To achieve the climate goals outlined in the Paris Agreement, businesses of all sizes, including ... [+]
The public sector will not achieve the climate goals outlined in the Paris Agreement—to limit the increase in temperature to 1.5 degrees Centigrade—without the involvement and commitment of the private sector to reducing and even achieving net-zero emissions. And soon. That realization and frankness is what drives Gonzalo Muñoz, co-founder of Sistema B and the UN COP25 High Level Climate Action Champion, to directly call out businesses of all sizes, including SMEs, to take action now.
And, as Muñoz shares, this isn’t just about doing the “right” thing—it’s the only financially sustainable way for organizations to operate into the future. “The smartest money is moving so rapidly with this aspect at the center. It's not only about ESG, it's about how much of not considering the climate risk increases the general risks of any investment. We're seeing how much of the money is moving a lot faster toward reaching companies that have this commitment in place. So, even taking the commitment gives you the possibility of being a better choice for the financial sector,” he says.
Starting with the 2019 UN Climate Conference, COP25, through this year and into next year’s COP in Glasgow, the role of the private sector in addressing climate change and taking climate action has taken a front seat alongside the duties of the public sector and civil servants. Business leadership, according to Muñoz, must either commit to becoming net zero by 2050, or even better, 2030, or “be comfortable being part of the problem.”
Muñoz believes Certified B Corporations, businesses that have been verified for their positive impact on people and planet, have an imperative to pledge, commit and take action on their climate impact. That to not do so would be a reason to forfeit their certification in coming years. This direct, science-centered approach is how Muñoz and the UN are working to make meaningful action—before it’s too late. And this passion has helped result in the NetZero2030 commitments by now nearly 1,000 B Corps, meaning companies are aiming to hit the net-zero goal 20 years before required by the Paris Agreements to do so.
I recently spoke with Muñoz as part of my research on B Corps and stakeholder capitalism. Here’s part of our conversation, where he discussed NetZero 2030, #RaceToZero, and how businesses of all sizes can get involved and take climate action today.
Tell me about the NetZero 2030, how it began and the commitment of businesses to this goal.
Gonzalo Muñoz, UN COP25 High Level Climate Action Champion
What was absolutely instrumental for this to happen was that Chile took the lead on the 2019 UN Climate Conference, COP25, after Brazil stepped away. COP goes around five major areas of the world and it was time for Latin America. Brazil was supposed to be the country that was going to lead COP 25 and at last minute they decided not to, so Chile took the baton and one of the things that an incoming presidency for COP has to decide is naming what is called the High Level Climate Action Champion, a figure that was created in the Paris Agreement to lead the non-party stakeholders.
The role of the High Level Climate Action Champion is to mobilize action among those sectors and until COP25, all of the previous Champions were civil servants. For Chile, it was absolutely evident that the role had to be led by somebody coming from the non-state sector, and they named me. For the first time ever, the High Level Climate Action Champion came from the private sector, which has been replicated by the U.K. The following High Level Climate Action Champion is now Nigel Topping former CEO of We Mean Business, also coming from the private sector.
The second thing that Chile did in that sense was to ask me and the team to position science at the center. To say, “Okay, we have to follow science and science has just spoken.” In October 2018, a couple of months prior to COP24, scientists of climate at the Intergovernmental Panel on Climate Change (IPCC) released a report stating the best possible option is to limit temperature rise to 1.5 degrees Centigrade and that to meet that goal the world has to be net zero by 2050 the latest. The year to achieve net-zero emissions worldwide, everything has to emit the same amount or less than what nature is capable of sequestering.
We then launched the Climate Ambition Alliance at the Secretary General Summit in September 2019 for everyone who wanted to follow and was capable of achieving a net zero by 2050 target. At that time, there were 66 countries that committed. But it is not only about the countries. We started to put together businesses, investors, sub-national regions, and cities all working together toward net zero by 2050.
Why is it important to have a diversity of companies committed?
We are trying to change the narrative of climate solutions from being North-centric to one that represents everybody in the world. This requires diverse types of companies and providers to have the same target, if not a more ambitious one. The #RaceToZero campaign, launched with Nigel working as “two champions, one team”, is pulling more and more members, it now has 1,100 companies and hopefully in December, at the Paris Agreements anniversary, we will update the number.
We launched the SMEs Climate Hub with the International Chamber of Commerce, with We Mean Business, and Exponential Climate Action Roadmap, as ways to bring thousands or hundreds of thousands of SMEs from around the world to join #RaceToZero, to join the commitment.
And in that case, the target is 2050. Not committing, at least to 2050, is recognizing that you are comfortable being part of the problem. ... It's not only about your position, but about changing the rules of the game with a bottom-up approach.
Can you say more about how businesses will work with the governing bodies and what sort of coordination exists there?
The Paris Agreement recognizes that the role of the business sector is important in terms of giving the business sector the possibility of moving from being part of the problem to being an important part of the solution. And if that works well, what we need to see in every country of the world is that once the national government signed the Paris Agreement, that should be perceived by the business sector in each of the countries saying, “okay, my country signed the Paris Agreement, that means climate is now in the center of the rules of the game.”
Countries will start positioning different types of regulations, as business leaders start moving toward the implementation of the Paris Agreement. That is the activation of the so called “ambition loop”.
What do you say to businesses or companies, affected by the economic downturn from COVID, that are focusing on getting their business back on the ground rather than focused on goals like climate change, which is, decades away?
We need to increase the number of commitments in order to change the culture. When it comes to small businesses, this is a massive opportunity. We already have the big multinationals of the world declaring that they need to be net zero by 2050. They are urgently needing SMEs of the world to say, “I'm with you, count on me.”
The smartest money is moving so rapidly with this aspect at the center. It's not only about ESG, it's about how much of not considering the climate risk increases the general risks of any investment. We're seeing how much of the money is moving a lot faster toward reaching companies that have this commitment in place. So, even taking the commitment gives you the possibility of being a better choice for the financial sector.
But also during COVID times, we have seen an acceleration of the energy transition. We have seen an acceleration of ESG metrics being considered. We have seen an acceleration on the value of nature-based solutions. So I'm absolutely sure that probably five years from now, we will take a look back to COVID and we will see how many of the trajectories sped up during this year. And, in that sense I would encourage any business of the world to surf the wave and not to just stay on the beach staring at it.
Do you have any case studies or examples of projects, companies, or people that are really inspiring to you?
It’s been two years since the IPCC launched their report, so things are moving really fast. But still we have to see a change of trajectory on emissions, on regeneration of the ecosystem, on capacity of solving the crisis. If you go to the financial sector, we're seeing insurance companies, asset managers, and asset owners—$5.1 trillion committed to net-zero emissions. We’re seeing all of that happening because they have learned even this year, how to measure the risk in a better way.
We're seeing airlines committing to fly NetZero flights by 2035, because they know if they don't do that, they won't have their social license to operate. You're seeing countries like the U.K. or states like California, Quebec, or even companies like Daimler killing the internal combustion engine earlier than 2030. That means a lot in terms of those who are places where the internal combustion engine was created, and the economy was moved.
We saw Walmart declaring to become regenerative by 2035. To become regenerative by 2035 is a massive topic. I mean, of course, joining Unilever and Danone, Mars, Cargill, and big multinationals that have somehow been blamed on being based on extraction and now they're absolutely committing to regenerate. We're seeing energy company General Electric deciding to get out of coal. We're seeing Nestlé, Erickson, BT, IKEA, Telia and Unilever saying, “we need this because we need to align them.” They're already sending a message to their providers.
