The COP26 climate change summit was both a success and failure. The purpose of the summit was to develop new ambitious goals that would address the current climate emergency. The renewed urgency at COP26 was the result of the recent Intergovernmental Panel On Climate Change (IPCCC) Code Red Report that revealed climate change is occurring faster than previously thought. IPCC has estimated that limiting global average temperature increases to 1.5C requires a reduction of CO2 emissions of 45 per cent in 2030 from the 2010 level.
The pledges made at COP26 Pledges at COP26 will still result in about 2.4 degrees warming. Also, the statement – “increasing the phase-out of coal” was watered down to “phase down” which has been interpreted by some Australian politicians as a green light for burning more coal.
However, the recent Australian Government long term plan for net zero emissions has assumptions for a 50 per cent reduction in the use of coal which will see a major shift away from coal. It also has a heavy reliance on unproven technology of carbon capture and storage. The use of carbon capture and storage is accepted as not being a viable solution to achieving the 1.5-degree Paris Agreement target.
Ultimately, Australia did not go to COP26 with a new 2030 target. Moreover, Australia’s 2030 target was not in line with meeting the Paris Agreement’s 1.5°C limit. Using the “Australian Way” and applying it to all countries, global heating would reach over 3°C and up to 4°C. Additionally, Australia was actively involved in decreasing ambition at COP26.
Given the failure of governments to raise the level of ambition needed to avert the climate crisis, what have businesses done in response and what can businesses do to compensate for the failure of governments?
Business has responded to the urgency of the code red alert by the IPCCC. There have been more net- zero emissions emission pledges at COP26 by companies that recognise this urgency. Forty companies signed up to the Net Zero Carbon Buildings Commitment. The Glasgow Financial Alliance for Net Zero was announced which focussed on carbon risk investment. The alliance sees companies agreeing to transition their portfolios in line with the Paris Agreement and they are being pushed to work towards 1.5C-degree rather than 2C-degree temperature pathways. Then there was the COP26 zero emissions cars declaration signed by countries and, large corporations.
COP26 did have some action directed to phasing out coal. More than 40 countries pledging to commit to exiting from coal. However, COP26 did not have a major impact on investment away from fossil fuels but it is part of a long-term investment shift away from coal. Legislation such as the upcoming US Climate Bill will have a larger impact, if passed, on investments than COP26.
Business can compensate for lack of ambition at the country level by setting net zero emissions targets and updating these to match the urgency of the crisis. Aiming for net zero by 2040 or 2030 would be more in line with the ‘code red alert’ warnings from the IPCC. Having a recognised and robust approach to achieve this will be vital.
An updated standard for businesses aiming for net zero emission was launched just before COP26
by Science-Based Targets; it’s considered the gold standard for business. Under this voluntary scheme, companies set targets and align strategies based on sector-specific methodologies, frameworks, and requirements. This standard dictates a limit of only 10 per cent offsets to ensure the main focus is on the emissions reductions of fossil fuels by a business. To date, 20 per cent of G20 companies have set net zero emissions targets using the Science- Based Targets approach. This might not sound that significant but one of the requirements of the standard is to mandate emissions reductions in the supply chain of a company. This will have a huge ripple effect throughout the global economy as it will force other companies to adopt net zero emissions targets and actions.
A recent report by Griffith University, partnering with Global Compact, WWF and Science- Based Targets, outlined the business case for adopting targets aligned with the 1.5-degree Paris Agreement: – Business Case for Science Based Targets. Our research examined 15 companies that had adopted net zero emissions targets using the Science- Based Target approach in Australia. The research provided many useful insights into how businesses developed a case for net zero emissions using this approach.
We found there were a number of key features in building a solid case for a Science-Based Targets approach to net -zero emissions.
The justification for the net zero emission target is specific to each company. There are, however, some common methods needed to push the case forward.
With any transformation in a company, there was change resistance to consider. Two roadblocks needed to be overcome before the adoption of net zero emissions targets was possible. Interestingly general staff resistance was not a feature in the companies we researched.
Early adopters we have highlighted in our research have proven that net zero emissions target setting can be done and makes business sense. The next era for net zero emissions will see companies aiming for a target of 2030 or 2040 to compensate for the failure of governments and to match business action with the urgency needed to avert climate catastrophe.
António Guterres, Secretary-General of the United Nations
His research interests include sustainable development goals (SDGs) in business and government, climate change policy and management, sustainable tourism and indigenous consent processes. He is also the program director of the Master of Global Development which is a rapidly growing development studies program at Griffith University. He teaches in the Department of Business Strategy and Innovation in such courses as Leadership for Sustainable Business and Research Methods.
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