The Glasgow Climate Conference (COP26) was not the breakthrough many scientists and activists had hoped for. The agreements made are insufficient to combat dangerous climate change. On the other hand, important steps have been taken in the right direction. It has been agreed, among other things, that the worldwide consumption of coal must be reduced and a large number of countries, including the Netherlands (although the signing of this in the Netherlands was not without a struggle) from 2023 onwards will no longer support fossil investments. Will the agreements made have an impact on business? And if so, how will companies notice?
Agreements COP26 are in line with existing agreements
The average company will not notice very much of what has and has not been concretely agreed in Glasgow. This is not only because the agreements made are not ambitious enough. In the first place, the climate summit was mainly intended to further elaborate the implementation of the international agreements laid down in the Paris Agreement (2015). Setting new, comprehensive, global goals was therefore not on the agenda at all. Secondly, and more importantly, in the Netherlands we come under the EU, which Green Deal and the FIT for 55 package is a global leader in the field of climate. The guidelines from this ambitious package will be elaborated by the new cabinet, and Dutch companies will notice much more there than from the agreements made in Glasgow.
Perhaps more impactful than the concrete official agreements, therefore, is the fact that policymakers, researchers, organisations, media and investors from all over the world have once again shown that they take climate seriously and that they can work together to stop climate change. In this way, additional support has been created for, for example, the Green Deal and the provision of capital to pay for the climate transition. And that will have major consequences.
New opportunities and risks for companies
Upcoming measures, such as pricing CO2 emissions, financially stimulating renewable energy and making it more difficult to invest in fossil fuels, will radically change the playing field for companies. This offers risks, but also enormous opportunities for ambitious companies and startups that dare to lead the way through innovation. For example, companies that already invest in sustainable products with a sustainable value chain will in the near future gain a significant advantage over competitors who will have to pay the real price for their emissions.
New opportunities for companies in the energy, road transport, steel, hydrogen and agriculture sectors in particular will also arise from the Breakthrough Agenda, which was supported and signed by more than 40 countries (including the Netherlands) during COP26. The mission of this initiative is to accelerate the development of sustainable technologies with great potential, but which are still in their infancy. The aim is to ensure that by 2030 clean technology will be the most affordable and accessible option for companies in these CO2-intensive sectors.
All these developments will accelerate the climate transition, which in turn can also pose risks and problems for companies. The growth in the demand for sustainable energy, raw materials and materials could well outpace the growth of the supply. The risk of shortages and rising purchasing costs is therefore high. Think of shortages of electric trucks, charging points and green steel. The current problems in the transport sector as a result of the corona crisis already show where this can lead.
It’s time for a plan
It is clear that entrepreneurs will have to work hard in the coming decade. Because not only keeping the planet livable is at stake, revenue models and business strategies will also increasingly experience the consequences of the transition. Mitigating risks, adapting to climate change and smartly responding to future opportunities will determine success more than ever. And since transparent and complete reporting In the field of ecological, social and governance (ESG) criteria becomes mandatory for all medium-sized and large companies from 2023, green promises alone will no longer help.
In short: it’s time for a plan. A plan in which green ambitions are converted into a future-proof strategy in which planet and profit go hand in hand. At Empact we are happy to help you with that. Knowing more? Read more about it here what we do for organizations or contact us at martin.dejong@empact.nu.