Bonn, a Boon for Business? Top Ways Your Company Can Make the Most of COP23

COP21 in Paris was a watershed moment for government. COP23 in Bonn will be the year for business.

In today’s uncertain geopolitical landscape, businesses have a unique opportunity to step up on climate action, but they need to be informed and they need to be engaged.

Next week, thousands of delegates from government, international organizations, trade unions, business and civil society will gather in Bonn, Germany for the latest round of negotiations under the United Nations Framework Convention on Climate Change (UNFCCC).

This 23rd Conference of the Parties, COP23 as it’s known, will give Paris Agreement signatories the opportunity to assess their progress in implementing climate commitments. It will also enable them to create rules to ensure they’re adhering to the Agreement, while preparing the groundwork for all countries to increase ambitions under their national climate action plans.

The meeting couldn’t come at a better time, as 2017 has been another critical year for the health of the planet.

COP23 coincides with the closing of the 2017 Atlantic hurricane season, likely to be the costliest on record, with a preliminary total of over US$290 billion in damages for hurricanes Harvey and Irma alone. Hurricane Irma was the strongest recorded hurricane ever to form in the Atlantic Ocean; and hurricane Ophelia is the easternmost major hurricane in the basin on record.

With the European Union also reeling from tragic wildfires in Spain and Portugal, and experiencing a doubling in the total number of forest fires in 2017 while deadly wildfires rage across California, delegates should be motivated to infuse the negotiations with the urgency and ambition they deserve.

On one side, we have intense weather events – on the other, governments seem to be losing focus.

Global politics – especially around climate action – continue to be unclear, and the need for distributed leadership among a diverse array of stakeholders across the UNFCCC process is more poignant than ever.

In this context, Bonn could be business’s climate moment. As such, here are the top five issues for companies to engage with and watch out for:

The Marrakech Partnership, go beyond show-and-tell

The Marrakech Partnership for global climate action provides a platform for showcasing successful approaches to reducing greenhouse gases and enhancing climate resilience. The showcasing element is important, but the Partnership is missing a space for a structured conversation between governments and other stakeholders to address the challenges that undermine climate action.

Many companies want to go further and faster towards decarbonization, but don’t know how to get there.

The first question COP23 negotiators need to answer is, “How can governments provide companies with a policy enabling environment that catalyzes their ambition?” Improving the Marrakech Partnership is key to this.

Business should be heard at COP23 - they should be vocal to negotiators about the policy environment they want and the solutions they can bring to the market to accelerate the transformation to a low-carbon world.

The facilitative dialogue, make sure you’re being heard

The Facilitative Dialogue is a process intended to take stock of collective progress towards the long-term goals of the Paris Agreement by speaking to a wide range of stakeholders. It’s also designed to help kick off consideration of the 2020 update to countries’ Nationally Determined Contributions (NDCs).

Over the course of 2017, the Fijian and Moroccan governments have been leading extensive consultations how to get input from other stakeholders: how often will people have the opportunity to give input, can they physically sit in the rooms with negotiators, how will their input be integrated?

A draft design of what the facilitative dialogue will look like is going to be presented during COP23.

For business, the key questions around this process are, “Will this Dialogue lead to stronger collective ambition and not just a review of progress? Will the Dialogue result in more comprehensive national climate action plans? And will companies be invited to engage as partners in the design of the Dialogue and of the domestic policies that follow?”

Business should be involved and contribute to scale ambition of the NDCs to meet the agreed goals.

Climate resilience, prepare for what’s inevitable

Climate change is a significant and material risk to business.

Research in the journal Nature suggests the impact of climate change on the market value of global financial assets to be $2.5 trillion and could be as high as $24.2 trillion under worst case scenarios.

In a recent survey, 72% of suppliers stated that climate risks could significantly impact their business operations, revenue or expenditure, yet only half of these are currently managing this risk.

Governments and the private sector need to find constructive ways to partner in building resilience inside individual companies, across complex global supply chains, and within frontline communities experiencing climate impacts.

This year’s COP will prioritize climate resilience, a timely and welcome focus for business.

Carbon pricing, change the system

Almost 40 countries and more than 20 cities, states and provinces already use carbon pricing mechanisms or are planning to implement them. The current total value of these pricing systems is estimated to be US$52 billion.

Businesses are also calling for a meaningful carbon price. It’s the most efficient means of driving change as it provides the economic signal for investments, operations and procurement of low-carbon products and services.

Governments need to find ways to align carbon pricing mechanisms, ensuring that pricing is credible, predictable and high enough to drive ambition consistent with the Paris Agreement.

Governments must also ensure coherent regulations between national and regional carbon market while establishing robust accounting rules to ensure transparency and good governance. They also must consider the social impacts when designing carbon pricing.

Will new leaders emerge?

The United States’ decision to withdraw the United States from the Paris Agreement will inform the dominant political backdrop to the two-week session. Cities, states and companies have illustrated the diversity of American commitment to decarbonization through their own pledges and action.

But how will the global community respond to US plans?

The first indications suggest a resolute response. Throughout the year, other members of the G7 and the G20 reiterated their determination to implement the Paris Agreement in full. The European Union and China have forged a new bilateral relationship which is emerging as a new engine of climate ambition.

Will global commitment to Paris hold and will new centers of leadership emerge to drive ambition forward?

What’s clear is that business is an implementation partner in reducing emissions and therefore needs to be fully involved in shaping the next round of national climate action plans.

This is the moment for corporate leadership

The Paris Agreement was a great victory and a testament to the courage, skill and ambition of governments across the globe. As climate action moves from commitments and agreements to implementation and innovation, the role of business becomes more important.

The private sector will be the driver of technological development, the source of the trillions of dollars in low-carbon investments and the force behind emissions reductions across global supply chains.

As we build on the success of Paris, businesses have become full partners in shaping an inclusive and prosperous low-carbon economy.

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