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    COP27 update: Bogus Corporate Net-Zero Crackdown

    Stockholm (NordSIP) – The 27th Conference of the Parties of the UNFCCC (COP27) began on Sunday 6 November in Sharm El-Sheikh, Egypt.  Among the highlights on the first day is an impassioned speech by former US Vice-President Al Gore.  His opening words set the tone: “we are all here today because we continue to use the thin blue shell of atmosphere surrounding our planet as an open sewer.”  Bemoaning the global complacency shown in the face of the climate crisis so far, Gore says it is a conscious choice whether to “continue with the culture of death that surrounds our addiction to fossil fuels,” or to exploit plentiful renewable resources that are becoming more cost effective by the day.  UN Secretary General António Guterres also brings his now familiar sense of urgency to the opening speeches.  In his words “we are on a highway to climate hell, with our foot still on the accelerator.”

    Having been reminded of the seriousness and urgency of the climate crisis, the opening sessions begin looking at some of the practical steps that can be taken to improve global mitigation efforts.  A fundamental problem both in the public and private sectors has been the discrepancy between climate commitments and concrete actions.  Many Nationally Determined Contributions (NDCs) remain vague or without clear implementation steps in place.  Similarly, many large corporations have signed up to net-zero pledges without seemingly changing anything in their business models.  In March of this year, UN Secretary-General Guterres launched a new High-Level Expert Group (HLEG) on the Net-Zero Emissions Commitments of Non-State Entities.  On the 8th of November, Catherine McKenna, former Canadian Minister of Environment and Climate Change and Chair of the HLEG, presents the outcome of the group’s 7 months’ work to the COP27 attendees.

    The HLEG’s report is entitled Integrity Matters: Net-Zero commitments by businesses, financial institutions, cities and regions.  Highlighting a theme that NordSIP has explored in various greenwashing cases, it is still far too easy to sign up to long-term climate pledges while failing to take any credible action in the short-term.  As McKenna puts in in her speech: “it’s a make-or-break moment for net-zero pledges by non-state actors. […] Either net-zero helps drive the ambition we need right now so that we stay below 1.5 degrees or, by focusing on 2050, it results in delay, obfuscation and greenwashing.”  Many of the recommendations in the Integrity Matters report would appear to be quite basic common sense to sustainability professionals but are indicative of the relative ease with which corporations can currently practice greenwashing.  McKenna points to the positive fact that more than 80% of global emissions are now covered by net-zero pledges.  “But now the bad news,” she continues, “too many of these net-zero pledges represent little more than empty slogans and hype.”  For McKenna , this results in growing public mistrust and scepticism, as displayed in a new Edelman report on Trust and Climate Change in which 64% of respondents think businesses are doing mediocrely or worse at keeping their climate commitments.

    McKenna summarises the HLEG recommendations for the COP27 audience:

    • Investments in new fossil fuel supply, deforestation or other environmental destruction are entirely incompatible with net-zero commitments.
    • Offsetting should only be used above and beyond carbon reduction actions, and must be of verifiable “high integrity.”
    • Reductions should be on absolute emissions rather then carbon intensity, and encompass scopes 1, 2 and 3.
    • No adverse lobbying, either directly or via trade associations.
    • A move away from voluntary initiatives towards properly regulated and verified net-zero frameworks.
    • An obligation on financial institutions and multinational corporations to take on more risk and work with governments and Multinational Development Finance Institutions to facilitate a “just transition” for developing countries.

    McKenna emphasises that “much of what we recommend is really about common sense and levelling up the playing field so that net-zero pledges, on which so much of our future depends, have integrity.”  The HLEG intends its work to be complementary to existing initiatives such as Race to Zero and the Science-based Targets.  The newly published report provides a solid basis for institutional asset owners’ climate related engagement discussions, either directly with portfolio companies or with their external asset managers.

     

     

     

    Image courtesy of UNFCCC Official coverage
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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