Businesses are trumpeting their efforts to address climate change at the COP21 summit in Paris. A small group is showing the leadership the world needs but, for the most part, the climate neutral businesses the atmosphere needs are nowhere to be found in Paris. In fact, they may only exist in the imagination of marketers.
The Lima to Paris Action Agenda, or LPAA, is an initiative supported by the United Nations, France and Peru, which asks businesses to identify how they are helping save the planet. The LPAA invites business to register their commitments to climate action through the NAZCA portal. And the invitation to register rests on the premise that “businesses have the responsibility to adapt their business models to help meet the challenge of keeping global temperature rises to no more than 1.5-2°C.”
Ostensibly, asking businesses to show how their models are compatible with 1.5°C world is a bold ask. The Carbon Disclosure Project provides companies with a disclosure platform on climate change. By requesting data from companies, investors can see the emission portfolios of the companies, enabling transparency and investor climate risk analysis.
Paul Simpson, CEO of the Carbon Disclosure Project, spoke to The Verb about the LPAA and his organisation. The Carbon Disclosure Project has over 5500 disclosing companies, and referred of about half to the NAZCA to show their climate action. This is a definite sign of progress in raising interest of private enterprise in helping the planet.
But before we get too excited, we must remember these are just voluntary commitments; and most are negligible in relation to the science of a 2°C world. For example, some businesses use $5 a tonne price on carbon, or a single energy efficiency policy. Additionally, many of the companies that made commitments, such as Coca Cola, Wal-mart, and Exxon Mobil Corporation, are not exactly climate crusaders. Some, such as Exxon, are actively undermining progress on climate change.
The exemplars of the Lima to Paris Action Agenda, Paul noted, are a small group of about 100 businesses that are making commitments that credibly align with the science line with a 2°C world. We Mean Business, an initiative of seven non-profit organisation including Climate Group, Carbon Disclosure Project and the B Team, has provided a platform that brings together climate business leaders. We Mean Business includes some big companies, such as Unilver, Honda, and L’Oréal, who have each committed to decarbonising their operations in line with atmospheric realities. Their methodologies are rigorous and verified by independent organisations, including World Resources Institute and WWF.
We Mean Business is a rare group of companies, showing commitments with integrity, and following science over spin. Their transparency, with independent third party verification, means they holding themselves accountable.
Despite their leadership, more than 2000 businesses are less helpful. Many in the NAZCA portal could well be the same old businesses making piecemeal attempts at change. Their participation may be aimed more at exploiting a marketing opportunity rather than addressing the issue or building in structural, cultural and strategic change in their business that accords with climate science. As Naomi Klein pointed out in her book This Changes Everything, we need a constant and critical eye on businesses who say they are acting on climate.
This is not about rejecting capitalism, but being vigilant in knowing how to tell which businesses will exploit and subvert the economies within which they operate, and which businesses will make a positive, or at least neutral, contribution.
Looking to the beyond COP21, how should consumers and investors invite more exemplary climate business leaders to play ball? All participants should work towards changing our economic systems for a happier, healthier, more equitable, and ecologically alive world. There is no silver bullet, but there are some clear metrics we can use to identify which business are genuinely creating the world we need.
Stuart Palmer from Australian Ethical Super, a superannuation fund and investment manager, says creating an ethical framework can help guide investment into companies making positive contributions. Stuart says his fund’s ethical charter directs them to avoid investment in companies that unnecessarily pollute, destroy or waste non-renewable resources, or extract materials harmful to humans or the environment.
The result? “No investment in companies extracting fossil fuels, investment in renewables and energy efficiency, and a target of net-zero emissions across all our investments within the time frame needed to limit warming to a safe level” says Stuart.
Beyond big companies, nimble start-ups are making an impact, too. Energy for the People, which enables a citizen-powered clean energy market, is one example. Not only are they are providing solutions for distributive renewable energy throughout Australia, they have social equity front of mind. Energy for the People has installed renewable energy on a social housing apartment with the cost savings from lower power bills. The cost savings are diverted to training unemployed tenants to get back into the workforce. The company also has a wage cap of three times the national average.
Pollinate Energy is a business that trains entrepreneurs in urban poor areas of India to sell solar lights for households which otherwise burn kerosene lamps for light. This is good news for the climate, as black carbon emissions from wick style kerosene burning is up to 700 times more potent as a greenhouse gas than CO₂ emissions. This leads to a business model focused on improving health, creating jobs, reducing climate emissions and raising living standards.
Business has been part of the causes of climate change, but it also must be part of the solution. It’s up to investors, managers, and citizens to ensure businesses fulfil their part of the social contract, for a cleaner and happier world. Who could want more than that?