Sustainable Views: Why businesses should be at COP

Hello and welcome to the Sustainable Views podcast, where we discuss all things sustainability. My name is Philippa Nuttall, editor of Sustainable Views, and I'm your host for today. So today I would like to welcome two fantastic guests that we have to discuss COP29. We have Ambassador Patricia Espinosa, who was former executive secretary of the UNFCCC, so the UN Framework Convention on Climate Change, and he's now CEO of the consultancy 1.5 Consultants. We also have Elliot Whittington, Chief Systems Change Officer at the Cambridge Institute for Sustainability Leadership and Director of CISL EU and the UK Corporate Leaders Group. So welcome to both of you. I think you were both in Baku in Azerbaijan for COP29, so I hope you've recovered from that. So to start today, I'd like to ask you both really just how you feel sort of Cop 29 went and in particular from a business perspective, kind of what you observed and the outcomes that you saw. Patricia, if you'd perhaps like to kick us off.

Yes, thank you. Thank you, Philippa. Thank you for having me in this podcast. And yeah, your question about Cop 29, how do I feel about it? Of course, it was a very, very challenging environment. It was taking place in a moment where we see a lot of divisions and tensions growing in different parts of the world. From that point of view, I would say that to me it was good news that in spite of all those tensions, which are real and are present every day, governments came together to discuss issues related to climate change and sustainability. So I think that's a good indication in my view that the sustainability agenda is very strong. There remains a wide understanding that this needs to be addressed. The issue of financing, of course, was at the center of the discussions. I think that we all knew from the beginning that a huge figure coming from public sources was not likely to emerge. In that context, in spite of the fact that it is, of course, the agreement to mobilize $300 billion is not enough and is not satisfactory to developing countries, still it represents a step forward. I try to be optimistic always about the process. And you know, in this process, sometimes there have been big steps like the adoption of the Paris Agreement, but that came after many smaller steps were taken. Now, from the private sector perspective, I would say that in my view, private sector was very much present, very engaged, very active in participating in the discussions. I believe that the big message from private sector was that the transition towards sustainability modes of operation that are low carbon makes sense. It makes also business sense, and it is absolutely necessary. This is an agenda that is good and necessary also for businesses. So in that regard, I would say it was also a positive experience.

Great. Thank you, Patricia. And so for you, Elliot, did you also see this positivity or was there sort of a more of a perhaps a negative outcome for you?

I mean, I think there is both the glass half full and the glass half empty. Story about COP. I'm not the first person to say this, but I think you could look at this process and say it is currently the most effective and successful multilateral governance thing that we've got, which admittedly is quite a low bar. So we aren't seeing global governance in a good place right now, but in a moment where we've just seen it, 2024 is It's the biggest election year ever. And I think a huge number of those elections brought in governments who are nationalist, who are isolationist, who are not keen on the compromise and messiness that goes along with multilateralism. And particularly, obviously, we have Trump being elected, you know, explicitly saying he wants to take the US out of the Paris Agreement. We've got a set of European elections which have shifted the political dial in Europe away from the same level of proactiveness on climate action and also challenged the ability of European institutions to be as clear as they were. So coming into that and expecting a lot, expecting almost anything is maybe more than you might have done from an advance. But absolutely, so we achieved something. We achieved a major step forward in terms of one of the most difficult questions within the negotiations, which is this flow of finance. So absolutely, there is definitely a glass half full. There is a very impressive story and a really substantive step forward. But of course, on the part of most, many developing countries, they point to real and rigorous analysis about their needs and point to the fact that these funding flows are not meeting those needs and are not, and are not sort of, you know, particularly the $300 billion figure. It's going to take us a while to get there. And is significantly below, I think, what the expectations are just in terms of public grant finance, let alone in terms of mobilized other funds. And of course, I think there is a really positive story about the fact that within the goal, there is a much clearer articulation of the fact that $300 billion is part of a bigger hole than that there is $1.3 trillion. But I understand again, from the perspective of many developing countries, they look at that $1.3 trillion and they look at that. The quite weak language in terms of there will be an action plan about how we're going to, or a roadmap in terms of how we're going to meet it. And that, that, that doesn't give them the confidence. The last thing is just to kind of completely support what Patricia was saying in terms of the business presence. It was there, it was active, it was dynamic. People were committed. You know, the green economy is very much alive and kicking despite the somewhat gloomy kind of mood music going into this COP. This was the second biggest COP ever. I spoke to business leaders who were not just there and taking part in the conversations, but were striking deals, signing MOUs and contracts, and were moving forward. And so I think, you know, the, the nature of COP as being a place where these kind of conversations can happen as well was also very strong.

