Following the delivery of the final Paris Agreement at COP21, BSR Managing Director of Partnership Development and Research Edward Cameron provided his perspective on what the agreement means for business, how he would like to see companies act on climate, and why this marks the beginning of a thriving, clean economy.

Eva Dienel: What is your overall take on the final agreement?

Edward Cameron: The Paris Agreement is a strong outcome that will send the appropriate signals to the real economy. The era of building prosperity and development on the back of a high-carbon economy is coming to an end, and the era of ensuring equitable access to sustainable development for all is now emerging.

Dienel: What does the final agreement mean for business?

Cameron: Business came to Paris looking for four critical ingredients: ambition, policy certainty, policy confidence, and a level playing field.

In terms of ambition, more than 180 countries representing 97 percent of global greenhouse gas emissions have put forth national climate action plans. Prior to these commitments, we were on course for a 4.8°C temperature rise by end of century. We are now on course for a 2.7°C temperature rise by end of century. This is still is not enough, and more work needs to be done. But a whole new climate economy has been created in the space between 4.8°C and 2.7°C. This is an opportunity for trillions of dollars in investments; substantial deployment of clean technology; changes in land-use practices; and shifts in the ways we move goods, services, and people around world.

On top of this, the agreement offers a mechanism known as “Workstream 2” to examine how government and business can work together to overcome domestic challenges to increasing ambition.

Finally, we have agreed to mobilize finance at scale, including leveraging private-sector finance to drive ambition forward over the coming years.

In terms of policy certainty, in order to hold the global mean temperature rise well below 2°C by the end of century, business needed to know that governments are committed to embarking on a long-term journey toward net-zero emissions. Understanding that governments are committed to this long-term transition provides business with the certainty it needs to invest in the long term—particularly when investing in things like infrastructure. The Paris Agreement contains this certainty through the so-called “long-term goal." In Article 4.1 of the Paris Agreement, governments commit to “global peaking of greenhouse gas emissions as soon as possible” and to “undertake rapid reductions thereafter so as to achieve balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of the century.” In essence, this means the era of high-carbon development is drawing to a close.

In terms of confidence, business needed to know that the agreement reached here and that the action that will follow is not dependent on political cycles or the changing political fortunes within countries. We were looking for a progressive and consistent journey to raise ambition over time, and we have this in the agreement through the so-called five-year cycles. These commit governments to reviewing their national climate action plans every five years and to subsequently raise the ambition within those national climate action plans to achieve the long-term goal.

Finally, in terms of a level playing field, companies operate across multiple jurisdictions through a complex and extensive value chain, and they needed to know this agreement would capture the widest possible cooperation across all countries. For the first time, we have that level playing field: This agreement applies to all, and it involves ambitious action by all. The agreement ensures that climate action is no longer the pursuit of a limited number of pioneering countries; it is the pursuit of the entire global economy.

Dienel: How does the final agreement stack up against the key policy asks that BSR and the We Mean Business coalition requested going into Paris?

Cameron: Businesses came to Paris in unprecedented numbers to demonstrate their own actions and commitments to reducing greenhouse gases and to enhancing resilience. They also came to work with governments to create a catalytic instrument for the real economy. With this in mind, we developed eight key policy ingredients we wanted to see in the new agreement. Seven of those eight asks are captured in full in the final text.

While not in the text, the remaining ask, carbon pricing, is also present in the text—but not in the form of a global price on carbon, as many businesses would have wanted. In my view, this is a satisfactory outcome: Carbon pricing is expanding rapidly around the globe and looks set to become a key implementation device and management tool to achieve the objectives of the agreement. Almost 40 countries and more than 20 cities, states, and provinces use carbon-pricing mechanisms or are planning to implement them. China, for example, has committed to creating the single largest emissions-trading system in the world by drawing seven pilot systems into one national system by 2017. In the private sector, 67 companies are aligning with the UN Global Compact’s business leadership criteria on carbon pricing, which means they are setting an internal carbon price and publicly advocating for carbon pricing.

Dienel: What would you like to see from business after Paris?

Cameron: I would like to see an increase in the volume of business action on climate. Today, 355 companies representing more than US$7.5 trillion in revenue and 160 investors with assets under management exceeding US$19.8 trillion have committed to action on renewable energy, carbon pricing, ending deforestation, and tackling short-lived climate pollutants. We want to grow the volume of companies making these commitments.

We also want to see companies turning these commitments into real action; engaging in dialogue with governments to create a conducive, enabling environment to achieve these commitments; and advocating for deeper commitments by their industry peers, within their supply chains, and in front of their consumers.

As Lord Nicholas Stern put it during a press conference just before this historic agreement was made, “The transition to the low-carbon economy is the growth story of the future.”

Please join BSR’s “Road Through Paris Briefing: First Results from COP21” webinar, 8-9 a.m. Pacific Time Wednesday, December 16. And for more of our analysis, please watch Cameron and the We Mean Business coalition discuss the draft Paris Agreement on a UNFCCC webcast.