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Business Leaders Are Leading the Way on Climate Change

As the December climate summit in Paris (known as COP-21) approaches, some leaders aren’t sitting around waiting to see whether the world will act to keep average global temperature from increasing 2°C or more. But these aren’t political leaders or even the heads of NGOs. To the surprise of some, business leaders are starting to take an active role in shaping the course of the conference.

Last month, the CEOs of 43 large global companies called on governments around the world to take “ambitious” action on a climate change agreement at COP-21. The CEOs published an open letter calling climate change “one of the biggest global challenges that will shape the way we do business now and in the coming decades.” They acknowledged that “the private sector has a responsibility to engage actively in global efforts to reduce greenhouse gas emissions and to help the world move to a low-carbon, climate-resilient economy.”

To deal with the immediate challenges, they called for:

  • Emissions targets for every country;
  • A price on carbon (either through market mechanisms or a tax);
  • An increase in renewable energy research;
  • Transparency and disclosure regarding energy-related financial investments and policies, and
  • An end to deforestation.

The signatories represent companies that generated a combined $1.2 trillion in 2014. They include Volvo, Dow Chemical, IKEA, HSBC, Phillips Lighting, Erikson, Allianz and Schneider Electric.

So why is the private sector turning activist? The action is largely in response to the perception that politicians, without support and pressure, are unlikely to take the kind of aggressive steps that are needed to address the realities of climate change.

Richard Branson, CEO of Virgin, told Reuters news service that “the politicians in Paris need to know business is behind them taking the right decisions and they are not going to damage the world economically by taking these decisions.”

The group, organized by the World Economic Forum, acknowledged that the private sector has “a responsibility to actively engage in global efforts to reduce greenhouse gas emissions, and to help lead the global transition to a low-carbon, climate-resilient economy.” In urging strong international action in Paris, the CEOs noted, “delaying action will be costly and damage growth prospects.” While the companies who signed the letter pledged to cut their emissions, help raise climate awareness and manage climate risks, they all want to take advantage of the growth opportunities of cutting carbon.

These business leaders are taking action not just because they understand the existential risks that climate change poses to business (as well as to the entire planet). They get that. But if there’s one thing business cannot operate without it’s the ability to plan for the future. A price on carbon provides certainty and will allow (and probably trigger) investment in low-carbon initiatives. That’s the kind of certainty business requires in order to plan.

This isn’t the first time the private sector has acted to put pressure on governments to produce tangible results in Paris to address climate change risks. In February, a group of 12 CEOs, calling themselves the “B Team,” advocated a COP-21 goal of global net-zero carbon emissions by 2050. Led by the CEOs of Virgin, Unilever and Tata International, this group called the net zero goal “doable.” It will encourage businesses to plan for and integrate new investments and clean energy research into their business strategies.

And the CDP, teaming with the We Mean Business coalition, has launched a platform where companies can sign up to make specific low-carbon, clean energy commitments.  They call it the Road to Paris 2015. Check out who has already made commitments!

Many leaders of the business community now view transitioning to a low-carbon global economy as both inevitable and necessary. That view is certain to increase the pressure on national governments to take tangible, ambitious actions in Paris.  To an increasing segment of the private sector, failure in Paris is simply not an option.  And business is starting to take steps to prevent failure. Over the next months, we’ll continue to watch and report on developments as the Paris talks draw near.