By Vincent Neate, KPMG’s UK head of Climate Change & Sustainability
A delegation from KPMG’s climate change & sustainability practices around the globe joined many from the world’s climate change community in Durban this month for the latest United Nations Climate Conference (COP17).
Expectations were low as the prospects for the Kyoto Protocol looked bleak, resulting in uncertainty for business around future regulation and investment opportunities. Indeed the atmosphere was really quite subdued at times.
So, in this context, while the outcome of COP17 is far from perfect, it is a deal that greatly exceeded expectations and offers some positives for business.
For the first time, all countries have committed to an “outcome with legal force” committing them to curb their emissions. It does not put the world on track to keep temperature rise to below 2°C but by doing away with the divide between developed and developing nations, the agreement increases the likelihood that the EU will increase its emissions reduction target to 30 percent, which in turn could spur further commitments elsewhere.
Important progress was made on the establishment of the Green Climate Fund (GCF) which aims to mobilise US$100 billion annually to help developing nations reduce emissions and adapt to the effects of a warming climate. It had been unclear what role business would play in the fund; the worry was that the private sector would be sidelined.
But Durban saw confirmation that as well as sourcing funds from the private sector the GCF will be able to lend to private sector mitigation and adaptation activities. These have the potential to build green industries, create jobs, alleviate poverty and improve infrastructure as well as tackle climate change. However there remains a lack of detail about where the money is going to come from.
A low profile success was the commitment to develop a common system for measuring, reporting and verifying emissions reduction. This is key, not least because lending from the GCF may be results-based. If the private sector is to invest at scale, then there must be a robust and internationally accepted framework for evaluating achievement.
Business can take away from Durban a clear signal that the international community is committed to taking the climate change agenda forward, that market-based mechanisms will continue and that there will be clear reporting guidelines. Those that plan for increased government actions to reduce emissions and adapt to a climate-changed world will be best placed to take advantage of the challenges and opportunities of the years to come.
The climate agenda took a big step forward – now the details must be sorted out before 2015.
For a comprehensive review of the outcomes from the conference please see our global wrap up