It seems everyone at the COP20 climate negotiation is talking about transparency. During the past week, governments gathered at the UN climate talks in Lima, Peru, under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC) have been working to build transparency into the new climate agreement expected to be adopted in Paris at the end of 2015. In both the formal negotiations and official side events, we are hearing strong voices from government and civil society, investors, and business that transparency is critical to advancing sustainability solutions and ensuring a low-carbon future.
Here's a brief overview of what they are saying.
Government and Civil Society
For members of government and civil society, transparency ensures comparable and accessible information on greenhouse-gas emissions, mitigation actions, interventions designed to enhance adaptive capacity, and the scale and nature of climate finance. It also facilitates accountability since public information empowers all those with a stake in collective action— governments, business, and civil society—to ask the tough questions that drive greater ambition. As illustrated in a recent World Resources Institute paper, transparency also facilitates knowledge-sharing so that we can collectively build on lessons learned and best practices.
From the business perspective, more transparency and accountability should be a required outcome of the climate negotiations to ensure that the policies created are consistent and predictable—factors that can encourage investments for low-carbon development.
Investors are also increasing the push for greater transparency, particularly within their own portfolios. At a recent roundtable in Washington, D.C., cohosted by BSR, BNY Mellon, and the UN Foundation, finance experts identified lack of transparency as the most significant barrier to increasing investments in social and environmental issues. For investors, transparency is important in terms of which investments are included in portfolios, the incentives behind investment-manager compensation and how deals are put together, and how ESG factors affect financial performance. Experts also want to understand the nonfinancial value of their investment and are looking for greater consistency across investment policies.
As the CDP points out in “Corporate Reporting in the New Age of Transparency,” transparency is no longer an option: “The only real choice open to managers is how to turn disclosure into an asset that has value in the investment community, the marketplace, and on the shop floor.”
Investors, in particular, recognize that without transparency, the financial services industry will not be able to scale investments in climate action consistent with holding temperatures below 2°C and safeguarding people, the planet, and our prosperity.
According to the sixth annual BSR/GlobeScan State of Sustainable Business Survey, 61 percent of respondents said they consider transparency to be the best way to improve public trust, but only 26 percent said they believe business is highly transparent on sustainability issues. Part of the reason more companies are not more transparent is the lack of policy and standardized reporting requirements coming from governments. As governments put robust policies in place, business will be able to unleash innovation by developing new products and services, generating employment opportunities, reducing energy consumption, and ensuring greater prosperity for all.
It is clear here in Lima that more stakeholders, investors, and businesses are calling for greater transparency in both politics and in private sector. Ultimately, they recognize that transparency will help promote the transformation we need for business action on climate.