By Chris Southworth
ICC United Kingdom
Aside of the more immediate challenge of recovering from Covid, the climate challenge is the big topic exercising many boardrooms. Achieving net zero will require a step change in the way we do business and how we operate long term, both domestically and internationally.
Climate action, like sustainability, is demanding that policymakers develop coherent frameworks across government departments and between local, national and international policy frameworks. It also requires a level of international cooperation that we haven’t seen before, being a problem that none of us can solve on our own. We all need to pull our weight and make the transition in a way that works for all nations and leaves no one behind with each economy facing its own unique challenges. It’s a huge challenge but one we can excel at.
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COP26 will be a good indicator of how far we have come since the Paris Agreement, to what degree we have political will and how ambitious we are as an international community to tackle the challenges we all face, but it is only one staging post on a long journey. The most important point is that we all start taking actions, however small, that sum up to a global solution which is why it’s so important to sign up to the UN Race to Zero campaign and show our support to the global effort.
How we support small companies will be critical. Small companies make up the lion’s share of the global economy and whilst we can make a difference working with large companies and their supply chains, we cannot deliver real, sustainable change without the help of every small business. The SME Climate Hub is an essential step forward in providing the practical guidance and tools they need to identify what measures need to be taken to make the transition, whether that is upgrading heating systems or using more efficient forms of light. It all counts. Small actions may not seem like much but when undertaken on scale, they can transform the way cities and economies impact the world. Large companies will play an important catalytic role and be able to help incentivise change through global value chains.
New technology, the digitising of the global economy and the shift towards green and sustainable finance will all be crucial enablers in the effort. The UK-led drive at G7 to modernise laws and digitise trade documentation will remove four billion paper documents floating around the global system and enable companies to invest in more efficient, climate friendly technology solutions. Greener forms of finance will play a crucial role in re-orientating the financial system towards the climate challenge – lack of finance has never been the issue but the type of finance and how it is available has, so efforts from the big banks to switch focus should be applauded.
We need to do this in a way that supports heavy industry to mitigate impact and make the transition. Cutting off access to finance for the heavier polluters is unlikely going to be the way to incentivise the transition if we want to all arrive at the same end point. For some industries, the transition might be quick but for others it’s going to take more time and a herculean leadership effort to make it happen which we should all support.
Our Parliaments will also play an important role in ensuring our national laws and bilateral trade agreements all align to global frameworks and importantly promote a race to the top on environmental standards and climate resilience. G7 nations have a duty to lead by example but also have an important function in helping fund climate resilience measures in the poorer nations. Bilateral trade agreements play an important role in raising the bar between countries and setting new standards for others to follow. Multilateral and plurilateral trade agreements often base themselves on best practice already in place so if countries like the UK can set high standards, these will help set examples for the global community to follow.
We should all be supporting the efforts of Costa Rica, New Zealand and 40 other governments who are playing a key leadership role at the World Trade Organization (WTO) to put climate on the agenda and align rules to ensure trade contributes constructively to the net zero transition and doesn’t act as a barrier. Aligning rules and removing trade barriers will form an important part of the effort in enabling green goods, services and finance to flow worldwide.
Domestically, there are lots of opportunities for the government to build new, green industries that create good quality, green jobs. Hydrogen, carbon capture, renewables and battery technology all present great opportunities for the UK government to create thriving new industries that will generate jobs in the places where they are needed most to level up the country, build back better and develop the export capabilities the UK will need to realise its green trading ambitions. What we need is a net zero transition on scale that takes a strategic focus on supporting key sectors at the same time as helping all businesses. It’s a both/and not an either/or.
Most of all, we are going to need great leadership across government and the private sector to make this happen and levels of cooperation between consumers, workers, business and government that we haven’t seen before. It’s interesting how the UK has wholesale adopted the net zero goal, the challenge now is to deliver it and bring others with us using the rich network of relationships we have around the world and international forums we are leading, G7 and COP26. We need to replicate this leadership in the UN, G20 and WTO where we can amplify our voice alongside others and create the momentum we need to generate fundamental change.
Closer to home, climate action is a unique unifying agenda that can bring the country and generations together after four years of fractiousness and division. It’s one agenda few argue with so let’s use it as an opportunity to bring us together again and show the younger generations that we mean business on an issue they really care about.
At ICC, we will be playing our full part at international level, working with the UN and others to support the Race to Zero, promoting international best practice and helping to align frameworks so we are all pulling in the same direction. At our flagship ICC International Trade and Prosperity Week, we will also be focusing on how companies can make the transition, what can be done and what practical support is available and in the UK adding our voice to others calling for a trade strategy that sets out how trade will be contributing to delivering net zero. We will also be working with the All-Party Parliamentary Group on Trade and Export Promotion to look at the opportunities and make practical recommendations to where we think government can lead by example.