As COP26 closes, can businesses step in where governments have failed?

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The pledges, targets and commitments came thick and fast during the first week of COP26 in Glasgow. In those first seven days there was a palpable feeling of optimism amid the pavilions, conference rooms and cafes of the vast Scottish Event Campus. 

More than 450 banks and financial institutions - worth $130tn - signed up to the Glasgow Finance Alliance for Net Zero (GFANZ), to help fund the transition to a low carbon economy, while 60 of the UK’s FTSE 100 companies joined the UN’s Race to Zero campaign. There was a deal to halt deforestation by the end of this decade too, backed by more than 100 world leaders, and 40 countries agreed that coal was best left in the ground. 

Pledges unwrapped 

Then, over that first weekend, 100,000 people marched through the streets of the Scottish capital demanding an end to ‘blah, blah, blah,’ and more urgent action against climate change. Journalists began to cut through the spin and unpack the true details of pledges, revealing that commitments around coal were far from binding, while there was nothing to stop the banks that had been so quick to talk up their membership of GFANZ from continuing to fund oil and gas exploration at the same time. 

During the second week, accusations of greenwashing grew, and there was increasing frustration that many of the people and countries most affected by climate change weren’t being given a seat at the negotiating table. The feeling of optimism began to dissipate. 

When the final wording of the COP26 agreement came out, few were were surprised that ultimately compromise had won the day. The Glasgow climate pact was adopted despite a late move by India to change language around the use of coal from “phasing out” to “phasing down”.

But the fact there was a pact allowed governments to claim success and a starting point to strengthen net-zero commitments. This despite climate advisers saying the pledges will not keep warming below 1.5C, while activists talked of a betrayal and a return to business as usual. 

Speaking at the CBI dinner during the first week of the conference, CBI director general Tony Danker had argued that businesses were ready, willing and able to deliver a net-zero world. 

“Leaders everywhere are starting to say that it is the ingenuity and the financial might of the private sector that will get the world to net zero. To match their billions with our trillions,” he said. 

“Well, we accept the challenge. We can, we must and we will make greater commitments, accept deeper accountability and raise more capital for the task.” 

The business case 

So as the dust settles on Glasgow and Egypt prepares to host next year’s jamboree, where does this all leave business? 

“The policies that are on the table, the things that are looking ahead are good… and the pledges are amazing,” says Charlie Kronick, a senior climate campaigner at Greenpeace. But only “if anybody actually acts on them”. 

For activists such as Kronick, pledges are worthless if they’re not mandatory. “The worst [of climate change] could be averted, no question. UK businesses are definitely capable of following the rules, but the rules have to be there,” he says.

Business leaders everywhere are starting to say that it is the ingenuity and the financial might of the private sector that will get the world to net zero

“Unless there are regulations in place that actually set out what it means to align with [limiting warming to] 1.5C and [the climate agreement in] Paris, businesses are going to do what they’re always going to do. They never walk away from the money… voluntary hasn’t worked.” 

Speaking at COP, the chancellor Rishi Sunak indicated he was considering moves towards more mandatory regulations, but Kronick fears progress will be slow. “GDP will be hit much harder by the impacts of climate change than it will ever be hit by regulations,” he says. 

“They know it’s coming but businesses just haven’t got either the mandate from government, or the courage to make it happen now.” 

But if they don’t act, he continues, “you end up with the inevitable policy response, which is a massive crackdown,” with the wrong kind of measures, taken at the last minute, when you already know it’s too late. 

Science-based targets 

“It’s vitally important that the commitments that have been announced actually have more substance and impact than they have had previously,” agrees Barry Clavin, senior ethics and sustainability manager at the Co-op. 

“But we’re also up for the opportunities, as well. We have to start framing this via a more positive lens, in particular for consumers if we’re going to bring them on that journey with us.” 

The Co-op monitors its full carbon footprint, says Clavin, and reports against science-based targets, although he is mindful that “next year we’re already going to have to start setting a new target because everything is going to move so fast. We have to be agile and responsive on this issue probably more than any other.” 

At COP, the Co-op, along with M&S, Sainsbury’s, Tesco and Waitrose, pledged to cut their environmental impact across climate, deforestation and nature in a ‘Retailers Commitment for Nature’ deal with the WWF. 

Other UK businesses also stepped forward, including Burberry with a new biodiversity strategy that will ensure all its key materials are 100% traceable by 2025, and Ovo Energy with a commitment to plant 1 million trees in the next 12 months. 

Call them enlightened, call them pragmatic, but there is a growing cabal of British businesses that is in no doubt that change needs to happen now. But perhaps the biggest challenge for UK companies is encouraging, cajoling and supporting those that haven’t yet pledged to achieve net zero. 

This includes many of the UK’s 6 million SMEs. According to a pre-COP survey from the Federation of Small Businesses (FSB), just 26% have a formal plan in place to combat climate change within their business. 

Small businesses are keen to play their part, but often don’t have the resources, deep pockets and dedicated specialist enjoyed by their larger counterparts, so can find identifying and taking the necessary steps a challenge,” says FSB chair Mike Cherry. 

He calls on the government to provide more support and practical action plans. This includes a Help to Green initiative that offers vouchers for SMEs to spend on environmental products and services, to a scrappage scheme that allows diesel commercial vehicles to be exchanged for grants that can be used towards creating a cleaner electric fleet. 

Clavin supports more collective action too, pointing to the work of the British Retail Consortium in creating a roadmap for the sector, which is so interconnected. Going it alone to solve problems along the supply chain is futile, he says: “The collective is the only way that we are going to get through this.”