As a business leader who wants to move your company forward with sustainability, you are likely aware of COP26 — the annual global climate summit held by the United Nations. Here’s what you need to know about the summit and how you can stay ahead of the curve.
About the Summit
The Glasgow gathering was the 26th COP, or “Conference of the Parties”. The purpose of the annual summit is to ensure countries around the world are on track to reach net zero greenhouse gas emissions by 2050. Ahead of COP26, about 200 nations prepared plans to reduce emissions by the end of this decade. Accountability remains a challenge, but by the end of the summit, the Glasgow Climate Pact – an update from the 2015 Paris Agreement — was reached.
Net-Zero will be the Norm
If your company hasn’t done so already, this is the moment to shift from goal setting to taking action around reducing greenhouse gas emissions. The nearly 200 nations that signed the Glasgow Climate Pact agreed to phase out fossil fuel subsidies. The U.S. is aiming for net zero by 2050, so the opportunity to organize your business around being net-zero has never been better
Follow the Money to Net-Zero
According to the BBC, two-fifths of the world’s financial assets, totaling $130 trillion, are being designated for companies to meet net zero targets. The funding and finances will be directed toward sustainable technologies that reduce or avoid carbon emissions and investment will be diverted from “brown holdings” including coal, oil and gas.
Increased Carbon Accounting for Supply Chains Expected
To reach net zero by 2050, Scope 3 emissions produced from supply chains will be under a microscope. RFPs and renewal contracts are now asking suppliers to measure, report, and reduce greenhouse gas emissions. This is an opportunity to take a closer look at your company’s supply chain, build your baseline, and put systems in place for efficient and effective tracking. Given the time needed to track emissions deep into the supply chain, define and execute initiatives and then track results, the businesses that start sooner will be better prepared to deliver on stakeholder needs and place their organization on a successful path.
Cracking Down on Greenwashing
In 2022, the International Sustainability Standards Board (ISSB) will announce baseline international standards to crack down on greenwashing. Greenwashing is marketing practice used to mislead the public that an organization’s products, goals, and practices are good for the environment. This will help investors and consumers have more accurate information to make business decisions in increasingly ESG-focused world.
A System for Transparency and Disclosure is Needed
Right now, countries are essentially self-reporting and self-policing their own carbon footprints. It’s imperative that governments and corporations alike report accurate numbers if we are to successfully lower global average temperatures. Software to track and measure emissions is needed to do that. Across all industries, using digital methods for carbon accounting transparency will soon be the expectation among key stakeholders.
More to Watch Going Forward
Cooperation Between China and the U.S.
China emits the most megatons of carbon dioxide annually, followed by the U.S. Our world is interdependent: a percentage of China’s CO2 emissions are a result of manufacturing goods for international customers. Reducing carbon emissions is not a task for each country to address alone — it requires international cooperation between both corporations and governments.
Many were concerned about China’s initial absence from the summit, until a surprise announcement to make a deal with the United States. The two countries agreed to meet the Paris Agreement’s goal of slowing the rise of global temperatures to no more than 1.5 degrees Celsius. This is of great interest to the many companies that own facilities or use co-manufacturing in the region.
Though there have been mixed reactions to COP26 from governments, climate activists, and citizens, the directive to corporations is clear: increase engagement, measurement, and target setting of greenhouse gas emissions. Social pressure will likely hold nations accountable, as investors and consumers expect increased communication and measurable progress — not just pledges — around greenhouse gas emissions. Implementing carbon accounting systems now will help the U.S. regain some of its position as a climate leader at next year’s COP27 summit in Egypt.