Christiana Figueres: The hard work starts NOW for sustainable business
One month on from the successful Paris climate summit, UN Climate Chief Christiana Figueres says businesses must now act as the catalyst in a "virtuous and self-reinforcing" transition to a low-carbon global economy.
Speaking at the World Economic Forum in Davos, Switzerland, this morning (20 January), Figueres and a panel of sustainability experts stressed the importance of businesses addressing the "ticking-clock" environmental landscape in which they operate. (Scroll down for video).
The signing of an ambitious global COP21 agreement to keep global warming 'well below 2C' has created a foundation upon which organisations can more easily make the shift to more sustainable business models, the panel agreed.
“Frankly, establishing the Paris agreement was easy,” Figueres said. “The difficult part starts now. We need to understand the signals and risks that are associated with the agreement - acting on it could be perilous if we don’t figure out how to dial back carbon use in a safe manner.”
Joined on stage by HSBC Group chief executive Stuart T. Gulliver, DSM’s Feike Sijbesma, and Walmart’s president and chief executive Doug McMillon, Figueres went on to point out that all companies – including those in the fossil fuel industry – now have to act quickly and get into the "fast lane of sustainable growth".
The panel implored businesses to "get a move on" with the transition to a sustainable future, with DSM’s Sijbesma noting that businesses can now choose to be winners or losers in this battle and that "only the blind will fall into the wrong category".
Fossil fuel fallout
The panel agreed that the financial incentives and technological innovations now available to companies in the green economy have created an enabling environment for sustainable growth. But they also conceeded that "demonising" fossil fuel companies in the shift to renewables could put certain funding and developing countries at economic risk.
HSBC's Gulliver noted that the fossil fuel industry continues to provide huge amounts of funding for educational and healthcare grants through taxing. This, coupled with emerging countries' dependence on fossil fuels – a dependence which will remain for the next few years at least – creates an incentive to collaborate with the major oil and gas companies, rather than avoiding them altogether.
“It’s not a question of leaving the fossil fuel industry behind," Gulliver said. "Emerging markets will be users of coal for the foreseeable future, and businesses understand that. You can’t suddenly jump and abandon them because it creates unintended consequences.”
Gulliver pointed to the Montreal pledge as an example of the "creeping social pressure" that is now being used to get fossil fuel companies to divest. The panel unanimously agreed that the fossil industry still had a wealth of capital, technology and well-trained engineers that could in fact play a vital role in peaking carbon emissions.
While some big players in the fossil fuel industry have already made big moves towards renewable energy, the panel stated that some national governments continue to create short-term roadblocks to renewable rollouts – with subsidy cuts for solar energy in the UK used as a prime example.
Figueres said: “The UK needs to figure out its policies and soon otherwise it is at risk of a domestic versus international policy dilemma. It’s a crying shame.
"They have to look long-term, there may be cheap oil prices now but in three or four years that won’t be the case. The cost of renewables is consistently predictable and is absolutely coming down.”
The panel concluded that this short-term mindset that many governments and businesses continue to operate with will have to radically change if the world is to reach the goals set in Paris and successfully switch to renewables.
Walmart's McMillon noted how the US retailer had itself made an "uncharacteristic" shift from quarterly thinking to long-term goals – a decision that has seen the company lower GHG emissions by 28 million tonnes since 2010 and reduce energy per sq ft by 9% in the same period.
“Thinking about finance over a quarter then the math for a sustainable future might not make financial sense, but by adopting long-term planning the evidence becomes really clear," said McMillon.
The panel also noted that the momentum building in the financial sector – especially in China – towards green finance has reinforced a "moral business imperative" to invest in low-carbon infrastructure to generate the annual $5.5trn needed to push the world into a sustainable future.
Despite Figueres claiming that the policy environment surrounding the low-carbon transition – reinforced in Paris – is now "in the best shape possible", the panel did all agree that the missing piece of the puzzle is a global carbon price.
Figueres stated that carbon pricing was a "deal-breaker" during the Paris talks, but she remains positive that it will be implemented in the future - a sentiment echoed by Gulliver.
“Carbon pricing still needs working out and there are unintended consequences to be dealt with but the concept is seriously smart,” Gulliver said. “If you’re not taking the price of carbon into consideration then you are seriously miss-investing.”