On December 12, 2015, 195 countries reached a historical agreement to reduce their greenhouse gas emissions in order to avert the worst effects of climate change. The Conference of the Parties (COP21) asserts that the rise in global temperature must be kept under 2˚C (compared to pre-industrial levels) to avoid the most catastrophic effects of climate change. COP21 also established for the first time the aim to keep the temperature below 1.5˚ to protect island countries, which are most vulnerable to the risks of sea level rise.
The groundbreaking pact required that nearly every country, large and small, developed or developing, take action and do their part to reduce greenhouse gas emissions. You may be wondering how the agreement will affect your business? Let’s take a look at the specific regulations agreed upon by the United States, as well as some things you can start thinking about as a business owner.
The United States Agreement
Each country set goals they will abide by to curb temperature rise, and in turn, they each submitted “nationally determined contributions” that indicate how much they will reduce their emissions and what actions they will take. The United States intends to achieve an economy-wide target of reducing its greenhouse gas emissions by 26-28% below its 2005 levels by the year 2025. It also agreed to make its best effort to its total emissions by 28%. The agreement won’t be officially signed until April 22, 2016 and won’t take effect until 2020.
What Does This Mean for Businesses?
Because the agreement is still in its early stages, there are many details which still need to be talked out and decided upon. However, businesses have a vital role in the fight against climate change. Many companies are affected by climate change and have already taken adaptive actions, such as the use of solar panels and the use of other low-carbon technologies. Businesses will continue to innovate and develop new products, as well as improve current process and operating procedures to reduce energy consumption and improve efficiency.
There also seems to be no clear guidelines yet as to what constitutes the difference between a small business, large business, and corporation in regards to the implications and requirements.
Questions to Ask Within Your Company
While the waters may seem quite murky right now, there are some questions and discussions that can start taking place–so that companies are forward-thinking in terms of their role to run a more sustainable business.
Consider these questions to begin company-wide discussions:
How is climate change currently affecting our business and business model?
- Emissions regulations may prove to be costly. So, how can you develop new carbon-neutral, eco-friendly products and technologies?
- Energy costs related to climate change are predicted to increase. What improvements can be made in processes to reduce greenhouse gas emissions and save energy?
- What can we do to ensure we are sustainable for the long run, both environmentally and financially?
- Investors and other stakeholders are encouraging companies to identify, assess, and report publicly on the financial implications of climate change to their business. Do you have an effective system in place for tracking data, reporting, and making it public knowledge?
- Are we committed to working with the local and statewide governments to usher in a new low-carbon era? And if “yes”, how can we become leaders in our industry?