(This text was updated with the correction of information on 12/24/2020 at 12:00 p.m.)
By Marina Grossi
President of the Brazilian Business Council for Sustainable Development
Half a decade after the signing of the Paris Agreement, the Earth is boiling and measures, which were already urgent, need to become more ambitious.
The largest global climate governance treaty involving rich and developing countries has definitively put the issue on the agenda of companies, investors, governments and international organizations. Not only that, it has begun to direct the transition to a low-carbon economy in all countries. The participation of the private sector has been essential for progress in reducing greenhouse gas emissions (GHG). Looking ahead, even greater engagement from companies and governments will be needed to correct the course and eliminate unsustainable practices. The global commitment made by countries through their nationally determined contributions, the NDCs, is still not capable of limiting the increase in temperature to 1.5°C; more will be needed than what is currently being done. The math doesn't add up.
The climate issue was on the agenda, but it did not take off as it should have. The occurrence of more frequent extreme events, high temperatures and impacts on biodiversity were felt most in difficult scenes throughout the year: polar bears going hungry during the record melting of the Arctic in the summer; jaguars burned after the fires in the Pantanal; the cloud of smoke from fires in the Amazon reaching São Paulo; the cloud of locusts threatening crops in the south of the country; and the bleaching of corals in the Northeast due to high ocean temperatures. Let's not forget that we have been isolated for months, facing a global flu pandemic.
It was precisely the prediction that we would see more intense climate imbalances that brought 195 countries, including Brazil, together 1,825 days ago in the French capital to sign the agreement. For the first time, the commitments were distributed among both the largest emitters, in this case the developed countries, and among the emerging countries, which had never had targets before. The responsibility now falls to everyone and the objective is clear: to prevent the planet from warming by 2°C. If this limit is exceeded, the damage will be irreversible, according to the UN Intergovernmental Panel on Climate Change (IPCC): the disappearance of 30% of species, in addition to more serious and tragic climate events.
This global climate governance, established by the Paris Agreement, has begun to guide the entire economic agenda and has revolutionized global finance. Large investors and institutional funds have been modifying their portfolios to benefit cleaner initiatives and companies, and have been withdrawing resources from countries and companies not committed to this issue. “Climate risk is investment risk,” summarized Larry Fink, CEO of the world’s largest asset manager, BlackRock, which has US$1.4 trillion under management.
At the same time, changing course and making the economy more sustainable and regenerative brings more business opportunities. A recent study by WRI Brasil showed that the Gross Domestic Product could grow by R$2.8 trillion and generate 2 million jobs by 2030 with policies aimed at a green economy. On the other hand, large national banks have already announced that they intend to finance sustainable initiatives and the largest global investors also require companies to follow Environmental, Social and Governance (ESG) criteria.
The world’s major economies have also doubled down on green economic policies and incentives, a move driven by the need for greater resilience in the face of the crisis caused by the pandemic and climate change. The United Kingdom, Japan, South Korea, China and the European Union have all begun to adopt policies to encourage changes in the way they conduct business. This is the unmistakable trajectory of international trade in the ongoing race that we are in a position to lead.
With this in mind, CEBDS has been developing a proposal for a Regulatory Framework to create a mandatory carbon market in Brazil. This step will allow our companies to minimize expenses, with the freedom to choose more appropriate technologies and make the decision to pay the price for emissions, according to their control costs and production and expansion goals. We are on this path: Brazil already has companies pricing carbon internally and worldwide, with more than 1,600 already doing so or expected to do so by 2021 (CDP data).
Nature-based economic solutions have the potential to generate up to US$17 billion by 2030, according to a recent study by CEBDS. The World Economic Forum estimates that there is a potential of US$10 trillion, with the creation of 395 million jobs over the next ten years, if businesses opt for nature-based solutions. The financial market is closely monitoring companies' behavior, new criteria for disclosing results (disclosure) increasingly include environmental risk in investors’ decision-making matrix.
The actions of companies and the changes in global finance are the result of the movements initiated by the Paris Agreement. It is in this scenario that we have developed a new concept of the future, Vision 2050, with what we expect from businesses in the country in 30 years. Our entrepreneurs are betting on a circular and regenerative economy that recovers life support systems to reduce the damage already caused.
We are experiencing a global race for a cleaner economy, with US President-elect Joe Biden and China signaling the same path. Recent moves by both countries – the largest economies and main emitters – raise expectations for the next chapters of climate governance. At the end of 2021, COP-26 will take place in Glasgow (Scotland), when we will discuss new targets to prevent a fatal increase in the planet's temperature and the negotiation of Article 6, essential to give the private sector the necessary scope and reach to leverage climate efforts. It will be a new chapter for the Paris Agreement and a return to the negotiating table. The business sector will be present, with its vision for the future and willing to contribute. The time has come to join forces, with a cool head, to cool the planet.
