Although COP26 nearly ended quite literally in tears, as President Alok Sharma reported his ‘deep disappointment’ at the last-minute watering down of the commitment to ‘phase out’ coal, the conference was far from the failure predicted by many. Some serious progress was made.
Acknowledging that “Glasgow has played a valuable role as the first real chance to assess progress since the Paris Agreement,” David Reiner, Associate Professor in Technology Policy at Cambridge Judge Business School, says future climate-change investment rather than words will be the test of COP26. As he suggests in his Final COP26 reflections, “what will ultimately determine genuine progress will be whether we see the many trillions of dollars in public and private investment, which will be needed to address every aspect of the climate problem over the 2020s and beyond.”
Promises and pronouncements by world leaders are welcome in terms of setting the agenda, but COP26 did underline the limitations of global summitry and reminded us that for real change to happen it is the private sector that will have to do much of the heavy lifting. In practical terms decarbonization will require a profound commitment by the private sector to innovating and investing in technological solutions—sustainable manufacturing processes for steel, concrete and the like; rewiring the way we produce and consume food; nature-focused shifts in land and ocean use; building more renewable clean energy capacity; electric vehicles that don’t cost a fortune; and the rest.
For business and the private sector to find this profound commitment it must see practical benefits. While, market forces driven by customer preferences are already influencing the innovation of environmentally sustainable products and services, and interventions such as carbon pricing can harness the profit motive, there are also deeper-seated benefits to business. Benefits that stem from an understanding that the relationship between business and the environment goes two ways.
“The connections between climate change and nature—and the value to business and society from all that nature provides—clean water, clean air, food, fibre, pollination, healthy living environments, and natural defences against flood, forest fire and drought—are increasingly recognized by business, investors, and policy makers,” says Jennifer Howard-Grenville, Diageo Professor in Organization Studies at Cambridge Judge, in the chapter she wrote for a climate leadership toolkit, released at the COP26 by Business Schools for Climate Leadership.
Howard-Grenville points out that all businesses have both impacts and dependencies on nature and these might be direct or indirect:
IMPACTS: “Business activities impact nature by, for example, using fossil-fuel derived energy which contributes not only to climate change but to air and water pollution. Whether such energy is used in a business’ own operations or indirectly within a supply chain or during consumption of a product or service, nature is adversely impacted. Increasingly, business, investors, and policy makers will be called on to take actions and develop instruments to limit ongoing impacts and reverse the effects of those already felt.”
DEPENDENCIES: “In addition to their impacts, many businesses – such as those that rely on agricultural production for food or fibre – directly depend on nature’s provisioning services. As nature is in decline, these companies will find it more difficult or more expensive to source raw materials. For example, the decline in wild pollinators, including bees, already affects 70% of the world’s crop production.”
INDIRECTLY: “All businesses and sectors depend on nature’s regulating services, which include the ability for soils and plants to absorb carbon, habitats to purify water, winds and ocean current to regulate local climates, healthy ecosystems to keep pathogens in check, and many others. Without urgent actions to protect and restore nature’s capacity to provide and regulate, businesses will face increasing costs and disruptions to their operations, and within their value chains.”
FINALLY: “Business and society depend on nature for health and wellbeing, as well as cultural value.”
These impacts and dependencies will increasingly pose operational, financial, regulatory or reputational risks for business. On the other hand, there are significant opportunities for businesses. Howard-Grenville quotes The World Economic Forum prediction that, “by 2030, up to $10 trillion US in annual business value could be created, alongside 395 million jobs, through nature-focused shifts in food, land and ocean use, extractives and energy, and the built environment,” adding that “While business leaders are waking up to the potential, much more action is needed.”
As David Reiner relates, despite the last-minute shenanigans, there was plenty to be pleased about at COP26. Yet only by the private sector rallying to the climate cause will the world see the changes it urgently needs. Businesses and entrepreneurs must be supported by governments—both financially and in terms of the regulatory rulebooks they need to abide by. Public opinion and consumer demand must militate towards a greener future. And above all, business leaders must grasp the deeper-seated benefits to be had from supporting the environmental cause as detailed by Howard-Grenville.
Read Associate Professor David Reiner’s ‘Final COP26 Reflections’
Read Professor Jennifer Howard-Grenville’s chapter: ‘Climate Change and Nature’