Yeah, I think it's really interesting that you both bring that out about businesses and business being, being present in a, a positive way because a lot of what's reported in the press, and I'm a journalist, so I count myself among these people who cover these stories, is the fact that there were, I think there were 1,700 fossil fuel representatives in attendance. There was also various campaigners who pulled out the fact that there were lots of big food companies there trying to influence the negotiations. So Patricia, how can businesses, how can we change this perception of businesses and see how important they are to the process as well? I mean, is it a question of businesses or progressive businesses standing up more and sort of making it louder about what they're actually doing and how involved they are at COP? Because it's quite a difficult narrative to get out, I think, to the general public that businesses are part of the solution and actually some of the things that they're doing is good and it's not just negative lobbying. Yes.

Well, definitely. I think we need to have a much a very open conversation about the role of businesses, right? Because I would say that there is a certain prejudice that, well, business are bad because all they want is to make money. Well, yes, it's true. Businesses need to make money, but they also need to make money to create workplaces, to create profits that then somehow also influence the economy as a whole. And I think this is something that gets confused in a very, I would say, in many ways. It's so simple as to say, yes, the transformation needs to take place basically in businesses, right? It is governments, they take the decisions, they make an overall framework, but then that then needs to be translated into specific plans and programs individually. But the economy is where all of these transformations need to take place. Then this is why businesses absolutely need to be there. I would argue even that there needs to be a much closer dialogue between businesses and governments, especially now that we need to focus on accelerating implementation so that the enabling environments are created, are commonplace, but according to the needs of businesses. And in a way also that is fair. That takes into account the needs and the situation of those that for different reasons will be left behind or will, you know, need to evolve in this transition. And that can be done. There are so many good examples about that. And my personal view is that that includes also the oil and gas sector. We need them to do this transition and also continue to play this very constructive and positive role that we all wish they could do.

And before I move to Eliot, just to follow up, Patricia, on what you've just said there in terms of all companies and even oil, the oil and gas industry needing to be involved in the discussions, how do you think the COP process could be changed or something could happen to ensure that the contribution of these companies is positive positive and they're not just there to sign a new deal around a new oil pipeline or something? How can we make sure that these discussions sort of focus on moving forward the transition? Is there a way of doing that within the COP process?

Within the process, what has been created is this space that we call the climate action space, right? Where we have on the one hand the negotiations, which is where governments are interacting, but then the climate action space. I think there it would be important to have more presence from governments as well, you know, to interact with civil society and also with the businesses. It is true that basically what we see from governments, the representatives that are responsible for these negotiations come from the ministries of the environment. So we would need to have maybe also some representatives from the areas of energy, agriculture, you know, and to have a direct exchange.

Thank you. And Elliot, yeah, you represent a progressive business organization alliance. How do you see that the process within COP could be changed to make sure that business has the role it needs to play? Because as Patricia says, governments make rules, but ultimately somebody has to implement them, and often that, that, that will fall to business.

Absolutely. I think probably one of the challenges is that we absolutely need to work out how to transition the whole of the economy and every economy, which means that the dialogue has to be inclusive. We can't all, we can't just talk to the people we agree with. And that, that's really, really true. I think there is a, there is a challenge that, that the role of business and the role of governments is different, and sometimes People sort of forget that. And also the way they sit in the economy is different. So you're talking about the country that's dependent on oil and gas. We're going to have to find a way to transition that country. The people who live there and count on us, they have a voice and it's right to have a legitimate voice. We're talking about a business, an individual business. Then there are, there is capital, there is expertise, there is all sorts of resources within that business. And sector as a whole, we need to kind of think about how that transition but no individual business has a, has a lock-on right to exist into the future because businesses fail all the time. And I think a part of this transition is it will change what is competitive, what is commercial, because which, you know, we're talking about shifting the economy. So if we're not, if we're not changing what, what makes good business sense, then we're not changing the economy. It's something that we've been trying to articulate more strongly recently is to, is to point to the fact that while there is a huge amount of business leadership, and I think that, you know, going back to this point about people are often ideological about business, I either go business is bad or business is amazing, whereas actually there are, there are some businesses out there that have definitely justified the critique and have conducted either self-interested or shady, all sorts of things. There are stories about there and we all know them. And there are some great examples of business leadership. and we, and we need to celebrate and support that business leadership. But ultimately that business leadership needs to scale up to deliver the kind of systemic structural changes. And we've been trying to talk about that under the heading of competitive sustainability, moving away from the kind of voluntary approach. And I think that's, that's really important. So, so yeah, business needs a, needs a seat at a table in, in terms of talking to policymakers, in terms of contributing to these processes. And, and we need to think about what that looks like because it can't the same as the government seat, but as businesses take that seat, then they need to understand the responsibility that goes along with that because at the moment, I think the business, whilst there are some great examples, they're probably not as broad a brush as we would like. And sometimes we've seen a little bit of shallowness where businesses will name check the transition in the broadest sense, but when it gets into the nitty gritty, they don't always follow through.

