COP27: The business imperative

by John Stapel

Reprinted from GreenBuzz, a free weekly newsletter.  Subscribe here .

It's certainly an inauspicious time to be talking about the well-being of the planet.

The global economy is teetering, authoritarian regimes are ascendant, there's an energy crisis, a looming public health tridemic, a globally destabilizing war in Eastern Europe and disruptive mass migration from Africa to Asia to the Americas, among other pressure points.

Amid all that, the nations of the world are coming together to discuss how to solve the climate crisis. And it begs the question: Could a unified, aggressive approach to climate also address the above challenges? If so, is the business world up to the task? And who will pay for it all?

Those are among the cogitations swirling about as I pack my bags to head to COP27 in Sharm el-Sheikh, Egypt, this week. I'm attending, per usual, to observe the business engagement and response to the United Nations climate negotiations and to hear how, and whether, the conversation has evolved.

Pragmatic optimist that I am, I'm not exactly expecting miracles.

93% of companies with net-zero commitments won’t achieve their goals unless they double the pace of emissions reduction by 2030.

This year, money reigns supreme. True, financing the transition to a decarbonized, just economy is a perennial COP topic. But this year, "loss and damage" is a dominant theme, focusing on the expected reparations from richer nations, which historically have generated the lion’s share of greenhouse gases, to the poorest and most climate-vulnerable ones to compensate for the devastation and disruption caused by the climate crisis.

It's a highly contentious and emotional issue seen as "a fundamental question of climate justice," according to Amina J. Mohammed, U.N. deputy secretary-general and chair of its Sustainable Development Group. Some see the negotiations on loss and damage as the litmus test of success for this year’s COP.

Loss and damage is not just about the ability and willingness of governments to pay. Companies are in the crosshairs, too. According to Harjeet Singh, head of global political strategy at the Climate Action Network International, "This is the COP where polluters must be put on the dock and be held accountable."

Or, as the Guardian recently put it: "It’s about holding the biggest fossil fuel polluters liable for the pain and suffering already caused by the climate crisis, separately and in addition to securing climate finance for mitigation and adaptation to help developing nations prepare for what’s coming."

The decades-old "polluter pays" principle is back with a vengeance.

The sums are significant. According to the U.N. Environment Programme’s annual Adaptation Gap Report released last week, the annual costs of adaptation in developing countries "could be between $160 billion and $340 billion by 2030" and "up to $565 billion annually by 2050." Another widely quoted study estimated that developing countries could suffer between $290 billion to $580 billion in annual climate damages by 2030, and up to $1.7 trillion by 2050. That’s just the developing world, never mind those in richer countries — or the global price tag for reducing future greenhouse gas emissions or cleaning up past emissions.

Whatever the number, the actual money being devoted to these matters is inadequate: A recent Swiss Re report found that the world will not reach net zero until 2069 if investment continues at its current pace.

Confronting the chasm

There’s also a performance gap. The U.N.’s recent "Emissions Gap Report 2022" concluded "there has been very limited progress in reducing the immense emissions gap for 2030." According to "State of Climate Action 2022," published last week by a consortium of groups including the Bezos Earth Fund and the World Resources Institute, none of the 40 indicators of systems change it studied are on track to reach their 2030 targets.

That’s at the country level. There’s a similar chasm between ambition and action among companies. According to a new report from Accenture, only a third of the 2,000 large companies it surveyed have publicly stated net-zero targets, and 93 percent of those with such commitments "will fail to achieve their goals if they don’t at least double the pace of emissions reduction by 2030.”

So, with that feeble report card, how is the business world showing up at this year’s COP? For perspective, I turned to Aron Cramer, president and CEO of the sustainable business network and consultancy BSR and a COP veteran. What, I asked, should we expect from companies coming to Egypt this year?

There is "an opportunity to influence governments, especially at a time when governments are at risk of slowing down or turning back because of overall economic conditions," Cramer told me. "I think businesses send a strong symbolic message by showing up in numbers and demonstrating that this is about the real economy, and that the real economy can deliver solutions. That is a crucial message to send to the entire world."

Cramer is one of the leaders of the We Mean Business Coalition, which also includes Ceres, The B Team, CDP, the World Business Council for Sustainable Development and other NGOs. In a joint statement last week, the coalition members identified three priorities for COP27: that companies must go "all in" to cut emissions, to nurture resilient communities and to finance the global transition to net zero. The statement identified specific goals to address each of these challenges during this year’s COP.

The subtext: Don’t let the globe’s many travails slow us down. For example, Cramer said: "It is incumbent on incumbents and government leaders to put a stake in the ground and say, ‘Yes, we are facing energy problems right now. And that is all the more reason for us to accelerate our shift to a clean energy economy.’"

I’ll give the last word here to another COP veteran: sustainable business icon and eternal optimist Paul Polman. "It’s a natural reaction to approach these sorts of summits with cynicism and to brace yourself for disappointment, but I urge you to put away your pessimism; it won’t do us any good," he wrote last week in the run-up to COP27. "Forget tempering your hope with realism, try tempering your realism with hope. This is a battle in which humanity still has everything to play for, and one we dare not lose."

Thanks for reading. You can find my past articles here . Also, I invite you to follow me on LinkedIn , subscribe to my Monday morning newsletter, GreenBuzz , from which this was reprinted, and listen to GreenBiz 350 , my weekly podcast, co-hosted with Heather Clancy.