CDP's new Policy Summary which includes the recommendations for policymakers to incentivize corporate climate action has been released.
We are running short of time: The decisive decade has already begun. The postponement of COP26 to November 2021 is no excuse for inaction – to the contrary – governments must take action as soon as possible. We therefore propose three recommendations for governments to implement to ensure the net-zero transition remains firmly underway. We need governments and non-state actors to go further, faster, together.
Recommendations for policy makers:
1- Strengthen Nationally Determined Contributions (NDCs) and long-term strategies and ensure that they are in line with limiting warming to 1.5°C.
Why are we asking governments to urgently strengthen their climate plans?
2020 is a critical year for increasing climate ambition to limit warming to 1.5°C. The 2019 UNEP Emissions Gap report warns that unless global greenhouse gas emissions decrease by 7.6% every year to 2030, the world will miss the 1.5°C temperature goal of the Paris Agreement. By 2030, emissions must be 55% lower than in 2018 to put the world on the least-cost pathway to limiting global warming to 1.5°C. Urgent government action is crucial to ensure that no more time is lost. The Paris Agreement sets out that Nationally Determined Contributions (NDCs) need to be strengthened every 5 years. With the postponement of COP26 to November 2021, the UNFCCC is now calling on countries to submit NDCs “9-12” months ahead of COP26.
How do Science-Based Targets and netzero 2050 targets fit together?
In contrast to Science-Based Targets, corporate ‘net-zero’ 2050 targets do not currently have a standard definition or commonly agreed requirements, leading to a growing number of high emitting companies stating they will be net-zero in the long term while pursuing a high carbon nearterm business models. Some plans may include growing emissions and relying on future unproven tech solutions and/or large amounts of offsets, using long term promises to avoid the short-term action we need to keep a 1.5°C target within reach. The SBTi which is run by CDP, WRI, WWF and UN Global Compact – along with the We Mean Business Coalition and supporting organizations are now working with companies on science-based net-zero targets, through encouraging companies to sign the Business Ambition for 1.5 pledge. This pledge aims to align as many large businesses as possible with setting a short to medium term, science-based 1.5°C target and being net-zero well before 2050.
2- Ensure that climate risks are transparently managed across the economy, while transitioning to net-zero.
Why mandate disclosure?
The TCFD’s 11 recommended disclosures and underlying principles are a useful, universally and internationally accepted framework to promote greater comparability of disclosures and aid investors in their decision-making and capital allocations. Implementing the TCFD recommendations will deliver the quality of climate-related financial information that investors need for decision-making and the exposure to climate risk can be assessed, reduced and managed by companies.
Which governments are already considering TCFD-aligned disclosure?
In September 2020, New Zealand announced it will become the first country worldwide to implement mandatory TCFD reporting for large banks and insurers – a step that would ensure that around 90% of assets under management in New Zealand fall under TCFD reporting as soon as 2023.
In November 2020, the UK became the first G20 country to set out its intention to mandate TCFD-aligned climate-related disclosures across the economy with most measures in place by 2023 and full coverage by 2025.
Already in May 2020, the Canadian government made TCFD-reporting a requirement for large companies to access COVID-19 emergency loans under its Large Employer Emergency Financing Facility.
In the EU, a range of legislative and non-legislative measures refer to the TCFD recommendations, suggesting that the EU is moving in the direction of mandatory disclosure
3- Capitalize on nature co-benefits and drive action to reduce deforestation through supply chains.
Nature-based Solutions and climate change: what is the link?
The world’s ecosystems, if managed correctly, can provide effective Nature-based Solutions to climate change. NbS is an umbrella term to describe a wide range of ecosystem-based options to mitigate climate change and ensure the sustainability of ecosystems. They can be understood as “actions to protect, sustainably manage and restore natural or modified ecosystems, which address societal challenges (e.g. climate change, food, and water security or natural disasters) effectively and adaptively, while simultaneously providing human well-being and biodiversity benefits.” Conservation, restoration, and the management of ecosystems can play a crucial role in climate change mitigation. Research has shown that Nature-based Solutions can provide over a third of emissions reductions needed by 2030. At the same time, such practices can be important for climate change adaptation, buffering societies from the impacts of climate change and reducing disaster risk. With this dual role, nature can and must play a critical role in climate mitigation and adaptation strategies.
What should policymakers do about it?
Policy makers should mainstream NbS into legislation and regulatory frameworks, improve criteria, metrics, and measurement of NbS and biodiversity. Prevent forests and other high-biodiversity areas from being converted into agricultural land, by requiring due diligence on these issues from companies.
The policy summary can be found here.