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01 Nov, 2021

Why COP26 should be a driver for change in your business?

Under the Paris Agreement, 196 member states agreed to bring forward Nationally Determined Contributions (NDCs) that outline their plans for climate action. Each NDC should be revised every five years to reflect increased ambition and the latest scientific knowledge.

COP26 is considered significant as it is the first time the contracting states review their updated NDCs since the agreement was signed in 2015. But, even with all national plans in place, current climate efforts are simply inadequate to achieve the goals.

UN’s recent report reveals that global emissions would increase 16% in 2030 compared to 2010, which might lead to a temperature rise of 2.7°C by the end of this century. These results are based on the 191 NDCs they have received so far.

Still more, the pledge made by developed countries in 2009, to provide $100 billion per annum to support emerging economies respond to climate change, was not fulfilled. The OECD estimated only $80 billion was funded in 2019.

As less wealthy nations are most exposed to climate risks and need help to deliver their action on the crisis, the UK as host nation is hoping that COP26 could be a vehicle to mobilise finance, from public and private resources, to ensure the promise this time.

This will require businesses to come forward with their commitments, and bring in investment in technology and innovation for a resilient and sustainable future. 

However, there are many more issues remain to be addressed in the next two weeks. Without a clear pathway ahead, you might wonder what does all this mean for your business?

What does COP26 mean for business?

More than 4000 companies have now joined the campaign Race to Zero, with a commitment to halve global emissions by 2030. The increase in companies taking action to fight against climate change, as 71% of CEOs believe*¹, shows that business can play a crucial role in leading the transition to a more sustainable economy.

As the experience of GSK tells us, there is no magic formula to achievement here; it is about collaboration across the value chains within your sector and partnership with governments.

While companies are finding ways to reduce emissions and reuse resources, consumers, too, are motivated to participate in climate action in this critical time. In fact, 81% of consumers worldwide strongly agree that companies should do further to improve the environment*², and they are willing to spend more to support products and services from brands committed to sustainability.

Moreover, environmentally conscious investors are increasingly using environmental, social, and governance (ESG) criteria to assess the companies they have targeted and to avoid those that might not have the ability to manage climate risks. It is true that, according to recent research, companies with high ESG ratings outperformed the market in both the medium and long term.

By implementing a sustainability strategy to help deliver global climate goals, you will also be able to seize opportunities to drive innovation and business growth, as the demand is certainly there!

What you should be aware of when integrating sustainability into business strategies, however, is that this will inevitably lead to changes, and those changes are real.

In 2019, the UK promised a legally binding target of net zero emissions. This has already imposed an obligation on larger businesses in the country and will eventually put supply chain pressure on SMEs. Still, stakeholders have called for a global regulatory framework as guidance. We expect leaders to address this issue at COP26, and urge you to monitor your compliance with changing regulations before new risks materialise.

You might also find yourself in a disadvantaged position because your workforce is not equipped with the right skills that meet the needs of the green economy. As the responsibility for investment in upskilling falls partly on employers, this reflects additional expenditure at the initial stage. And the need to retain or replace the existing workforce will possibly emerge at a later time.

These are only some of the challenges facing businesses in the climate transition process, and there is, for sure, more to come. Therefore, why not act today on sustainability to stay ahead.

At Chaucer, we believe business should be making a greater contribution to demonstrating environmental excellence. Here we would like to share our approach to achieving a sustainable difference.

Chaucer’s approach to sustainability

Step 1 – Assessing Sustainability

To start the journey towards sustainability, you must first understand the impact you are having on the world. Start by undertaking sustainability assessment, including maturity assessment, lifecycle assessment, and measuring your emissions and carbon footprints.

Step 2 – Embedding Sustainability

Critical to the success of improving your sustainability is the entwining of sustainability into your main strategies. To implement these strategies, you will need to foster both Sustainable Mindset and Sustainable Cultures within your business. Now it is a good idea to Measure and Disclose your carbon impact. You might also want to aim for Sustainability Certification which helps to direct and focus your efforts, see this blog on how Chaucer applied for B-Corp certification.

Step 3 – Developing Sustainability

Since you understand your carbon impact, have the correct mindset, and codified a strategy, it is time to start deliver the reductions! You should build an Execution Programme to look at ways to make practical changes. For example, improve your energy efficiency and begin non-financial reporting.

Step 4 – Funding Sustainability

Lastly, you might look at Carbon offsetting, like Chaucer’s partnership with Gone West as reported in Our Purpose.

How can Chaucer help you?

As awareness and interest in sustainability grows, Chaucer has seen an increase in conversations and enquires from our clients as to how we can help their sustainability efforts. In response, Chaucer is pleased to strengthen our sustainability offering in the UK with a dedicated Sustainability Services.

To find out more about how Chaucer can help you please contact Greg.Barrett@chaucer.com.

References

*¹ UN Global Compact CEO Study

*² Global Consumers Seek Companies That Care About Environmental Issues