Business pledges at COP21: Progress or COP out?

Businesses at COP 21 have promised to reduce their emissions, invest in renewables, and support climate policy. But are these commitments true progress or greenwash? Eco-Business gets the view from civil society observers.

While government negotiators are hard at work finalising a global climate change treaty in Paris this week, the private sector has also been busy unveiling a series of commitments that officials are hailing as “unprecedented”.

Civic society groups, however, are divided on whether the pledges reflect a sincere effort by companies to tackle climate change, or if they are merely greenwash.

Initiatives launched by businesses in the two weeks since the conference started include:

  • The Business Leadership Criteria on Carbon Pricing programme, where 65 companies with a total market value of US$1.9 trillion agreed to set an internal carbon price, report it publicly, and called for a carbon market. 
  • The Science-Based Targets initiative, through which 114 companies including IKEA, Coca-Cola, and Kellogg will set emissions reduction targets in line with scientific recommendations for limiting global warming to 2 degrees Celsius.
  • The Responsible Corporate Engagement in Climate Policy programme, where 114 companies will track their activities that influence climate policy, ensure these are consistent, and be transparent about their policy position on climate change. 
  • A move by two of the world’s biggest institutional investors – German firm Allianz and Dutch pension fund ABP – to join the Portfolio Decarbonisation Coalition, a group of investors which has promised to rid their portfolios of high carbon investments. 

These initiatives were presented at the UN Global Compact’s Caring for Climate (C4C) Business Forum on Tuesday, held on the sidelines of the climate conference, which is commonly known as COP21.

The forum is part of the Lima-Paris Action Agenda (LPAA), an initiative by France, Peru, and the UN to showcase commitments by businesses, cities, and civil society to reduce their emissions.

UN Secretary-General Ban Ki-moon welcomed the commitments by companies, noting: “The collective momentum among the private sector for climate action is growing daily, and more companies and investors are leading on climate action than at any time in history.” 

Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change also called these pledges “unprecedented”. 

Some civic society leaders, however, are sceptical about the sincerity of businesses behind their pledges.

What’s behind the scenes?

Jesse Bragg, media director at US-based Corporate Accountability International, questioned the motives of some energy and utility firms, and banks which have investments in these carbon-intensive outfits.

He told Eco-Business: “It’s fair to be sceptical of any corporation making climate commitments, particularly if their business model is predicated on the extraction of fossil fuels or requires cheap energy to survive”. 

Despite their commitments, these organisations may have a vested interest in weaker climate policy, he added.  

A recent report by CAI for example shows that notorious climate laggards like ExxonMobil – which was recently allegedly exposed for lying about climate change for decades – and Shell, which this year embarked on a controversial project to explore oil prospects in the Arctic, but later abandoned it - have also signed up to the LPAA platform.  

The collective momentum among the private sector for climate action is growing daily, and more companies and investors are leading on climate action than at any time in history.

Ban Ki-moon, United Nations Secretary-General

Their participation amounts to little more than greenwash, said CAI in its report.

Bragg added that companies may also be trying to mask their energy-intensive activities by sponsoring the climate conference itself. French bank BNP Paribas, for example, is a COP21 sponsor, but it is also heavily invested in coal.

While the company has pledged not to finance controversial coal mines such as a project by Indian conglomerate Adani in Australia and made other announcements to improve its coal financing practices, it continues to hold coal assets, said Bragg. “Their sponsorship is therefore little more than “a half-hearted attempt at public relations,” he said.

Jonathan Jacoby, policy manager, private sector department, Oxfam America, acknowledged that some companies with a presence at COP are indeed lagging on climate change, but noted that the private sector today is “a tale of two business communities”.

There are regressive firms which try to weaken climate targets, but they are now outnumbered by firms which have good intentions, he noted.

And if the Paris talks deliver a strong commitment on decarbonising the global economy, “fossil fuel companies will have to be less complacent about diversifying their business” to include more sustainable energy sources, noted Jacoby. 

Obfuscating climate policy

Bragg also noted that some companies unveiling climate commitments at COP 21 – such as French energy firm Engie – are members of trade associations like the Confederation of Europe Business trade association, which has long opposed efforts by the European Union to set strong renewable energy adoption and emission reduction targets. 

“It’s a lot easier to believe that a corporation is operating in the best interest of the people if it is not behind the scenes undermining the very policies it advocates for,” said Bragg.

What we have seen at COP 21 is unprecedented in terms of the business community’s commitment to align with climate science.

Jonathan Jacoby, policy manager, private sector department, Oxfam America

Companies which are sincere about climate action should distance themselves from these regressive trade associations until the latter shows support for strong targets on reducing emissions, he suggested.

But while some companies have been unconstructive in global climate policy, “what we have seen at COP 21 is unprecedented in terms of the business community’s commitment to align with climate science”, said Jacoby.

He cited Kellogg’s pledge to reduce its own emissions by 65 per cent and its supply chain’s carbon emissions by 2050 as an example of a company which formerly had been been “conservative” on sustainable sourcing evolve into a leader on climate action today.

A good climate agreement will also “enable the very difficult and uncomfortable conversations that are long overdue in traditional trade associations that these companies are members of,” he said.

It will send the message that “there is no legitimate political case for opposing climate action now”, he noted.

Michael Brune, executive director of US conservation group Sierra Club, noted that the company commitments represent an “undeniable momentum” in tackling climate change, and that they are also encouraging Ministers in the negotiations to push for higher emissions reductions targets.

There is reason for “cautious optimism” that the Paris agreement will reflect a strong and ambitious commitment to tackling climate change because businesses, cities, and regional governments have already shown their political and financial support to doing so, he added.

Companies, keep your word

While the commitments are a step in the right direction, it remains to be seen whether businesses will deliver on their promises, said Jacoby. 

“Policies are the first step by which you can hold companies accountable,” he said. “They must demonstrate that they have truly fulfilled their emissions with evidence from third-party auditors.”

But reporting by companies alone is not enough, said CAI’s Bragg. A standardised way of tracking how companies deliver emissions reductions and other goals is essential, and “the best way to do that is through government regulation,” he said.

“You can’t rely alone on corporations to act out of the goodness of their heart, because they are ultimately beholden to shareholders,” he said. “You need governments to introduce strong, abiding regulation and have oversight of the commitments”. 

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