The UN climate change negotiations in Paris last month were vastly different from previous international summits. A new spirit of collaboration and positivity was at the heart of securing a global deal. For the first time ever we now have global agreement that tackling climate change is imperative and that doing so can provide a unique platform to drive long-term, profitable growth. In previous years negotiations had been scuppered by disagreements on responsibility and solutions but the Paris gathering saw world leaders finally recognise their shared responsibility to tackle climate change and preserve the planet for future generations. President Obama described the agreement as representing “the best chance we have to save the one planet that we’ve got”.
An emboldened, positive contribution by the private sector played a big part in enabling an agreement, with governments reassured that business leaders are increasingly willing to take a lead on creating innovative solutions. Many of the technologies we need to limit greenhouse gas emissions are already available to us and the 195 nations present in Paris were therefore able to commit to bold reduction targets in the knowledge that the challenge is not insurmountable. Whereas previously some nations had been reluctant to sign an agreement that might act as a break on economic growth, there is now a universal recognition of the vast opportunity presented by the transformation to a low-carbon economy.
Over the coming years we will need huge changes to business processes, infrastructure, energy generation and transportation and these changes will drive positive and ultimately, sustainable growth for innovators who unlock new market opportunities. Bank of America estimates that the low-carbon economy is already worth $5.5trn a year and the Paris agreement is likely to drive a major upturn in investment. National climate change pledges already commit countries to a massive uptick in decarbonisation and the level of ambition will have to increase significantly to meet the new UNFCCC target of limiting temperature rise to well below two degrees.
According to The New Climate Economy Report, launched by Ban Ki-Moon before the Paris summit, $90trn will be invested in infrastructure in the world’s cities, agriculture and energy systems by 2030. We have an unprecedented opportunity to drive investment in low-carbon growth, bringing benefits including jobs, business productivity, health and quality of life. China invested $90bn in renewable energy last year and plans to build six to eight nuclear plants every year, reaching 110 by 2030.
A leading role for business
DLA Piper joined the heads of major multinationals from Brazil, China, Europe, India and the United States in urging world leaders to reach an ambitious climate deal in Paris. 78 CEO climate leaders – a cross-sectoral coalition facilitated by the World Economic Forum that includes banking, manufacturing, construction and energy companies – extended an open offer to governments to co-design climate solutions. These business chiefs collectively represent $2.06trn in revenue, equivalent to India’s GDP. Importantly, many of them lead companies from outside of the OECD group of developed nations.
The firm also joined major cities, regions, companies and investors from around the globe, representing 150 million people and $11tr, in promising to quickly and effectively help implement the Paris Agreement and accelerate the transformative changes needed to meet the climate change challenge. L’Appel de Paris, or the Paris Pledge for Action, is a call to action in support of the Paris Agreement which brings together a multitude of voices on an unprecedented scale within a single, collective statement:
This landmark pledge is a clear signal that the message sent by the negotiations has been received loud and clear and that cities, regions, business, investors and other non-state actors are now ready and willing to stand shoulder to shoulder, alongside governments, to implement the terms of the agreement.
“There have been a number of significant business commitments flowing from Paris”
Mark Carney, the governor of the Bank of England and chair of the G20’s Financial Stability Board, announced that Michael Bloomberg is to head a new global taskforce aimed at highlighting the financial exposure of companies to the risk of climate change. Separately, the Paris Green Bonds Statement saw global investors representing over $11.2trn in assets under management commit to supporting the development of global markets in green bonds.
The Breakthrough Energy Coalition has been launched by some of the wealthiest figures in the technology sector, including Bill Gates and Mark Zuckerberg, to invest in technologies that can combat climate change. An increasing number of diverse global businesses such as Google, Goldman Sachs, BT and IKEA have also committed to shifting to 100 per cent renewable electricity. Ford announced that the company is spending $4.5bn to expand its electric vehicle portfolio by 2020, to keep pace with changing consumer trends and stricter fuel-economy and emissions standards in key global markets.
The key elements of the Paris Agreement will be adopted in the coming years but the December deal has already had a profound impact on governments, businesses and investors. The global deal only happened because of a collective recognition that acting on climate change is in all of our best interests and the upsides associated with positive action are huge. Paris is a key milestone in the transition to a low-carbon economy and signifies a major shift in momentum.
