This blog post was co-written by Ceres’ Anne Kelly and BSR’s Edward Cameron.
As world leaders prepare to gather for the COP22 climate talks in Morocco, Ceres experts are blogging on low-carbon investor and company actions since the adoption of the Paris Climate Agreement and challenges that remain.
Thanks to the immediacy recognized by so many countries concerning the need to address climate change, the Paris Climate Agreement entered into force much faster than anyone could have anticipated. For the first time, we have a global climate agreement that is unprecedented in terms of ambition, defining for the global economy, and immediate in terms of the impact on domestic policy and business action already gathering momentum. The strong and determined leadership of the United States has been and will continue to be vital for realizing the full potential of the Paris Agreement.
The U.S. leadership attracted other major economies, such as China and Brazil, to assume courageous leadership positions of their own. Most recently, U.S. leadership was evident leading up to and during successful negotiations to address global hydrofluorocarbons (HFCs) through an amendment to the Montreal Protocol.
Domestically, the Obama administration has done what it can, within its authority, to set the U.S. on a path towards decarbonization that is worthy of its diplomatic leadership. The U.S. Environmental Protection Agency’s Clean Power Plan, which has been tied up in courts but appeared to fare well in the latest hearings this September, is a critical early step. While efforts to enhance energy efficiency and to address emissions from the transportation sector are also crucially important, sufficient progress cannot truly be made without swift and decisive decarbonization of the electricity sector.
The Clean Power Plan is critical for reducing carbon emissions in the U.S. —and major businesses recognize this as well. When 110 leading businesses commended the Paris Climate Agreement last spring, they also acknowledged the importance of swiftly implementing the Clean Power Plan to meet the United States’ ambitious climate commitment as outlined in the agreement. These businesses joined a group of 365 companies and investors who championed state implementation of the Clean Power Plan last summer as well as eight major companies—Adobe, Amazon, Apple, Blue Cross Blue Shield of MA, Google, IKEA, Mars Incorporated and Microsoft—who courageously filed legal briefs to make the case for the Clean Power Plan in court. These companies acknowledge that climate change affects their bottom lines and that smart, economically transformative policies like the Clean Power Plan are key for sending the right market signals that enable the transition to a low-carbon economy.
It should be noted that these companies are leading not only with their words, but also with their actions. More than 650 companies and investors have made over 1,060 climate-related commitments, ranging from adopting science-based emissions reduction targets and committing to procuring 100 percent renewable power, to putting a price on carbon and reducing deforestation. These companies are also profiting from their climate action. Research conducted by CDP has revealed that 62 major global companies have decoupled emissions and growth. These companies saw an average 29-percent increase in revenue alongside a 26-percent drop in emissions. Those companies not decoupling saw revenue down by 6 percent alongside emissions increases of 6 percent. It turns out what is good for the planet is also good for profits.
Continued leadership by lawmakers and businesses is vital if we are to hold rising temperatures to within two degrees Celsius and to meet the United States’ commitment to reduce emissions by 26-28 percent below 2005 levels by 2025. These two goals are inextricably interlinked: an inability of the United States to fulfill its commitment would have implications for the rest of the world. And while the Clean Power Plan is certainly a key component of the U.S. commitment, further policy mechanisms—such as clean transportation standards or an economy-wide price on carbon—will also be necessary to achieve the United States’ goals as outlined in the Paris Climate Agreement.
No matter the outcome of the U.S. presidential elections, what remains clear is that the sustained, enhanced leadership of the United States will be essential for ensuring the successful implementation of the Paris Climate Agreement. Strong U.S. leadership should provide the clear policy signals needed to enable the private sector to embrace and unlock investments in the low-carbon economic future.