Key insights for business from COP27
Two weeks ago, as the Environmental Defense Fund team entered the conference grounds in Sharm El-Sheikh, Egypt, which would serve as our ‘office’ during the United Nations’ annual climate talks, the theme of COP27 was clear.
The slogan “Together for Implementation” was pasted on walls and signs around the conference — implementation being UN lingo for ‘putting the plan into action.’ We hoped to see fewer splashy announcements in Egypt and more focus on moving from pledges to progress.
As we look at corporate progress since COP26, a new report from Accenture found that one-third (34%) of the world’s largest companies are now committed to net zero, but nearly all (93%) will fail to achieve their goals if they don’t at least double the pace of emissions reduction by 2030.
Now that COP27 has ended, we’re looking closely at what that progress looks like, and how companies can play a leading role in making sure that progress is real.
Echoed by activists, heads-of-state and UN-appointed experts, one message for companies rang out loud and clear: you can’t claim net zero without doing the hard work to deliver net zero. A major report, entitled Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions, released by the UN High-Level Expert Group on Net Zero Emissions Commitments, drew a line in the sand between corporate greenwashing and credible commitments to net zero. The High-Level Expert Group’s report shared guiding principles and recommendations on how companies can deliver on their net zero commitments.
Issuing a clear call for commitments to be ambitious, have integrity and transparency, and be credible and fair, the report’s recommendations include:
- A net zero pledge must set interim targets every five years, and ultimately align with the Intergovernmental Panel on Climate Change (IPCC) or International Energy Agency (IEA) net zero greenhouse gas (GHG) emissions pathways to limit warming to 1.5°C.
- Companies must reject poor quality carbon credits, electing instead to use high integrity carbon credits in voluntary markets for beyond value chain mitigation.
- Companies must publicly share their comprehensive net zero transition plans detailing what they will do to meet all of their targets, while also supporting a just transition.
- Companies must report publicly every year on their progress, including greenhouse gas data, in a way that can be compared with the baseline they set.
The High-level Expert Group Chair, Catherine McKenna said: “Right now, the planet cannot afford delays, excuses, or more greenwashing,” and as COP27 has confirmed, companies will be facing even higher expectations from investors, customers, and employees moving forward.
It is imperative for companies to take action now, implement their plans, and truly cut emissions. The transformational work we need to see must be done, and it’s going to be a challenge with a tight timeline: In order to keep the goal of limiting 1.5 degrees Celsius within reach, we must peak global greenhouse gas emissions before 2025, and nearly halve emissions by 2030.
Global operations and supply chains are already complex, and adding a rapidly changing landscape of reporting requirements and regulations to a company’s priorities can be extremely challenging and confusing. Despite these obstacles, companies must lead the way in addressing climate change, innovating, and making progress towards achieving their commitments.
Resources like EDF’s Pathways to Net Zero: The Decisive Decade report, co-authored with Deloitte, showcases how companies can turn their net zero pledges into real results by identifying and prioritizing the highest-impact solutions. Our business playbook is designed for this precise moment, providing a guide for companies to be climate leaders.
This report is the first of its kind — it’s an aggregate of resources that sheds light on how companies can achieve their net zero pledges. Providing a step-by-step outline for companies to take action toward executing on their commitments, climate leaders can find details on:
- Concrete, practical steps for advancing a company’s net zero journey within this Decisive Decade.
- How a tailored emissions profile — including separating out operational and value chain emissions, looking at different categories of emissions, and identifying long- and short-lived greenhouse gases — helps set the foundation for identifying and prioritizing near-term solutions.
- Opportunities to lead, invest, and advocate to meet climate goals.
With only one year to make significant progress before the global stocktake at COP28 to be held in the United Arab Emirates, now is the time for companies to go bold, act fast, and demonstrate what leadership really looks like. Next year, the global stocktake process will assess countries’ collective progress toward achieving the mitigation, adaptation, and finance targets outlined in the Paris Agreement. We get to choose how we show up to COP28: with clear wins and progress underway, or emptyhanded.
As I flew back home from Egypt to California, I looked out my window down to the verdant countryside of Germany covered with windmills and I saw hope. But I also saw the consequences of inaction when we passed rising clouds of smoke from still-raging wildfires in Oregon.
If we act now, there’s still time to secure the future we want: One with people, businesses, and nature thriving together. But this means the private sector must move from pledges and words to the truly important work: implementation and action to cut emissions.
For additional analysis, please read the following statements and blogs from my EDF colleagues:
- COP27 agrees on key milestones and historic consensus on funding for loss and damage by Angela Churie Kallhauge
- What you should know about what happened at the UN climate talks in Egypt by Jenny Andreassen Burke
- Forests have grabbed a prominent spot at COP27. Here are some highlights by Breanna Lujan
- Indigenous Peoples need a seat at the climate table. Here’s why by Santiago Garcia