The world has reached many important milestones related to climate change in 2015. The hottest ever recorded in human history, it was the year we crossed the symbolic threshold of over 400 parts per million of carbon dioxide in our atmosphere. Today we have a new milestone: national leaders have come to an historic and ambitious agreement in Paris that will enable us to realize the transition towards a clean economy and stop dangerous climate change.
During the past two weeks at COP21 – and for many months preceding that – CDP and its partners in the We Mean Business coalition have urged governments to push for the highest level of ambition, and to send a clear and truly catalytic signal to the real economy.
We are overjoyed that the final Paris agreement is the low-carbon, investment-grade accord that the world needs.
By establishing a clear, long-term goal to achieve an early peak of greenhouse gas emissions and zero overall global emissions in the second half of this century, governments have set us on a path to decouple our prosperity and development from fossil fuel use.
We congratulate negotiators in Paris, under the leadership of the French Presidency: in this accord, they have truly raised hopes with their recognition of the dangerous consequences of climate change. We welcome the desire of the parties to limit the global temperature rise not just to below 2°C, but to strive for 1.5°C and, critically, to update national targets every five years to keep raising ambition.
Governments have taken this lead from business ambition, so readily demonstrated in Paris – from the 114 companies pledging to set climate science-backed carbon reduction targets to those signing up to 100% renewable energy and hundreds more signing up to bold climate action through CDP and the We Mean Business coalition. The Paris Agreement now provides the policy foundation from which these efforts can and will be scaled up. CDP is a ready and willing partner to enable the private sector to achieve this.
Carbon pricing, as acknowledged in the text, is key to unleashing the trillions of dollars needed for energy infrastructure investment. It will provide an incentive to reduce emissions, alongside a mechanism for trading emissions units. A growing number of countries have or plan national policies for carbon pricing and businesses are beginning to act. Over 1,000 companies reported to CDP that they are integrating or expect to integrate a carbon price into their business planning over the next two years. This agreement should bring greater confidence that prices on carbon will continue to rise.
Tackling deforestation plays a crucial role in stopping global warming. We welcome the agreement’s support for the results-based payments, building on earlier progress made with REDD+. We are delighted too at the establishment of a global goal on adaptation, noting that water resilience is crucial in efforts towards both climate mitigation and adaptation.
To help this ambitious accord succeed, we must turn to the core principles of measurement, transparency and accountability. Oversight of greenhouse gas emissions disclosure and reporting transparency is a fundamental driver of investment into clean energy and technological innovation. It is also a fiduciary responsibility, as highlighted by the Financial Stability Board’s announcement of the new Task Force on Climate-related Financial Disclosures (TCFD) to which CDP will contribute its expertise.
Investors have been increasingly ‘mainstreaming’ climate action as they seek to reduce climate risk in their portfolios. This is evidenced by the twenty-fold increase, since CDP’s inception, in our investor signatories to 822 with $95 trillion in assets, who request that companies disclose environmental information. This shift in investor behavior is underscored by the New York State Pension Fund’s recent launch of a $2 billion index using CDP data, which will exclude or reduce investments in high carbon emissions contributors and increase the fund’s investment in low emitters.
With its global environmental disclosure system that enables companies, cities and regions to be transparent and accountable, CDP is at the heart of this transition to a new, low-carbon world. The CDP system, which already holds information from 5,500 companies representing nearly 60% of global market capitalization, also tracks progress against commitments by companies, investors and cities, which are showcased on the UNFCCC’s NAZCA portal.
This history-making Paris agreement is our new north star. It gives business, investors, cities and regions – all critical to its delivery – a clear signal of their direction of travel. The private sector, leveraged by the ambitious financial contributions agreed by national governments, now has the power to channel serious money into low-carbon investment. The work has only just begun, but the transition to a thriving, clean economy is inevitable and the business case for climate action has never been clearer.