Public, Private Sectors Can Work Together on Climate Change
There is often an assumption that international negotiations pertain only to the diplomats and representatives who attend those negotiations and the states they represent. On the occasion of the celebration of the most recent Conference of the Parties to the United Nations Framework Convention on Climate Change, or COP 27, this article aims to briefly describe some of its outcomes and agreements and why these discussions are important to businesses and how they can participate in reaching the goals set through the conference.
It should be noted that individuals increasingly play an important role in these negotiations, either because the issues concern us as the decisions made directly impact individuals and civil society or because of the growing interest that new generations are showing in global issues and the need to address them. In particular, issues related to the environment are transcendent for individuals and our lives.
Similarly, discussions on environmental issues have become of special interest to companies and industries. There is now more clarity on the repercussions that these issues and the negotiations thereon have for business, and vice versa, and special attention is also being given to the ESG policies of businesses.
On Nov. 15, a number of media outlets around the world, including Reforma in Mexico, published editorials calling for action and cooperation among nations to address the climate crisis. In those editorials, they referred to the dependence on fossil fuels and the need to accelerate the transition to clean energy, acknowledging the responsibility of developed countries in creating the conditions that led to the climate crisis and their moral responsibility to help. They emphasized the need for financing from all sectors, and urged the implementation of actions at the national level without waiting for international coordination.
The above serves as an example of the impact caused by climate matters and how actors from different spheres are more aware of the discussions and decisions taken on these issues. In particular, this broadens the range of interest to more groups, which, in good faith, could serve to engage them as well as other individuals in the search and implementation of effective solutions to protect the environment for the benefit of people and communities, especially those that are most vulnerable.
The goal of COP 27 was to work toward the implementation of existing climate agreements to take action on certain essential issues to address the climate emergency, ranging from the urgent reduction of greenhouse gas emissions, strengthening resilience and adaptation to the unavoidable consequences of climate change, to the fulfillment of climate action financing commitments in developing countries.
One of the agreements reached during COP 27 was the establishment of a “loss-and-damage” fund calling for rich countries, including those historically responsible for greenhouse gas emissions, to compensate developing countries for the consequences of climate change. However, this historic decision has not been established in full since there are details on the operation of this fund that still must be negotiated and agreed, such as the decision on who will provide the money and who will be the benefactors.
Another of the most resounding topics was the proposal to phase down the use of fossil fuels as a follow-up move to the decision taken at Glasgow last year to phase down the use of coal. This was a matter that was widely promoted by several organizations and even by several states, including members of the Beyond Oil and Gas Alliance. The parties agreed instead on the promotion of renewables and “low emission” energy.
It has been stated that strong steps have to be taken toward renewable energy so that the international goals can be reached. However, it cannot be denied that the energy transition will depend on a number of factors, including market conditions, and it is frequently concluded that it will not be immediate. In this sense it can be seen that companies, such as the now Total Energies, instead of focusing exclusively on oil and gas are also embracing other forms of energy rather than opting for an immediate transition, showing that the full phase-out of fossil fuels may still take some years.
The above has raised a number of considerations; for instance, in the event that the transition to renewable energies can be achieved sooner, new investments and new facilities in the oil and gas sector will be rendered inoperative and it is feared that such facilities will be abandoned without taking into account the impact that this will also have on the environment and on the objectives and commitments established at the international level. In this case, there is a need for strong and effective regulations on abandonment and decommissioning, on which regulators like ASEA are actively working.
Another of the main topics discussed was the urgent need for deep, rapid, and sustained reductions in global greenhouse gas emissions to limit global warming to 1.5°C above pre-industrial levels. In this regard, although it has been reported that states may not be on track to meet their targets, some efforts were announced. Mexico reported that it will reduce its greenhouse gas emissions by 35 percent by 2030.
Regarding methane emissions, UNEP announced the launch of a satellite system to detect methane emissions and the US announced amendments to its methane regulation to include provisions regarding “super-emitters” that will report to third parties approved by the Environmental Protection Agency. It is worth mentioning that this is a known practice for Mexico, included in its regulations, and it provides private companies the opportunity to participate in some way in the implementation of the provisions.
Possibilities for participation, such as that described above, could begin by awakening the interest of various companies in these issues and negotiations. The participation of the private sector could be transcendental to achieve the objectives and commitments made at these international meetings. As previously noted, the private sector can provide support for the implementation of legal provisions or participate in other mechanisms for environmental protection, such as compensation mechanisms, by means of which, while complying with their legal and environmental obligations, they become involved in some way in activities in favor of the environment.
On the other hand, investments in infrastructure and technological innovation are the usual contributions from the private sector and can be used to address the challenges posed by the climate crisis. Also, companies are changing their policies and supply chains, from a local to a global level, with the aim of setting an example for corporate responsibility.
Also, investors may pay attention to companies’ ESG scores. Although it has been argued that this may not be an accurate mechanism to determine the true commitment and responsibility of companies due to the lack of regulation and consistency of the information presented, it may have served as a good starting point. In this regard, the Securities and Exchange Commissions in the US proposed a rule that would require companies to disclose information on climate-related risks, including information on greenhouse gas emissions, climate, and transition goals.
It should be noted that these issues are often raised in negotiation forums; for example, in 2022, the WTO Public Forum included talks on the environment as part of its discussions toward a sustainable economic recovery. It is usual for negotiations on certain issues to be conducted through discussions among experts on that topic. This highlights the need for a forum in which the voices of experts on various topics, such as climate, environment, biodiversity, economics and business, can be heard. Private sector representatives can serve as a bridge for these experts to exchange ideas and information while providing insight on the impact of decisions made in either area to find solutions that offer lasting results.
Thus, it is possible to conclude that the participation of the public and private sectors is essential to achieve the objectives that will allow us to face the challenges caused by climate change.