U.S. and China Announcement Sends Low-Carbon Signal to Private Sector

November 13, 2014

In an unprecedented act of collaboration, the United States and China have provided additional momentum to tackle global climate change by agreeing to reduce their carbon emissions. This commitment represents a crucial signal for the increasing number of businesses that have been reshaping their investments to drive a low-carbon economy.

More than ever, the private sector recognizes that climate change is one of the greatest risks we face—and that tackling it is also one of our biggest economic opportunities. Many businesses have already started taking climate action by measuring their emissions, setting ambitious targets, and scaling up low-carbon investment.

The United States announced plans to reduce greenhouse gas emissions by between 26 and 28 percent below 2005 levels by 2025. This builds on the current U.S. target of 17 percent emissions reductions by 2020, compared with 2005 levels. The Chinese commitment to set an approximate date for emissions to peak is perhaps more significant as it signals real and unprecedented intent to decarbonize the world’s most carbon intensive economy.

The U.S.-China announcement provides a new stimulus for low-carbon investments. The more certainty policymakers provide, the more confidently companies can invest—and continue to unleash a wave of innovation in low-carbon technologies: creating new products and services, generating employment, reducing energy consumption, and increasing savings.

Business needs smart policies that help scale these investments, send the right price signals to drive investment in low-carbon technologies, and build resilience into their operations, workforce, and communities.

This announcement, which follows the European Union’s recent commitment to reduce greenhouse gases by 40 percent over 1990 levels by 2030, is now part of a growing chorus of more than 90 countries that are committed to addressing climate change.

Together, the United States and China are responsible for more than 45 percent of global greenhouse gas emissions. We cannot succeed in meeting the climate challenge without collective action by all—and leadership from the world’s two largest economies is pivotal to this effort.

As a coalition of organizations working with thousands of the world’s most influential businesses and investors on climate action, We Mean Business welcomes this agreement as an important step in raising ambition toward a global deal in Paris in 2015 and encourages both to go further and commit to emissions reductions in line with the science.

Business leaders understand the scale and opportunity of ambitious low-carbon policies: In fact, leading companies that have set targets aligned with the science and publicly disclosed their performance are seeing an internal rate of return of 27 percent on low-carbon investments, with some reporting an internal rate of return as high as 81 percent, according to our report The Climate Has Changed.

Businesses can be more ambitious if the right polices are in place. Let’s be bold.

To learn more about We Mean Business, visit www.wemeanbusinesscoalition.org. The We Mean Business coalition members are BSR, The B Team, CDP, Ceres, The Climate Group, Prince of Wales’s Corporate Leaders Group, and WBCSD. Also, read more about BSR's Business in a Climate-Constrained World program.

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