COP26: What corporations should know

The 2021 United Nations Climate Change Conference, also known as COP26, is being held in the UK between October 31 and  November 12, 2021. The event, which will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change, will shape the direction of climate action for many years to come, and businesses need to engage. 

What is COP26?

The 26^th UN global climate summit is a worldwide meeting on climate change and how nations intend to address it. It brings together the signatories of the UN Framework Convention on Climate Change (UNFCCC) – a convention agreed on in 1994. This year, more than 190 world leaders are expected to attend, together with tens of thousands of negotiators, government representatives, businesses and citizens for twelve days of talks. It has been labeled by Alok Sharma, this year’s COP president, as a “make or break” moment for keeping the objectives of the Paris Agreement –signed at COP21 – within reach.

While the commitments set out in the Paris Agreement were far-reaching, they do not come close to limiting global warming sufficiently to avoid runaway climate change, and the window for achieving this is closing. Every five years, Paris Agreement signatories are expected to submit new, and more ambitious nationally determined contributions (NDCs) on emissions reductions. COP26 will be the first time this happens, and hopes are that as many governments as possible submit new NDCs that will keep global warming well below the two degrees Celsius ceiling laid out at COP21, and preferably at 1.5 degrees.

Ahead of the meeting, British Prime Minister Boris Johnson has called on all countries to commit to achieving net-zero emissions by 2050, and for the G20 countries to come forward with stronger 2030 NDCs. So far, 86 countries and the EU27 have submitted new or updated NDCs to the UNFCCC, with others pledging new targets that are yet to be submitted officially.

What are the key goals of COP26?

“Securing a brighter future for our children and future generations requires countries to take urgent action at home and abroad to turn the tide on climate change,” says the UK prime minister. “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.”

To this end, the conference will aim to achieve four main objectives:

Secure global net-zero by mid-century and keep 1.5 degrees within reach

To deliver on this target, countries will need to accelerate the phase-out of fossil fuels, speed up the switch to electric vehicles, and encourage investment in renewable energies.

Adapt to protect communities and natural habitats

Climate change is already a fact of life, and at COP26 commitments will be made around protecting and restoring ecosystems, building natural disaster defenses and warning systems, and promoting resilient infrastructure and agriculture to avoid the loss of homes, livelihoods and lives.

Mobilize finance

Delivering the first two goals will require trillions of dollars in public and private sector finance. At the conference, international financial institutions, as well as developed countries, will be expected to make good on their promise to mobilize at least US$100bn in climate finance per year.

Boost collaboration

The world can only rise to the challenges of the climate crisis if everyone works together. Countries need to manage the increasing impacts of climate change on their citizens’ lives; private finance needs to fund technology and innovation, and companies need to be transparent about the risks and opportunities that climate change and the shift to a net-zero economy pose to their business.

What COP26 means for businesses

Although an ever-growing list of companies has signed up to climate change mitigation and reduction, the vast majority of corporations around the world still haven’t made official commitments to decarbonize.

With strong statements and ambitious commitments expected at COP26, it’s time for businesses to get their net-zero plans off the ground.

What’s more, the outcomes of COP26 will likely give companies certainty about the conditions in which they will be operating over the next few decades – be that carbon taxes, restrictions on fossil fuel use, or new net-zero legislation.

Acting now means that companies can gain a leading edge on what’s to come, as well as becoming part of the conversation as policies are decided. Several large companies are already doing this: in May 2020, 155 firms — with a combined market capitalization of over $2.4 trillion — signed a statement urging governments around the world to align their COVID-19 economic aid and recovery efforts with current climate science. It is now time for the rest of the corporate world to follow.

How businesses can act now

Define your path to net-zero

Companies have the opportunity to start taking ambitious climate action now with science-based emissions reduction targets. Leading companies are already proving that a 1.5°C-compliant business model is possible, and there is evidence that these companies will be best-placed to thrive as the global economy undergoes a just transition to a net-zero future by 2050.

Business Ambition for 1.5°C is a campaign led by the Science Based Targets initiative in partnership with the UN Global Compact and the We Mean Business coalition. It was launched in 2019 by a global coalition of UN agencies, business and industry leaders. It enables business leaders to publicly commit their companies to a net-zero, 1.5°C target and be recognized in the lead up to COP 26 as making a critical contribution to limiting the worst impacts of climate change.

Assess your climate risk

The near-inevitability of carbon pricing as well as growing pressure on firms to report on climate risk mean that this needs to become top of mind for companies across sectors. 

The Task Force on Climate-related Financial Disclosures (TCFD) provides a framework for companies to assess potential climate-related impacts using scenario analysis, effectively evaluating risks to their business, suppliers, and competitors.

Companies that don’t have a handle on their climate risk are in jeopardy: in his recent 2021 letter to CEOs, Larry Fink, BlackRock’s CEO announced that companies should disclose climate-related risks in line with the TCFD recommendations, adding that the firm would now implement a “heightened-scrutiny model” in its active portfolios as a framework for managing holdings that pose significant climate risk, including flagging holdings for a potential exit.    

Make the switch to renewable energy

Currently, over 80% of the energy used in the world comes from fossil sources, and emissions from the energy sector account for around two-thirds of global greenhouse gas emissions. This can’t continue.

A number of leading companies can see what is coming over the horizon and are taking steps to reposition themselves. Making the switch from polluting fossil fuels to clean energy sends a strong signal that, when it comes to fighting climate change, businesses mean
business.

In July last year, Microsoft along with AP Moeller-Maersk, Danone, Mercedes-Benz, Natura & Co., Nike, Starbucks, Unilever, and Wipro created the Transform to Net Zero initiative, with the tech firm committing to develop a portfolio of 500 megawatts of solar energy projects in under-resourced communities in the US. 

Meanwhile, Google pledged in September to achieve 100% renewable energy by 2030, while Apple’s newly-launched Supplier Clean Energy Program has seen 71 manufacturing partners in 17 countries commit to 100% renewable energy for the tech giant’s production as it commits to transitioning the electricity used across its entire manufacturing supply chain to clean sources by 2030.

Furthermore, growing numbers of influential, globally recognized companies have committed to 100% renewable power as part of the RE100 initiative. 

But for the objectives of COP26 to be met, every single company around the world needs to start thinking seriously about its energy transition strategy, and take steps now to execute upon this.  

How Atlas can help

If businesses don’t keep a close eye on the issues discussed at COP26, they risk being consigned to history. COP26 will result in an increased political impetus to meet ambitious climate targets. The direction of travel is clear: the net-zero future is imperative, and companies must act now.

Atlas Renewable Energy was conceived with sustainability at its core. It develops, builds, finances, and operates clean renewable energy projects across the Americas that enable companies to power their operations sustainably.

With a range of services, from renewable power purchase agreements (PPAs) to renewable energy certificates (RECs), Atlas helps large energy consumers across industries manage their transition to net-zero and track their performance against long-term environmental and emissions targets.

To find out more about Atlas Renewable Energy’s approach and how it can help bring your company in line with the objectives of COP26, please contact: [email protected]

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