In for the long-haul. With no quick political fix from November’s climate summit, the world’s business community is now being asked to complete the long marathon to net-zero. The summit did see important green technology gains. But will HS2 cuts derail them?
World leaders and governments went to Glasgow with a mandate to stop climate change in its tracks. With both pluses and minuses, the broad view seems to be that they could and should have done better.
That brings a new team in to defend to wicket. COP26’s inability to agree tough steps to decarbonise a rapidly warming planet will see the low-carbon baton increasingly be passed from politicians to the world’s business community.
The Chamber low-carbon team, plus leading local companies, represented Lancashire in Scotland. They hoped for a better result, but saw new momentum building up behind the net-zero emissions drive. More on that below.
Businesses go in to bat
The big question in the post-COP26 world is what next?
The onus is now falling on an army of ordinary companies – through efficient low-carbon working and green technologies – to keep temperature rises down to no more than 1.5oC this century.
They will be supported and encouraged early in New Year 2022 when banks and financial institutions start to attach new green conditions to finance.
SMEs will not be exempt. Through Scope 3 indirect emissions from “assets not owned or controlled by the reporting organisation” SMEs will affect value chain partners. That in turn will mean stringent reporting requirements to meaningful new standards – not easy but with commercial rewards.
What happened in Glasgow?
In a moment, Chamber CEO Miranda Barker outlines three priorities she believes are needed to pick up where COP26 left off.
Lianne Smith, Group IMS and Sustainability Manager of The Senator Group (https://www.thesenatorgroup.com/), and Nicholas Butcher, Process and Equipment Development Manage at ENR Group (www.enadr.com), were part of the Lancashire team. They both explain where we must go from here.
Other positive developments are also described below.
HS2 – a transport tale of three cities
With the ink barely dry on the COP26 Glasgow Climate Pact, Lancashire’s competitive focus has been hit by bad news about the strategic future of northern transport.
The Government will now upgrade existing rail lines and not build either a new leg of HS2 north of Birmingham from the East Midlands to Leeds, or a new Northern Powerhouse Rail (NPR aka HS3) link between Manchester and Leeds. This breaks six years of promises.
It says the revised plan will provide faster services to connect up north of England industry at an earlier date and lower price. ‘The North’ doesn’t see it that way.
As Miranda Barker explains, “Dialling back the investment in the north on the HS2 eastern leg and NPR will severely limit the economic benefits of the plan and its contribution to levelling up, for both the North’s and the UK’s benefit.” She adds that the decision will: –
… plus views on COP26: –
She also sees four important takeaways from Glasgow.
The first, she says, is a cheap and easy option for the Government – policy changes! Rather than investing huge amounts of taxpayers’ money, it can firm up low-carbon action with basic changes to the rules industry and society play by.
That would see national and local government setting net-zero standards for all future planning and materials procurement. No new-build residential, industrial or municipal developments (schools and hospitals) would then gain planning consent without their carbon footprints meeting strict criteria.
The second, Miranda suggests, will be for businesses to prove they are cutting their carbon footprints. Crucially, this must not be based on strict standards! “Standards are a barrier,” she explains, “We want firms to spend their money on real things!”
Thirdly, she believes green finance should not be dependent on grants or subsidies, but government-backed loans repaid from green savings made – ditto low-carbon technology funding.
Lastly, mirroring the ethos behind vaccine equality, developed nations must give developing countries the know-how needed to make and deploy new green technology; the aim is to end futile arguments about whether growing economies have a right to copy advanced economies.
Business views from the green zone
The CBI says climate targets are a UK opportunity for a “new industrial revolution”. Lianne Smith similarly believes COP26 provided a foundation that can now be built on.
“Many good things happened in Glasgow that businesses can use to create a ripple-effect through their supplier and customer value chains,” she says. “There were fewer ‘strict’ outcomes than expected through policy which was disappointing. However, repercussions from COP26 have raised awareness and enthusiasm, which is great to see.”
“Senator has already accepted one invitation to discuss net-zero with students and businesses at Burnley College which is inspiring and we are having many discussions with our clients and suppliers around net zero targets,” she adds.
“COP26 highlighted that carbon-reduction commitments from individual countries are coming too slowly to make the needed difference. However, the summit has prompted many businesses to ask how they can get to net-zero themselves.”
– Using zero- or science-based targets
“Businesses that have already set science-based targets are being encouraged to interact and collaborate more and this will continue to gain momentum towards a net zero economy. Ultimately, to support government targets, businesses will have to start pushing towards net zero, otherwise they risk being left behind, or worse.”
One of the opportunities, she says, is to understand their carbon footprint and look at areas that can be reduced through better behaviours, stricter controls, or look into greener technologies – such as on-site energy generation, LED lighting, and heat recovery.
