After what has felt like endless build up and discussion, COP26 is finally underway. Taking place in Glasgow between the 1st and 12th of November, this is the 26th Conference of the Parties – the UN’s annual climate change conference.
This conference in particular has been widely publicised as a pivotal moment in the globe’s response to the climate crisis. Final resolutions are needed to resolve the Paris Agreement once and for all. And this is the first COP to happen since COVID turned the world as we know it upside down.
In official COP26 documentation, Prime Minister Boris Johnson describes that:
“It is with ambition, courage, and collaboration as we approach the crucial COP26 summit in the UK that we can seize this moment together, so we can recover cleaner, rebuild greener and restore our planet.”
Goals for the conference include:
- Securing global net-zero by 2050 through new, ambitious, country-specific targets.
- Protecting and restoring ecosystems in the places most affected by climate change. As well as boosting the resilience of infrastructure and agriculture.
- Mobilising finance to better achieve the above goals.
- Ensuring accelerated collaboration across governments, countries, businesses, and civil society.
So that’s what COP26 means on a larger scale. But what can businesses expect to see from the coming few weeks? And what will it mean for future responsible business strategies?
A renewed focus on emissions
Key to this year’s conference is resolving the Paris Agreement – a 2015 international treaty on climate change. The final piece of the puzzle is Article 6, which remains unresolved following 2019’s COP25 in Madrid.
Article 6 is designed to foster voluntary international cooperation on climate action. And a solution could establish the foundation of an emissions trading system.
A worldwide cap of greenhouse gas (GHG) emissions would ensure a reduction. But countries with low emissions who outperform on their targets could sell their leftover allowances to larger emitters. This supply and demand of emissions will ultimately lead to a global price on carbon. The goal being that excess emissions will prove costly to the biggest polluters, therefore giving greater motivation to reduce their emissions in line with global goals.
Finding a negotiated solution for Article 6 will be a key focus of the coming weeks.
💡 What does this mean for businesses? 💡
It’s likely that a resolution for Article 6 will result in increasing demand for reduced GHG emissions. Even more so than we’re already seeing. Businesses everywhere will have a greater incentive to cut their emissions. Countries risk paying for their excess, or could receive rewards for outperforming on their targets.
New legislation
COP26 is putting climate action on centre stage. And it’ll put mounting pressure on governments around the world to speed up their emission reductions. Achieving the significant cuts needed to meet 2030 targets will require new legislation, something that will directly impact a large number of businesses across the globe.
There’s already been the announcement of upcoming legislation here in the UK:
“The UK will become the first G20 country to enshrine in law mandatory TCFD-aligned requirements for Britain’s largest companies and financial institutions to report on climate-related risks and opportunities.”
“From 6 April 2022, over 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis – in line with recommendations from the Task Force on Climate-Related Financial Disclosures.”
The goal in this particular case is to establish a higher quality and quantity of climate-related reporting. This should encourage more businesses to consider climate targets, as well as the opportunities they have to impact progress for the better.
And this is just one example. We suspect even more legislation will come into play as a result of COP26 discussions and negotiations.
💡 What does this mean for businesses? 💡
The following weeks will be insightful for businesses in terms of what to expect from incoming legislation and what they will be required to implement across their organisation.
By the end of the conference, businesses will have at least a rough idea of what this legislation may centre around. Then they can begin to consider how they may alter their strategies to better meet these future requirements. This will prove integral to identifying and avoiding future litigation risk. As well as empowering businesses to get a head start, working alongside the government to boost climate progress.
Shifts in consumer behaviour
Consumer trends are already shifting towards more sustainable and green operations. 77% of consumers are motivated to purchase from companies who strive to make the world a better place. While 66% are willing to pay more for sustainable goods.
And with all the coverage and discussion surrounding COP26, we can expect a revived consumer interest in responsible business practices.
💡 What does this mean for businesses? 💡
As consumers become more conscious and committed to sustainability, businesses that are making strides toward a more ethical operation will be rewarded. While those who aren’t may be left to face the consequences.
Businesses can expect lower tolerances from consumers when it comes to greenwashing, with increased calls to explicitly evidence environmental and social impacts. And capital will flow more freely toward greener companies, leading to greater opportunities for development and innovation in those furthering the government’s climate change agenda.
Greater innovation and new business models
Technological advancement, the rising price of emissions, and burgeoning risk for less sustainable business practices will all create a significant push toward greater innovation.
As the global response to climate change shifts, so must the day-to-day operations and priorities of business. We’ll know more specifics over the coming weeks, but there’s no question that the outcomes of COP26 will impact the world of business as we know it in many ways.
💡 What does this mean for businesses? 💡
Whether it’s the creation of new products or services, or changing internal systems, businesses will have to think long and hard about the impact they’re having and the opportunities at their disposal for encouraging positive change.
There will also be an increased focus on the measurement and reporting of environmental impact. Whether it’s to comply with legislation (as mentioned above) or simply because consumer expectations make it a non-negotiable for any organisation looking to stay ahead.
The other side of COP26 will be far more nuanced in terms of sustainability and what this means for business. If using Excel spreadsheets for non-financial reporting was problematic before, it’ll only become more so soon.
We can expect COP26 to dominate the news cycle over the next two weeks. But as the discussions and negotiations get underway, they will have very real and tangible impacts on the world of business and your very own operation. Expect significant shifts in attitude and behaviour across all industries.
At Impact, we make measuring and reporting your environmental and social impact easier than ever before. Putting the entire process on autopilot, we’re compatible with all metrics and conversions, allowing you to track your organisation’s progress reliably and in real time. If you want to find out more, get in touch on 0161 532 4752 or book a demo.