Why fighting climate change matters now for your business?
Fighting climate change is the Sustainable Development Goal 13 (SDG 13), one of the 17 goals defined by the ONU as part of the 2030 Agenda for Sustainable Development.
Now is the moment for you to integrate the fight against climate change in your strategy and your action plan. Why?
Between the trickle-down effect of the Paris Agreement and the climate change youth movement you have the combined effect of top down policies and a bottom-up movement which push at the same time towards the same direction: your business must contribute to the fight against climate change, and you must start now to figure out how.
1) The Trickle-Down Effect from the Paris Agreement
It works sequentially. Countries agree to a voluntary agreement like the 2015 Paris Agreement, then they develop an action plan, then they issue regulations and laws that change the rules of the game. These new laws and rules gradually nudge investors and private sector actors into new behaviors because new some business models will no longer make sense, some others will become more viable financially. This is a perfect storm for the emergence of new players, and the disruption of incumbents.
- What’s the Paris Agreement? And what are its implications so far?
In December 2015, the Paris Agreement was signed at COP21 between 196 parties with the objective to decrease global warming by 1.5 degrees celsius (or more) compared to pre-industrial levels. By 2024, countries will report on actions taken for climate change mitigation and climate change adaptation. Collective progress will be assessed towards the long-term goal of achieving a climate-neutral world by 2050. And many countries have are already set interim objectives for 2030.
The 2024 target suggests that meaningful actions are likely to be taken over the next 3 years to actively provide new solutions for climate finance for the new investments, support research for new technologies to support climate resilience, and to provide resources for capacity building.
We’re in 2021, six years have passed. 192 have already contributed their first plan for climate action: their Nationally Determined Contributions (NDCs), and 11 have already published their second action plan to date. See registry here. These are fairly short tables between 5 and 10 pages that are worth a glance to know what the countries you live in and/or have business with intend to do.
Momentum. January 2021 and January 2022 are often earmarked as the starting point of many countries’ implementation plans according to the preliminary NDC synthesis report published in February 2021 by the UNFCCC (ONU for Climate Change) here. Its conclusion was an alarming “red flag for the planet” inviting all parties to aim at more ambitious goals by 2030, because the ones that were shared in their preliminary NDCs were insufficient collectively to achieve the 1.5 degree celsius temperature reduction. Now, everyone is bracing for COP26 in Glasgow, scheduled for November 1–12, 2021.
In the end, is the Paris Agreement enough to affect Climate Change? Probably not. But, it’s a start.
- New rules, new financing programs, new opportunities… the European example
For now, the European Union intends to be the first climate neutral continent by 2050 and the EU Green Deal Investment Plan will mobilize EUR 1 trillion over the next decade. Funds will be available through their InvestEU and Just Transition Fund for instance.
In July 2021, the EU has announced some Green Deal measures that are likely to have business implications if and when the legislative proposals are adopted. Here are just a few examples:
(1) the change of their EU Emission Trading System to lower the caps on emissions from certain economic sectors every year (think car industry, aviation industry, etc).
(2) the introduction of EU Carbon Adjustment Mechanism (CBAM) that will force importers to pay a levy to offset the carbon costs. This will have a seeping effect on the global actor of the European Supply Chain (think all business exporting to Europe).
(3) new objectives to remove carbon from the atmosphere by natural sinks (think Forestry, Agriculture, etc) by 2030.
Once adopted, the new regulations will create new taxes, new subvention mechanisms, new rules that will create a tunnel of opportunities. A moment when existing business models can be disrupted, when stakeholders can find new sources of funding. Some business initiatives will no longer be viable, others will find their epiphany. The next 3–5 years will be pivotal to the Climate Change roadmap as private sector companies will be gradually reckoning with the business implications of the Paris Agreement and their role in the picture.
2030 is around the corner. Change does not happen overnight. Systemic change is even more fleeting, considering the delay between action, reaction, offsets, and outcomes, and the interpretation of the interconnection between them.
This is a reason why you need to pay attention now to the Climate Change fight. Obviously, not the only reason.
2) The climate change youth movement
In August 2018, a Swedish 15-year old high schooler started a movement. A global movement called Fridays for the Future that still exists today. Her name is Greta Thunberg.
At the heart of the movement is the reckoning that if today’s leaders vouch for business as usual (i.e. do not fight climate change), then, there will be no future for the young. The young felt the need to take action and demand that adults be up to the challenge.
In March 2019, young people went on school strike to denounce climate change and the world leaders inaction. The estimated participation? 1.6 million kids across 125 countries.
These kids are your future consumers, your future employees, the future entrepreneurs and the future business leaders. Maybe they are the tip of the iceberg. How many kids of their age believed in the cause but did not participate in the demonstrations?
These kids live in a world that they feel is being taken from them. They feel robbed. How is this early activism going to affect their everyday life decision as consumers, leaders, citizens, voters when they come of age?
They have seen how the seemingly innocuous action of one little girl has inspired them, and has inspired world leaders. Maybe they understand the potential power of one action, the power of the compounded effect. Maybe they will be the ones who will start the disrupting new ventures to fight climate change? Maybe they will be the one demanding for more sustainable products and practices? In that case, you may have to adapt your marketing strategies. Time will tell. But don’t wait until the last minute to figure it out…
Other relevant links.
Washington Post. 5 myths about the Paris Agreement.
EU. Carbon Border Adjustment Mechanism Q&A
US White House. GHG reduction targets for 2030
New Yorker. How Greta Thunberg transformed existential dread into a movement (Book review)
IDB Inter-American Development Bank. Climate policies in Latin America and the Caribbean: Success stories and challenges
