Why is COP26 important for businesses?

COP26 – the 26^th UN Climate Change Conference (COP26) – will soon be the focal point of news as the two-week climate change conference descends on Scotland. The summit is not just a talking shop between nations and global leaders, big business will be there – large international conglomerates, financiers and investors. Their presence recognises the crucial part businesses and other major organisations play in shaping the green economy.

Here are just some of those reasons:

• Green is good – it brings benefits for all and simply makes good business sense. For some, the green economy will bring new business opportunities, for others the focus is on adapting to a changing operating environment and meeting stakeholder expectations.
• COP26 will ultimately drive consumer behaviour – or rather the outcomes will. Research tells us that green products command a premium and green businesses are doing well. Many businesses are alive to this and want to help shape the market as well as do the right thing.
• Business is critical to delivering the goals set by governments – policies agreed at COP26 will filter down to regulations and businesses will need to comply. By taking part in the summit’s discussions, businesses are helping to shape their future regulatory environment.
• Horizon planning – COP26 provides an opportunity to picture the future, see what is headed our way and explore what needs to happen to steer the right course.
• Supporting investment – delivering on each nation’s action plans and, ultimately, climate change goals will need substantial private finance. As set out in the summit’s key goals, green finance will play a key role and so businesses will follow the outcomes of these discussions with great interest.
• Every business in every sector and in every jurisdiction impacts the environment – change is coming and with the decade to 2030 described by the UN as “crucial to limiting global warming”, it is coming at a rapid pace. As in any area of business, there is a need to be on the front foot in adapting to these changes and embracing them.

How will you help shape the green economy?

With just two weeks to cover such an all-encompassing issue, COP26 is not designed to be a panacea for the world’s problems. It is a platform for bringing nations together and is all part of igniting the “green revolution” as we lead up to 2050 – a milestone date for achieving net zero carbon emissions. If the UK reaches that milestone quicker, then UK plc will have the advantage of being able to sell its knowhow, technology and skills further afield.

There are a range of areas where exporting green could provide opportunities, including:

• The replacement of coal fired power stations with renewables and the importance of storing that energy.
• The required infrastructure around electric vehicles, in particular charging points, will be significant and manufacturers will need to keep pace with demand.
• The introduction of biodiversity net gain, ensuring developers achieve a set minimum increase in biodiversity through their developments.
• In the aviation, shipping and freight sectors, the need to reduce or eliminate emissions calls for new tech solutions.
• The decarbonisation of our homes will entail retrofitting technical solutions to provide different ways, for example, of heating and cooling them.

New industries, and new tech entirely, are also likely to emerge as the green economy starts to expand.

Depending on where you are at in terms of managing the risks and opportunities around climate change will influence the steps you take following news from COP26. However, at foundation level it’s important for all organisations to consider: how they impact the environment (e.g. the resources consumed and the environmental footprint made); how they will be affected by climate change; what information is shared with stakeholders; and what role the business can play in improving the planet.

Our team of legal experts in Environmental, Social and Governance support clients in responding to the issues raised by these important questions. Comprising lawyers from a range of disciplines, they are fully engaged in developments in this area and working with businesses from a wide range of sectors to advise on their approach to ESG matters.