The Implications of COP26 for Businesses and their Legal ProfessionalsNews
Traditionally, Conferences of the Parties (COPs) are seen as major steering events for businesses. It is questionable however whether COP26 will have the much-needed implications for business that consumers, advocates, and politicians have been calling for globally.
What are the COP26 climate pledges?
COP26 was a highly anticipated event, hailed as the most important COP since COP21 - where the foundations of the Paris Agreement originated. The resulting document from COP26, the Glasgow Climate Pact, sets out the commitments and pledges made by participating countries. These are the highlights:
- Paris Rulebook: One of the biggest successes of COP26 was the agreement on the Paris Rulebook – a transparent standard on how countries report on their emissions reductions under the Paris framework. Agreement on this standard will allow for objective comparison between countries and their progress.
- Climate Justice: COP26 failed to establish a ‘Glasgow Loss and Damage Facility’ – the proposal aimed at offering (financial) support to millions of people who suffer on a daily basis from the climate impact caused by rich countries and corporations. No concrete solutions were agreed upon for resolving the impact of climate change on human rights around the world.
- Methane: US president Joe Biden and European Commission president Ursula von der Leyen put forward a pledge asking countries to cut their methane emissions by 30% by 2030. Ultimately, 109 countries signed up, jointly representing roughly 50% of global methane emissions. Notable absentees are Australia, China, India, and Russia.
- Coal: Countries at COP26 agreed to a weak commitment to ‘phase down’ rather than ‘phase out’ coal. China and India were the main drivers behind the watering down of the key coal commitments. More than 40 countries agreed to the weakened coal commitments. Absentees are China, India, and the US. However, Poland, Vietnam, and Chile did commit, and they are heavy coal users too
- Deforestation: More than 130 countries signed a declaration on forests and land use, solidifying their promise to “wor[k] collectively to halt and reverse forest loss and land degradation by 2030”. Moreover, the UK and Indonesia put forward the ‘Forest, agriculture, and commodity trade statement’ (FACT), to support more sustainable trade between countries that produce and consume commodities.
- US-China Joint Climate Declaration: The surprising joint declaration published by two major players (and emitters) discusses collaboration on coal, promoting decarbonisation, protecting forests, and conducting technical cooperation.
The pledges made at COP26 will gradually be translated into laws and more actionable points on the national and international levels. It is important to note that the Glasgow Climate Pact is not legally binding. Rather, the text “requests” countries to “revisit and strengthen” their climate pledges by the end of 2022, and similarly calls for a “phasedown” of the use of coal. The language is therefore weak and passive. The Pact however also refers to the IPCC report, reiterating how significant emissions cuts are needed by 2030.
Implications for business legal professionals
Corporate legal professionals have a major role to play in the implementation of a more climate-conscious approach in business practices. The climate crisis should no longer be top of mind for just environmental or climate change lawyers. Particularly those heavily involved with business dealings and operations have the potential to imbed sustainability into their clients.
As with many other legal frameworks, the written result of COP26 lacks hard law and an enforcement mechanism. Legal professionals should take the lead when working with their clients, going beyond advising clients on potential risks, liabilities, and financial/reputational damages that may arise from irresponsible business behaviour. Therefore, rather than speculating about the possible implications of COP26 on the legal industry, here are four implications it SHOULD have:
- Corporate legal professionals should assume a more proactive role in leading the client towards better environmental decision-making.
- Through more voluntary disclosure, corporate clients can be transparent regarding the sustainability of their operations across the supply chain to stakeholders.
- Rather than waiting for countries to implement legal frameworks turning their pledges into plans, corporations can be guided to comply with commitments made by countries.
- Legal professionals can enable thought leadership and innovation by pursuing a responsible, pro-active legal strategy, thereby creating a competitive advantage for the client.
Overall, we can conclude that COP26 lacks any resulting hard legal mechanisms legal professionals love to hold onto. However, where our countries’ leaders may have fallen short on making tangible commitments due to politics or diplomacy issues, legal professionals need not be held back by such constraints. Particularly when working with corporate clients, there is a pro-active role to be assumed which will provide much long-term value to your client.