The Business Imperative for International Carbon Price Signals at COP21

While the above feels like a headline I've drafted a dozen times before, the business case for climate action remains stronger than ever. However, here at COP21 countries continue to quibble over the funding and implementation of the $500 million Green Climate Fund.  More specifically, for companies operating internationally (i.e., almost every company that manufactures a product of any kind these days), clear price signals and a long-term policy actually make it easier to conduct business.

Letitia Webster, global director of corporate sustainability for VF Corp., explained to me in Paris, where she is lobbying in favor of a strong commitment to climate eradication, that global regulations are absolutely necessary for her organization's forward planning. "We need predictability across globe because we lack certainty in the U.S. We have goals for reducing carbon, but we need to know what the rules are going to be."

VF Corp., a holding company for apparel brands including Timberland, The North Face, Reef, Vans, Wrangler and many more, has operations in 150 countries and a supply chain running through 70 countries including India and Bangladesh. This means it has an absolute economic imperative to monitor and ideally reduce impacts of climate change. For VF, it is a no brainer.

Webster shared an example from VF's U.S. headquarters to demonstrate how an uncertain policy environment can wreak havoc on the company's business decisions. The company usually uses a two-year payback to approve new capital investments. North Carolina's state legislator recently put the kibosh on renewable tax credits, which throws off all of VF's calculations on payback for efficiency upgrades and renewable installations for its headquarters. With hundreds of miles of conveyer belts moving around the world, this uncertainty means stagnation for improvements that could otherwise take place.

That's why VF is in Paris lobbying with Ceres, alongside six other apparel companies, in favor of:

"strengthening mechanisms in the climate deal to ensure net-zero greenhouse gas emissions well before the end of century,” including assurances that national climate commitments are strengthened every five years, starting in 2020. It also highlights the importance of "adaptation funding to build climate-resilient economies and communities."

The issue of the the adaptation fund, also known as the Green Fund, is a testy one, with everyone in favor until it comes time to pay the bills. The idea is that developed countries -- which caused the bulk of climate issues -- should finance adaptation and recovery for developing countries that stand to encounter the worst impacts.

Oxfam’s head of advocacy and campaigns, Celine Charveriat, said: “Climate funding is the glue that will make the Paris agreement stick. It will be the difference between a minimalist agreement and one that starts to deliver for the world’s poorest people.”

The issue of the developed world funding recovery from climate change impacts continues to be a key issue at the COP21 talks. In addition to mitigation and adaptation, "loss and damage" has become a key sticking point for the developing nation blocs. Developed countries dislike the term because it invokes a legal responsibility to act. As reported in Grist, "Rich countries adamantly do not want even the specter of admitting liability and compensation obligations for the effects of climate change." This is a non-starter with the U.S. Congress' Republican majority chomping at the bit to eradicate any responsibility for climate change adaptation, mitigation or even acknowledgement.

But recovery and economic development in the global south hinge on a fair response to climate change. While some countries quibble over the expenses and the responsibility, business leaders look to clean energy, energy efficiency and sustainability as the drivers of innovation and economic growth. By showing up in Paris to lobby for action, businesses send a message to global policy leaders that climate action doesn't have to mean negative economic impacts. As Webster puts it, "We're here to say climate policy is good business." We wish the documents coming out of the climate talks would be so clear and simple!

Stay tuned here for further discussion as the climate talks move forward. Missing something? Get caught up here. 

Image credit Jen Boynton