How Policy Traction on the Paris Climate Change Agreement May Take Hold
On April 22, 2016 – Earth Day – delegates from 150 nations gathered at United Nations headquarters in New York to sign the Paris Climate Change Agreement. The agreement was the signature product of the COP21 climate change talks held in Paris late last November, calling for participating countries to actively reduce greenhouse gas emissions and limit the global temperature increase to 2 percent.
While many observers applaud the move, others claim it may not be enough to significantly reverse global warming trends, citing that agreements like this lack an enforcement mechanism to hold nations accountable.
Despite this seeming “no win situation,” Tom Kloc, managing director, Corporate Responsibility & Sustainability Services, KPMG, offers a compelling view that the Paris Climate Change Agreement, and the COP 21 climate change talks, may succeed after all.
Speaking before business leaders gathered at the Environmental Initiative conference at Thomson Reuters Eagan, Minn. campus last week, Kloc reviewed the state of the COP21 talks and the possible policy ramifications here in the United States.
Though lawmakers debate the impact of climate change and limit actionable policy as a result, Kloc noted that businesses are already taking a serious look at risk assessments around climate change. Though some may deny that we are seeing rising sea levels as a result of global warming, the aftermath of Hurricane Sandy has proven to be a sufficient prompt for many insurance companies, for example, to reevaluate flood insurance offerings for customers living in coastal areas.
The agreement also takes a closer look at curbing greenhouse gas (GHG) emissions for the power and utility industry, which as previous Thomson Reuters data has shown accounts for a significant level of GHG emissions.
Some energy providers have gotten a jump on the agreement by shifting to more sustainable energy production – moving away from coal-powered plants to natural gas, for instance – which leads to reduced emissions, better operational costs and improved power output. The shift is less about environmental impact and more about financial benefits and investor demand for environmental, social and governance metrics that demonstrate reduced investment risk.
“In many ways, there’s more pressure in the investment community to meet carbon emission standards,” Kloc noted. And while the Paris Climate Change Agreement offers a framework around GHG emissions policy, he added that further change will be driven by a bottom-up approach.
“Its an equivalent to cigarette smoking,” Kloc said, “There was no grand law that came along and said we are going to limit cigarettes, it was a grassroots, local government [issue] that drove a larger change.”