By Crystal Avila
The second week of the climate conference is wrapping up in Paris, and as various groups make the final push to pressure negotiators for an effective agreement, one set of groups stick out like a sore thumb: big businesses. This year businesses have flocked to the negotiations more than ever before, and are bringing their big promises and purses with them.
On Monday it was announced that Allianz and ABP have joined the Portfolio Decarbonization Coalition, a group of now 25 investors committed to the gradual decarbonization of $US600 billion worth of investments. In addition, it was announced Monday that 26 financial institutions with US$11 trillion in holdings have signed up to voluntary incorporate climate concerns into their advising and investment decisions.
These are only two of many commitments announced by the business community to join the fight against climate change. During the official BINGO (Business and Industry NGOs) and Action Days last week, business leaders reassured climate activists that the private sector is now willing and able to join the movement.
The Inter-American Development Bank (IDB) recently announced that it will administer the disbursement of up to US$450 million in “green bonds” to support energy efficiency projects in Latin America. The IDB also aims to double its lending to climate-related projects by 2020 as part of a joint initiative made by five major multilateral development banks to increase climate financing to US$170 billion by 2020.
Laurent Fabius, the President of COP21, has lauded the efforts made by businesses, encouraging negotiators to not lag behind the achievements set by the private sector. At BINGO day, Jose Meijer, the vice-chairman of the board of trustees of ABP, one of the world’s largest pension funds said: “When will government follow our example, when will government stop subsidizing fossil fuels?”
For many, the new leadership demonstrated by businesses at the conference is unexpected.
The climate action movement has long blamed businesses for prioritizing dirty money over cleaner futures and of using their power to sabotage any meaningful changes. Thus, the presence, or rather the influence, of business interests at the negotiations has always been controversial. However, businesses are beginning to realize that addressing climate change and furthering economic development do not need to be in opposition.
David Runnalls, a Distinguished Fellow and former President of the International Institute for Sustainable Development, explained that businesses are changing their perception of the climate debate. Their strategy is transitioning from green washing to risk management to understanding the economic potential of a shift to renewable energies.
Businesses are urging governments to set a price on carbon in order to set clear policy signals and offer predictability to investors. In order to align economic incentives with the goals of climate activists, investors must internalize the costs of climate change.
At Action Day, Paul Polman, the CEO of Unilever, declared: “24 trillions worth of capital is asking for a price on carbon,” and later adding, “Business as usual is no longer good anymore, moving on to business unusual.” Polman has backed up his impressive rhetoric with even more impressive actions; Unilever has recently announced plans to become “carbon positive” by 2030, setting a high bar for other companies to follow suit.
So does all of this mean that businesses should now be welcomed with open arms at the negotiations? Not exactly. Just like any other major constituency group, the business community is not uniform. While some businesses are beginning to make commendable strides towards climate action, others lag behind, and yet others are actually working against these efforts. But this does mean that we need to acknowledge the great potential of the private sector towards preventing climate catastrophe.
Many have argued that the goal of developed nations to mobilize US$100 billion a year in climate finance by 2020 should be seen as a floor, not a ceiling. As governments struggle to meet even that minimum requirement, we can not ignore the ability of businesses to turn those billions into trillions.
As all eyes turn to the final negotiations, let’s not forget what’s happening on the sidelines. As Polmon argues, business accounts for 60% of GDP, 80% of financial flows and 90% of job growth. Therefore, it is unfair of us to ask governments alone to solve this problem.
In a time when such urgent action is needed, it matters less whether individuals are being driven by economic or moral incentives, but whether we are all being driven towards the same goal.
Businesses have long had a seat at the negotiating table, it’s now a matter of continuing to make sustainable development lucrative for them. As the old saying goes, if you can’t beat them, join them.
Crystal Avila is a member of Brown University’s Climate and Development Lab. The opinions in this article are the sole responsibility of the author.
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