COP27 – What it means for SMEs
COP27, the latest annual United Nations climate summit, will take place in Sharm el-Sheikh in Egypt from 6 to 18 November. The COP, which stands for ‘Conference of the Parties’, follows last year’s summit in Glasgow. This year marks the 30th anniversary of the UN Convention of Climate Change.
Leaders and negotiating teams of more than 200 governments, including prime minister Rishi Sunak, are expected to attend, along with environmental charities, community leaders and business groups.
The headline for COP27 is “Together for Implementation” highlighting the importance of a global effort to work together to deliver commitments made. Some of the key themes of the conference include:
- Mitigation: Immediate action to fulfil pledges made as well as stepping up national commitments to close the current gap between reduction commitments and the trajectory required to limit temperature change to 1.5C;
- Adaptation: Enhancing resilience and assisting the most vulnerable to the impacts of climate change; and
- Finance: Meeting the climate finance needs in developing countries and meeting the earlier commitment of annual $100 billion of finance.
Summit organisers will also seek to push ahead with issues from COP26 in Glasgow. These include countries’ commitments to reducing the burning of coal and the establishment of a global carbon market, designed to help corporations achieve net-zero at lower cost. For more on the announcements made at COP26 click here.
UN climate summits involve debate and negotiation at the highest level, but the issues in question have huge implications for everyone, including small and medium-sized businesses. SMEs make up the vast majority of the UK’s business population, making them a key part of reaching Britain’s climate goals.
Reaching net zero
In 2019 the UK became the first major economy to set a net zero emissions target into law. This is already having significant impacts on the evolution of energy provision and investments in new infrastructure. The UK is seeing growth in renewable energy investment and will tackle large emissions sectors such as land transport and building heating through electrification.
All businesses are experiencing higher energy costs (gas, oil and electricity), making energy efficiency an imperative. And the changing future of energy use in the UK requires all businesses to evaluate their investment planning in their buildings, their processes, and their vehicles. As part of the UK’s net-zero goals, all firms will have to make changes to their own operations and their supply chains.
Future-proofing with green technologies can see SMEs make large savings in the long-run. A move to an electric vehicle, for example, could have significant tax benefits and much lower running costs than a fossil fuel alternative. Considering the whole life costs (including upfront purchase price, energy running costs and maintenance) of any energy consuming equipment is important in any capital investment decision.
Consumers are increasingly aware of climate-related issues. Many businesses are choosing to accelerate their green ambitions to attract customers who want to make a difference with their everyday spending.
People are also more engaged than ever with news coverage of climate summits and have a growing awareness of sustainability certifications.
The transition away from fossil fuels will require hundreds of thousands of skilled workers in industries such as offshore wind, energy efficiency and solar energy. The move to electric vehicles will support new generation of manufacturing, maintenance and infrastructure businesses.
The green revolution in these industries, and many others, presents an opportunity for SMEs to establish their long-term futures and support the net-zero strategies under discussion at COP27.
Much of the discussion at COP27 will focus on the number of people around the world facing extreme weather events. Flooding, wildfires and rising sea levels will have a growing impact on doing business in the coming decades – whether they affect business premises in the UK or those of suppliers abroad.
Building on conversations taking place on a global level, SMEs should consider their resilience to extreme weather, whether local flash flooding or supply chain risks.
Throughout the next fortnight Close Brothers will be analysing the announcements from COP27 and breaking down what it means for small businesses here in the UK. Follow us on LinkedIn or keep an eye on this page for updates.