance market.
As a consequence, investors will increasingly direct capital to greener companies and countries, putting non-sustainable business models at risk. Businesses should, therefore, keep a close eye on any green financing arrangements that are likely to come out of COP26.
3. COP26 will drive consumer behaviour and business revenue
Awareness of the climate crisis influences consumer expectations and behaviour. Already today, 70% of consumers would be willing to pay a premium for brands that act sustainable and environmentally responsible. This trend is likely to be accelerated by COP26.
Companies, therefore, should use the opportunity to adjust their strategies and grow revenues by responding to this trend for sustainable consumption.
4. COP26 will help attract and retain top talent
Google CEO Sundar Pichai recently said that companies that fail to go carbon-free will lose the talent war. Research confirms this as two thirds of Millenials and Gen Z are reluctant to take a job if an employer does not have a strong corporate social responsibility (CSR) agenda.
The new generation of top talent, however, is savvier than ever, so it’s not enough for a business to claim to be green - action counts. Engaging around COP26 and strengthening your sustainability strategy signals that your company is willing to take climate action and will help you eventually win the talent war.
Companies that follow and engage in COP26, and future summits, will be better informed about emerging trends and regulations and, therefore, will have a competitive advantage.
Climate change is the biggest business risk and opportunity at the same time. Companies ready to manage this risk and take actions should therefore pay close attention to COP26 in order to create value from sustainability.
Would you like to discuss how COP26, and other climate-related issues, affect your business? Reach out to us!