Words matter. This is especially true for the Paris Agreement on climate change to be concluded this December. Businesses and investors have a clear stake in the words in the agreement and in the political commitment behind them, which will underpin the policy certainty they need to build the low-carbon economy. Getting the right words in the right place is essential to success.
Businesses and governments alike recognize that the low-carbon economy is inevitable, irreversible, and irresistible. Businesses and investors are already stepping up to the plate. Through the We Mean Business coalition, 154 companies with revenues totaling US$3.5 trillion, and 111 investors with US$8.1 trillion in assets under management, have now made 430 ambitious commitments to climate action.
At the same time, 56 countries covering nearly 60 percent of global emissions, including the three largest emitters—China, the United States, and the European Union—have now announced their commitments to reduce emissions and build climate resilience under the new, universal Paris Agreement. By the time Paris arrives, we expect that all of the major economies will have commitments on the table.
These are important commitments that will reduce projected warming, drive the expansion of clean industries, create low-carbon jobs, improve energy access and energy security, help us adapt to a changing climate, and protect our health. But we know that these commitments alone will not be enough to keep warming below 2°C.
A successful Paris Agreement will clearly show how governments, business, and civil society will finish the job in the years ahead. The agreement we want to see will set a collective long-term emissions goal. For We Mean Business, this means net zero greenhouse gas emissions well before the end of the century, words that give us a likely chance of holding warming below 2°C.
Every country can begin to decarbonize and so can every business, no matter its sector or maturity. By mapping out their unique pathways toward net zero, each country will provide the incentives for business to do the same.
A successful Paris Agreement will also spell out the means to reach this goal beyond the first round of country commitments in Paris. These include regularly strengthening country commitments, holding governments accountable, and shifting trillions of dollars toward low-carbon investment.
Regularly strengthening commitments: At meetings in July, ministers converged on returning to the negotiating table every five years, but it remains unclear what they will do when they get there. Here it is the verb that matters. No business was ever founded on a review or stock take. When leading businesses meet their targets, they immediately set more ambitious ones. Governments should put their timidity aside and agree to strengthen their commitments every five years.
Holding governments accountable: Transparency and accountability are the foundations of a credible agreement. Thousands of businesses publicly report their emissions and are increasingly having their emissions accounting externally verified. Here, what we need are rules requiring governments to make clear how they are tracking against their targets, and how well their collective effort is tracking against a 2°C trajectory. This will provide a level playing field for global business.
Shifting the trillions: The Copenhagen pledge to mobilize US$100 billion per year by 2020 is key to the trust necessary for a strong Paris Agreement. Businesses and investors are ready to do their part to leverage private climate finance. But minimizing dangerous climate impacts will require shifting trillions of dollars into low-carbon, climate-resilient investment. To accomplish this, we will look to the Paris outcome for clear policy signals such as carbon pricing and partnerships with the private sector to reorient broader financial flows.
With a clear goal and clear means to reach that goal in the Paris Agreement, a 2°C world will be within reach. In its recent report “Seizing the Global Opportunity,” the Global Commission on the Economy and Climate shows that stronger cooperation among governments, business, and civil society can put us on track.
Words matter in the Paris Agreement. The right words will speed the construction of the low-carbon economy and promote sustainable prosperity for all. In these endeavors, the governments coming to Paris have steadfast partners, and we mean business.