COP26 Creates Some Progress, But Still More Action Needed
After two weeks of discussion, over 200 countries signed the Glasgow Climate Pact, marking the end of the COP26 UN Climate Change Conference and delivering some notable achievements.
For the first time, fossil fuels were named as a main driver of climate change and participants called for the phasedown of coal power. Some wished for stronger language around coal, calling for a complete phase-out, but it is clear that the era of coal is over.
Other highlights include more calls to provide climate financing to developing countries and a save the date for COP27 next year, where countries will reconvene around their emissions reduction goals.
Overall, COP26 made significant progress towards addressing climate change. But there is still much to be done to limit global warming to 1.5°C, and the private sector will play a major role in these efforts.
How should business leaders respond to COP26?
Leaders set the tone for their entire company and have a strong voice in whether or not a company takes measurable action against climate change. We know the time to act is now—we must take action on a global scale to stop further warming and reverse the damaging effects already seen.
Leveraging their exposure and influence, business leaders should take the following steps to ensure their companies join the fight against climate change.
Demonstrate thought leadership and develop your unique voice on climate issues.
Business leaders have a high-visibility platform to share information, encourage advocacy, and make change. For example, CEO activism is increasingly common, and research has shown that people want CEOs to take a public stance on social issues.
Demonstrate leadership by participating in industry-specific groups that bring companies together around climate action and share best practices that your company has developed.
Incorporate climate as a key element of your company’s business and policy strategy.
Climate change impacts everyone, and every company should have strategies in place to reduce its environmental footprint and mitigate potential climate risks. Business leaders should ensure their company is adequately prepared by setting a climate mission and embedding it throughout the company.
Champion a comprehensive materiality assessment to inform climate strategy.
Materiality assessments are crucial to understanding how climate change impacts a company’s value chain and operations. The assessment reveals potential risks by engaging key stakeholders, and findings can be used to inform mitigation tactics.
Ensure that your company has actionable and measurable goals.
Every company needs specific commitments and action steps to reduce its carbon emissions based on industry materiality. Commitments hold the company accountable and signal to stakeholders that climate action is a business priority.
To support progress, companies also need science-based targets that are aligned with global goals to limit warming to 1.5°C by 2030. There are many resources available to help companies develop these targets, such as the Science-Based Targets Initiative (SBTi).
Demand robust public disclosure on environmental data and climate action.
If your company makes promises, reporting on progress is imperative. Companies should disclose their environmental impact data, as well as progress made toward net-zero goals. There are many different frameworks to consider, such as the Task Force on Climate-Related Financial Disclosures (TCFD).
Call on suppliers to adopt similar environmental sustainability practices.
Supply chains contribute significant carbon emissions to a company’s overall environmental footprint. Business leaders can help reduce that impact by using their influence to encourage suppliers to make commitments to reduce their greenhouse gas emissions.
Sustainability requirements can be included in a company’s supplier code of conduct to ensure they are doing business with suppliers who have similar climate goals.
Empathetic leadership in climate action—the way forward
The climate crisis will be a defining struggle over the next decades and it requires business leaders to step up and lead with empathy—a core tenet of responsible leadership.
Empathetic leadership means:
- Having a plan in place to support employees and their families who may be negatively impacted by climate destruction.
- Acknowledging and talking about climate anxiety within your company and incorporating concerns into strategy conversations.
- Ensuring that all stakeholders—investors, employees, local communities—are adequately prepared for the future of climate change and how it may impact them.
- Embracing the role that your company has to play in the fight against climate change and taking action to do your part.
COP26 is an opportunity for business leaders to reflect, strategize, and take action. The corporate sector made numerous pledges to address the climate crisis, including a commitment from leading automakers to only sell zero emission vehicles by 2035 and $100 trillion in climate financing from over 450 banks and asset managers by 2050. Now is not the time for empty promises. Regardless of size or industry, every company has the potential to make a positive impact in the journey to net-zero.
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