The Paris Agreement: What It Means for Business

A growing number of businesses understand that money can be made by mitigating climate change. Their collective voice is becoming louder and more credible as over 150 countries prepare to formally sign the Paris Agreement on Friday in New York City.

The question now is not whether that voice is heard by national governments, but how soon policymakers will recognize the rise of clean energy as the biggest driving force behind sustainable economic growth.

The We Mean Business coalition held a global press call in advance of this week's proceedings at the U.N. headquarters in New York. The coalition's members include companies such as Google, Ikea and BSR, as well as nonprofits like Ceres. On Wednesday, they relayed increasingly compelling metrics which prove the companies that choose to ignore this tectonic shift do so at great peril to their bottom lines.

“Implementing the Paris Agreement will enable and encourage businesses and investors to turn the billions of dollars in low-carbon investments we have seen so far into the trillions the world needs to bring clean energy and prosperity to all,” said Mindy Lubber, president of Ceres, which works to mobilize investor and business leaders toward a sustainable global economy.

The Paris Agreement goes into effect once 55 countries representing 55 percent of global emissions have deposited their “instruments of accession” with the U.N. This is basically a fancy term for signing the agreement and agreeing to be bound by its terms. (For more information, check out this breakdown from the World Resources Institute.) Advocates are hoping that could happen as early as next year.

“Many businesses have helped kickstart this movement by setting ambitious targets, reporting emissions and scaling up low-carbon investment,” the We Mean Business coalition says. But it is quick to admit policies are not changing quickly enough to keep the anticipated rise in global temperature to below 2 degrees Celsius.

As promising as the opportunities may be, there was still a palatable sense of urgency among those who participated in the call.

“We cannot waste time moving these programs forward,” Lubber said. “It’s time to put muscle behind the policy.”

If roughly 400 large institutional investors with more than $24 trillion under management working toward cleaner energy is not enough, one has to wonder how much it will take to keep the Earth’s temperature from rising more than 2 degrees. Lubber’s answer: $1 trillion every year through 2050.

“It’s now vital the 196 countries who adopted the Paris Agreement, especially the top 20 major emitters . . . (sign) the Paris Agreement to bring it rapidly into force,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which represents more than 120 European asset owners and managers.

All eyes are on how many countries will formally accede to the agreement this Friday – Earth Day – at the United Nations in New York. The more that sign, the stronger their message will be that economic opportunities await those investing in, executing strategies and/or developing technologies to improve energy efficiency and grow renewable energy.

While industrialized nations bear a big burden of global warming to date, Anirban Ghosh, the chief sustainability officer of the Mahindra & Mahindra conglomerate in India, said developing countries should look past who’s to blame and seize the opportunity. India gets it, he said, citing $17 billion already at work on cleaner energy among 20 industries there.  He called their actions “critical” to progress “because we will be the engines of growth.”

Michael Terrell, senior policy counsel for energy and sustainability at Google, strutted the more than 2 gigawatts of renewable energy the tech giant has helped develop as the largest corporate purchaser (he claimed) of renewable energy in the world. But he acknowledged mitigating climate change is something not even a few global companies can solve.

Terrell estimated the cumulative efficiency-clean-energy challenge and opportunity – today – to be a mere $13.5 trillion. But Steve Howard, the chief sustainability officer at Ikea, was quick to add: “If you want to build those industries in a big way, you need long-term, stable policy.”

“It is a very bridgeable challenge. We need to get on with it,” Howard added.

Image credit: We Mean Business Coalition