What is COP26?
This is the 26th summit, attended by the countries that signed the United Nations Framework Convention on Climate Change (UNFCCC) – a 1992 treaty that binds signatories to find ways to reduce greenhouse gas emissions globally in an equitable way.
Under the Paris agreement made at COP21 in 2015, nations pledged to limit global warming to 1.5C to curb climate breakdown, but the contribution to which each nation committed was inadequate. A 45% reduction in emissions is needed by 20301 compared with 2010 levels, according to scientists, whereas the national commitments made so far would result in a 16% increase in emissions2.
The purpose of the COP is to get countries to bring fresh commitments to the table.
Why should businesses pay attention?
With rising costs and widespread shortages creating immediate risks for businesses, they could be forgiven for not giving COP26 their full attention.
However, here are three reasons why what happens at the climate conference will present both challenges and opportunities for the business community, which arguably pushes it up the agenda.
1. Media attention will raise expectations among voters, which will in turn lead to new regulations affecting business
Just recently, a joint report from the WWF, the National Grid, a think tank and an energy company tapped into a nationally representative sample of over 20,000 voters across the country, to find that the public is most supportive of a carbon tax on polluting industries and higher levies on flying, particularly frequent flying, above all other possible policy options for bringing down UK emissions.
The findings of this report - the biggest analysis of policy preferences ever published - were widely reported and are likely to be referenced by policy makers at the conference and further down the line.
With such a strong indicator of what would prove popular in a manifesto being put before ministers, businesses would do well to think about contingency planning around how a carbon tax or levies on flying would impact their operations.
2. It could accelerate changes in consumer behaviour
Achieving net zero will depend on individuals changing their behaviour. The UK’s Climate Change Committee (CCC) estimated that 62% of what we need to do requires behaviour change3.
But research has shown repeatedly that while most – if not all – of us want to live more sustainably, to change our behaviour we need to both know what to do and believe that our own actions matter. That is where COP26 will aim to make a big difference, and it will give a focal point to individuals receiving that information and being able to act on it.
For example, two of the biggest individual actions that make a real difference to carbon emissions relate to transport and heating your home. COP26 will shine a light on that, and mainstream media will likely get people talking and thinking about it.
Businesses that can help people think through the logistics and the finances of taking actions like replacing an old boiler with a heat pump or swapping an ICE engine car for an electric vehicle could tap into a huge opportunity.
3. It will mean more innovation, commercial opportunity and new business models
A likely outcome of the conference will be to highlight a confluence of forces - such as rising regulatory risks for high-emission processes, the increasing price of carbon emissions, the falling cost of capital for ‘green’ investments and the standardisation of what should be considered ‘green’ finance and ‘green’ projects - that will determine where businesses can find new opportunities.
For example, the rising price of carbon creates significant opportunities for businesses that can develop products and solutions that generate carbon credits.
Businesses can get valuable insights into potential opportunities like these by engaging with COP26. Rather than seeing climate action as a barrier to business, it will shed light on the growth opportunities available to them. And with assets, products and services becoming ‘greener’ over the next decade, businesses will need be able to adapt in order to remain relevant and sought after.