COP28 delivered at least 3 new developments that corporate sustainability leaders will need to grapple with in 2024.
The most recent COP28, hosted in the UAE, delivered several pivotal developments that will warrant the attention of every corporate sustainability leader in 2024. Here are three key insights demanding the careful consideration of chief sustainability officers moving forward:
1. Business advocacy under scrutiny for influencing fossil fuel debate
Amid the global push for more robust action, corporate climate initiatives are under greater scrutiny that extends beyond mere emission reductions. As Lobby for Good founder and academic Alberto Alemanno notes in the Stanford Social Innovation Review, the business community is at a crossroads, facing mounting pressure to cut emissions and reconsider its lobbying practices, given their outsized influence on policymaking.
Notably, at COP28, business interests seeking to dilute commitments to phase out fossil fuels were extensively documented. The Center for International Environmental Law analysis revealed the presence of 475 lobbyists advocating for controversial Carbon Capture and Storage (CCS) projects - which critics write off as an expensive distraction. To contextualize, the entire U.S. Government’s COP delegation comprised 159 diplomats.
However, in stark contrast to much of the pro-fossil fuel lobby, COP28 also showcased how businesses, even those heavily reliant on fossil fuels, can wield influence positively. One notable example is Australian mining billionaire and philanthropist Andrew Forrest. As the founder and Executive Chairman of Fortescue Metals, the world's fourth-largest iron ore producer, Forrest has boldly committed to phasing out fossil fuel use at his Australian iron ore sites by 2030. Now, as he actively urges his peers to follow suit, Forrest embraces policy entrepreneurship alongside his traditional business interests. He is wasting no time confronting fossil fuel-reliant business leaders and fossil fuel-producing countries who cannot commit to a 2030 or even 2035 with a simple question: “When are you going to stop burning fossil fuels?”
As part of Forrest’s provocative approach leading up to and during COP28, he financed advertisements in major newspapers worldwide, challenging the effectiveness of CCS and branding it an 'old lie' for its alleged failure to deliver promised impacts. Before the conference, Forrest traversed the globe, delivering lectures and publishing open letters signed by scientists, addressing the legal consequences of increased humidity on the human body. He also reversed his opposition to a global carbon tax for the shipping industry, acknowledging its necessity for a global green transition despite the
Forrest's message unsurprisingly resonates with the sentiments echoed by numerous NGOs. As a business magnate who amassed his wealth from fossil fuel consumption, however, his advocacy is poised to become a benchmark against which other similarly vested leaders will be measured, distinguishing him from those who lobby for solutions perceived as insincere and lacking credibility. As Alemanno notes, this added pressure may hold more companies accountable to the public for how “they exercise their lobbying power.” This could lead them to “support—or at least not oppose—ambitious policy targets” in the near future.
2. More pressure is coming to reduce corporate emissions
Currently, 92% of global GDP, spanning operations of both large and small businesses, falls under some type of net-zero target. Despite this widespread adoption, the lack of clear standards to differentiate genuine climate actions from mere assertions has allowed greenwashing to persist. Business leaders need to recognize that this era of ambiguity is swiftly drawing to a close.
Consumer expectations are evolving, with a rising demand for corporate net-zero targets to be substantiated by third-party standards. According to a recent survey by Patch Inc., a climate technology business, over 1500 European consumers, particularly in the UK and Germany, express a level of trust in businesses' climate actions (75%). However, only 13% “fully trust” these actions.
On the contrary, when businesses collaborate with third-party organizations to guide their climate initiatives, at least a quarter of consumers feel a boost in trust. This trust gap underscores the increasing necessity for businesses to engage with reputable integrity standards such as the Science Based Targets Initiative (SBTi). SBTi plays a crucial role in measuring and guiding climate action across businesses, providing a framework for corporate commitments to be taken seriously. For claims and climate targets to be validated by SBTi, companies must commit to substantial emissions reductions, ideally aiming for a 45-50% reduction by 2030.
SBTi has validated 500 companies against its net-zero standard since its launch two years ago. This marks a significant milestone, and the momentum is expected to grow further, with an additional 2,000 companies anticipated to have their net-zero targets validated in the next 24 months. At COP28, SBTi also urged companies to extend their commitment to adopting science-based targets beyond their operations. This call to action aims to create a 'supplier snowball effect,' encouraging other companies within supply chains to set science-based targets. AstraZeneca serves as an exemplar, which has set a target of aiming for 95% of its suppliers to establish science-based targets by 2025.
The various voluntary integrity frameworks, such as SBTi, serve as critical foundations, setting the stage and generating momentum for the imminent regulation of corporate claims. Earlier this year, the European Union took a pioneering step by introducing new regulations for claims. Going forward, any claim made by a company operating in Europe must reflect its actions. While the U.S. Securities and Exchange Commission (SEC) experienced delays, expectations are high for the release of similar regulations in the first half of 2024 to oversee claims made by companies. This new regulatory landscape will likely usher in an era of accountability for the veracity of corporate assertions.
3. Carbon credits still have a necessary role to play - especially for developing countries
Earlier this year, confidence in the integrity of carbon credits wavered due to a series of reports challenging their efficacy in delivering genuine emission reductions. This uncertainty led many companies to hesitate or even reject purchasing these credits. However, a pivotal announcement during COP28, jointly made by several organizations and standard setters, underscored the complementary and valuable role that carbon credits can play “in supporting ambitious climate action.”
Even if a company is on track to reduce its emissions by 50% by 2030, carbon credits become crucial for offsetting the remaining 50%, contributing to the communities actively building vital natural climate sinks and scaling technology. For example, the sale of carbon credits can direct financing towards nature-based solutions that address deforestation or scale up new technologies designed to remove carbon from the atmosphere. A pre-COP28 study by Asocarbono in Colombia revealed that over USD 300 million was raised across 212 nature-based projects, with 72% directly supporting local communities, including indigenous groups engaged in vital biodiversity efforts. These funds generate jobs and aid community-driven initiatives, enhancing local governance, infrastructure, and essential services like health, education, water, sanitation, and connectivity.
Overall, carbon credits have the potential to help countries address their climate needs, which are currently facing an annual gap of $600 billion to 2050, 10–18 times greater than current aid flows. According to a recent analysis, nearly 50% of the emissions required by 2030 to limit warming to 1.5°C could find support through 'high-integrity' project-based carbon markets that align with proper standards.
Importantly, these credits should be considered additions, not substitutes, to a company’s emission reduction efforts. Secondly, standards like The Voluntary Carbon Markets Integrity Initiative and Equitable Earth will outline quality criteria that carbon credits must align with to instill trust.
This article was written by Michael Sheldrick from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.