Philippe Joubert: Policy frameworks will define climate action in 2018
The concept that markets can direct themselves without government guidance is a "fallacy" and policymakers must create the regulatory frameworks that enable businesses to thrive on a low-carbon pathway in 2018.
That is the view of sustainable business expert and chairman of the Corporate Leaders Group on Climate Change Philippe Joubert, who told edie that governments need to send out “clear signals” that they are fully-committed to delivering the targets of the Paris Agreement.
Joubert attended the One Planet climate summit in the French capital last week, and believes that the numerous pledges to phase-out fossil fuel use made at the event now need to be backed by policy that aims funding opportunities towards renewables and technological innovations.
“What business needs first is clear goals from government that this is for real,” he said. “Too many times, we’ve seen governments change, which changes the policies and the rules. Business generally plans longer than one mandate… we need certainty of the goals and the rules for a level playing field.
“It’s a fallacy to say that markets will direct themselves. It doesn’t work. Markets need rules and then it will play inside them. Without rules, it is a big mess, so we need governments to establish goals and rules.”
Joubert alluded to initiatives such as the Climate Group’s RE100 programme as an example of how policies can create enabling frameworks to inspire corporate actions. The RE100 was launched in Europe and the US in 2014, before expanding to China and India, and now has more than 100 corporate members all pledging to source 100% renewable energy by a specified year.
According to the Corporate Leaders Group’s chair, the success of initiatives like the RE100 begins with national governments creating policies to increase the share of renewables in electricity networks. This, Joubert says, creates an incentivised market that reduced the costs of renewables for corporates, partly through subsidy schemes.
Such a dynamic is now being seen in the automotive sector, with a growing number of businesses turning to electric vehicles (EVs) to cut emissions. Governments have responded by setting time-specific phaseouts on new diesel vehicles, which is helping to further incentivise a developing market.
Joubert believes this type of market development needs to be introduced for other climate-related aspects, such as carbon pricing, which he describes as an “absolute necessity”. Fortunately, the investor market is reacting to climate risks and are looking at companies to promote resilient, low-carbon business models.
Climate disclosure in the investor sector has been buoyed over the past few years by the introduction of the Task Force on Climate-related Financial Disclosures (TCFD), which seeks to disclose climate information as part of mainstream financial statements. While the TCFD’s recommendations are currently only voluntary, Joubert believes that they will soon become an obligation for businesses.
“It’s so important to see green finance come into place,” Joubert added. “Investors realise they can have the same profitability of investment while ensuring that long-term risks are accounted for. People are starting to get conscious of risk.
“The financial market understood why it was so important to get the full transparency on the risk people are taking. It’s very important that we disclose it now. The TCFD is quite important, it will very quickly become an obligation I think, that the finance market will ask for.”
While the Paris Agreement and the TCFD recommendations are predominantly climate-related, frameworks such as the Sustainable Development Goals (SDGs) call on nations and corporates to account for wider societal and environmental actions.
But, with a UN Global Compact study highlighting a “glaring gap” between business intentions and actions towards the goals, Joubert claims that sustainability professionals can’t afford to be “shy” when it comes to communicating with their board.
“The centre of a company strategy should be on sustainability, there is no other possibility. This is no longer a choice; the business model has changed. The big change from the Paris Agreement and the SDGs is that boards can no longer say they don’t know; it has completely changed their responsibilities
“The board must take care of the company, and they must have a clear view of the risks they are running into and the opportunity they have in front of them. The director of sustainability has to take responsibility, there’s no such thing as ‘no access to the board’; it’s where the risk of responsibility lies, and the board has an obligation to act on them.
“Companies that don’t want to change will not be here 10 years from now.”
Joubert is also the founder of the Earth on Board initiative, an ecosystem of leading organisations, which works directly with Boards of Directors to put sustainability at the centre of their company strategy, to capture opportunities related to aspects such as biodiversity and resource scarcity.