1.5°C is dead. Companies must redefine their relationship with the Paris Agreement

As reality sinks in that we are going to exceed 1.5°C of warming, the Paris Agreement is starting to show a very different face here in Egypt. Businesses aligned with Paris should prepare for the impact. Evan Stamatiou writes from Sharm el-Sheikh in Egypt.

In the end, it only took seven years to realize that the Paris Agreement’s goal of limiting global warming to 1.5°C was dead. UN Secretary-General Guterres didn’t have the heart to break the news earlier this year, opting instead to frame 1.5°C as “on life support.” But it is surely dead now, buried under a mountain of bad news detailed in UNEP’s just-released Emissions Gap Report 2022.

The pace of global warming has been surprising, already 1.2°C. Annual global GHG emissions are again at an all-time high, with emissions from developed countries remaining stubbornly high. Emissions in parts of the developing world are rising out of control, in part because of the West’s abysmal failure to provide promised funding to support their green transitions.

The final blow is the flurry of new funding committed to oil and gas, now obscenely misaligned with a 1.5°C trajectory, with $742 billion of fossil fuel funding committed globally in 2021. No wonder UNEP has concluded that we have no credible pathway in place to keep 1.5°C alive.

With overshooting the Paris 1.5°C target now a done deal, what does this mean for companies actively marketing Paris 1.5°C alignment through emission reduction targets, investment strategies and services? Quite simply, it means that they will soon have to stop doing it. Even aggressive corporate emissions reduction targets and strategies for 2030 will not prevent the inevitable. This ambition is too little, too late to keep 1.5°C alive.

As this bitter reality becomes widely accepted over the next few years, companies that persist in selling their green credentials through 1.5°C alignment disclosures will be at increased risk of being called at the greenwashing by investor groups and broader stakeholders. Regulators (read ASIC and ACCC) will also soon be aware of our new reality, and we can expect to see guidance from them warning against 1.5°C alignment marketing. Inevitably, even the Science-Based Targets initiative (SBTi) will have to drop its 1.5°C recommendation once the UN signs the death certificate.

How can companies stay aligned with Paris from here?

Companies now have the option to simply rename their 1.5°C aligned goals and strategies to aligning them with the less ambitious Paris target of . After all, if we redouble our ambition, there’s still a (very) slim chance that we’ll continue to warm up to that level.

The problem here is that the Paris

So companies that retreat to a

As an extension of this, companies wishing to brand themselves as Paris-aligned will also need to consider how they support the elements of the Paris Agreement that come to life here in Egypt in the face of the impacts of failure. Poor countries, seething with resentment at being most affected and yet least responsible for climate change, are forcing the energy of this Egyptian COP to turn to neglected articles of the Paris Agreement that address climate impacts, including Article 9 on Climate Change Adaptation and Mitigation Funding to the Developing World.

The attribution of responsibility for historical emissions is a delicate subject during these COP negotiations, with considerable pushback from developed countries anxious to avoid any admission of responsibility. But whatever the evolution of the negotiations at the national level, the business world must realize that the alignment of Paris now takes on another meaning. Companies that persist in Paris’ voluntary alignment will now need clear strategies to 1) redouble our ambition with aggressive decarbonization targets for scopes 1, 2 and 3 (to effectively stay below the 2°C mark), and 2) deal with the consequences of their historic failures through emissions repair plans.

What could emission reduction strategies look like?

Article 9.2 of the Paris Agreement makes direct reference to non-state actors and encourages their support for financing mitigation and adaptation in the developing world. But we are only beginning to see the emergence of mechanisms to operationalize the support.

Supply chain engagement is a good starting point for companies considering fixing their emissions. For most Australian businesses, supply chains are their most tangible link to the developing world. As companies begin to take climate risk assessments seriously, most are also discovering serious vulnerabilities to physical impacts within their supply chain networks.

Smart investments in sustainable products and supply chain models are already helping some Australian companies improve their supply chain resilience while helping their partners in the developing world adapt to climate impacts and finance their emissions mitigation efforts. CDP offers helpful guidance to help companies conceptualize what supply chain engagement on climate change might look like.

Another layer to this is to consider offsetting legacy carbon emissions as a very small group of companies have already committed to (notably Google, with Microsoft following in its footsteps). This idea is also coming to life here in Australia but remains under the radar.

Global carbon markets are focused on solving integrity issues and there is now a rush to develop high-end carbon offset products. And as we realize that climate, biodiversity and humanitarian crises are inextricably linked, voluntary markets are responding with nature-based solutions projects that deliver carbon, conservation and sustainability outcomes to protect communities. vulnerable communities in developing countries.

In this context, investing in high-quality carbon offset projects is an opportunity for companies to offset a slice of their historical emissions, but also to support the flow of valuable climate change mitigation and adaptation finance to southern countries. Of course, all of this comes at a price, but smart meeting rooms are already opening the door to this idea because of its potential to boost a company’s social license to operate and its ability to attract customers and customers. longer-term capital.

Ultimately, each company will have to choose its own Parisian alignment adventure in this strange new era, leveraging its unique ecosystem of partners, assets, investments and stakeholder relationships in the developing world. .

Identifying win-win pathways that underpin an emissions repair strategy will be hard work and will require a degree of leadership-level commitment to climate risk never seen before.

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