Businesses can create momentum in their own organisations using zero- or science-based targets, or taking part in the UN’s Race to Zero Campaign (https://unfccc.int/climate-action/race-to-zero-campaign). Planet Mark is another option (https://www.planetmark.com/).
In October 2021, the new “SBTI – corporate net-zero standard” was also launched (https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf).
“Times have already changed since we made our net zero pledge at Senator in January 2021,” she says, noting that many more great local information sources now exist – including Chambers of Commerce and low-carbon programmes. Networking with other businesses and sharing best practice is also important; no-one can be an expert at everything but together we can try!
“Yes, manufacturing businesses do have huge carbon footprints and we worked hard to understand our own targets,” she adds. “But my advice is to keep learning, keep evolving and pushing. Never stand still!”
Nick Butcher also sees a key role for business: –
“Spending time at COP26 reinforced that the time for action is now, and while the politicians may have made some marginal commitments, the wider business community came together in the back rooms of Glasgow to share in each other’s strategies and promises, and through this wider networking and collaborative approach, it’s clear that there is a significant business-led desire to make a difference,” says Nick.
He adds, “As a Lancashire-based SME that exports 90% of our products, it is essential we understand the environmental objectives from our markets so we know how we will adapt our ‘modus operandi’ to meet the carbon reduction steps required for all geographical areas.”
“Through a greater investment in on-shoring of our manufacturing, and a continuous investment in low carbon technology in both the products we provide and our way of manufacturing them, we strive to support the businesses who will put low carbon technology products in the hands of consumers.”
“To reinforce our commitment, we have already pledged to net zero and are currently beginning to measure our footprint so we can maintain well-defined carbon reduction while continuing to grow the business and transition our expertise of printing and coating technologies into new low carbon technologies.”
The Good, the Bad and the Contentious
Three key points – and a series of specific agreements – came out of Glasgow: –
The first point was “keeping 1.5C alive” (https://ukcop26.org/cop26-keeps-1-5c-alive-and-finalises-paris-agreement/).
The second was the Glasgow Climate Pact setting the global climate change agenda up to 2030 (https://unfccc.int/sites/default/files/resource/cma2021_L16_adv.pdf).
The third is that COP27 (https://sdg.iisd.org/events/2021-un-climate-change-conference-unfccc-cop-27/) in Egypt in 2022 must try to fill the big carbon-reduction commitments gaps COP26 couldn’t.
Official summaries of what was achieved in detail can be seen at https://ukcop26.org/cop26-keeps-1-5c-alive-and-finalises-paris-agreement/ and https://www.gov.uk/government/news/cop-26-ends-with-global-agreement-to-speed-up-action-on-climate-change.
However, a number of other developments are worth noting.
– Big boost for green technology
A new programme backed by 42 nations will also make green technology a better commercial choice than old fossil-fuel equivalents (‘Glasgow Breakthroughs – Race to Zero and Race to Resilience’ – https://racetozero.unfccc.int/system/glasgow-breakthroughs/).
– As ever, follow the money
Financial organisations controlling 40% of global private capital also agreed to greater support for “clean” technologies and push finance away from fossil fuel-burning industries.
Some 450 organisations in the Glasgow Financial Alliance for Net Zero ($130 trillion/£95 trillion) have committed to keeping global warming down to 1.50C over pre-industrial levels (GFANZ – https://www.gfanzero.com/).
– Better big green finance
The Treasury will make it mandatory that large firms and financial institutions show their plans for meeting the UK’s tough net-zero target – an expert panel will set standards to avoid ‘greenwash’.
Chancellor Rishi Sunak also sees the UK as the “first-ever net-zero aligned global financial centre”, with “Better and more consistent climate data; sovereign green bonds; mandatory sustainability disclosures: proper climate risk surveillance: and proper global reporting standards.”
The Government is also creating a verification scheme for corporate net-zero transition plans; high-emitting sectors must publish their plans by 2023. It will also develop a science-based ‘gold-standard’ verification scheme.
Reporting standards and assurance
Many of the initiatives and developments above are based on accurate data disclosures
ESG (environmental: social: governance) analysis and reporting (or disclosures) is becoming increasingly important here in bringing non-financial issues onto the balance sheet.
To provide uniformity, the global Task Force on Climate-related Financial Disclosures (TCFD – https://www.fsb-tcfd.org/) initiative has “developed a set of recommendations that are changing the way organisations manage climate risks and opportunities”.
As of January 2021, all top UK companies have had to state in their annual reports whether their disclosures of information meets TCFD recommendations, and if not then explain clearly why not.
By 2025, TCFD-aligned disclosures will be mandatory across the UK economy. By highlighting risks in a consistent and comparable framework, the aim is also to help organisations future-proof their businesses.
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