And I think that leads me quite nicely into my next question that I wanted to ask you about, was the role of regulation within the business environment. And we're seeing at the moment a big pushback around the word competitiveness in the EU, in the US, but also to a certain extent in the UK. The Prime Minister, Keir Starmer, when he gave his speech at the business conference recently, very much enthused about, you know, I think he said he's going to smash his way through, you know, any regulation that was stopping sort of businesses working. How can we sort of move this agenda on? Because it's true that in the EU in particular, but also in the UK, there is now this big swathe of legislation aimed at moving forward the transition. We've got the due diligence regulation, the reporting, sustainability reporting legislation, and there's an increasing pushback against this. I mean, how can, how would you like to see the discussion evolving so that businesses are free still to to do business, but at the same time, they, as you say, there are some guardrails that really are making sure that they move forward and it's not just lip service. Because there seems to be a bit of a danger at the moment that this regulation is pushed aside and business as usual sort of is what happens.

I absolutely think there is a danger, and I think that many businesses, but particularly the trade associations that represent them, are being very short-sighted and are looking at the immediate sugar hits that they can get from, from a, from kind of moving away from a bit of regulation and, and, and completely missing the absolutely catastrophic risks that they store up if they, if they don't allow that regulation to take place or something like that regulation to take place. I was at an event this morning where I was sharing a panel with a general counsel from an international company. He was talking about the fact that he looks at some of these things. He looks at the reports that are generated by the kind of transition plan framework and various things, and he finds them really useful business documents. They help him them navigate these risks and that, that's what they should be doing. I'm not sure every business finds it as quite positive, but I actually think that's, that's the goal of this regulation is climate, nature loss, these, these kind of things. They, they represent economic risks. Ultimately, they do represent business risks. And it, for businesses that don't take them seriously, they are storing up risks and maybe that risk won't happen quite next year or the year after, but it will come come calling at some point. And so, you know, there is a short-sightedness, there's a lot of short-sightedness out there in terms of the role of how we, how, you know, pushing back on particular bits of paperwork at the expense of the ability to really properly manage these risks. And particularly because it doesn't just matter that you do it as a company, it matters that your supply chain does it, it matters that your customers do it, because you need everybody to be adopting this. That said, we also need to recognize that regulation should be playing a role. It should be driving changes in the economy. But sometimes we have, you know, the— we need to make sure we're doing that in a way that allows compliance to be the least burden possible. And so I think there is a, there is a real question there. And I think, you know, we've got some interesting opportunities in terms of, you know, new forms of digital technology that can make some of this this regulation applies easier, and we should be absolutely seizing those opportunities.

Patricia, I wanted to ask about you. You talked about certain organizations or individuals being kind of quite ideological about the role of business. And one thing when I speak to campaigners, they often say to me is, you know, nobody should be at COP to make money, but businesses offer, you know, their raison d'être is to make money. And so how can this sort of dichotomy between making money and business and wanting to reduce emissions and act on climate change climate change be brought together a bit more coherently? I mean, is it, as you said before, to have more discussions between governments and businesses outside of the kind of main negotiations, or is there other work that needs to go on elsewhere to kind of change this narrative a bit and accept that, you know, we need also an economy to move forward or there to be money made somewhere if the transition is going to happen? It's not an either or.

I think it's everything, right? I think it should, there should be more dialogue within the process and outside of the process and at different levels. And it should be, it's very important that we acknowledge that realities are very different. So in that sense, there's not just, you know, one recipe that works for everybody. But the truth is that in every country, you need to have an economy that is running. An economy that creates jobs, an economy that creates wealth to be distributed among the people. At the end, I mean, when we look at the negotiations also, why is finance so important? Why is finance such an important issue? Because you need resources in order to be able to move forward. So I think here the point is really to have, again, an honest and open conversation about You know, the fact that businesses are the ones that are creating jobs, they are the ones that are, you know, giving opportunities to a big proportion of the population everywhere. And that governments also need businesses to be successful so that they can get resources. So governments cannot function without businesses being able to pay taxes and employees to pay their taxes. So this has to do from, you know, with small farmers to big companies, global companies. This needs to be recognized and we need to be able to work with them. They need to have a long-term vision, which is not usually what we find in many cases in politics, because the terms for politicians are always short. I mean short in terms of here we need to be looking at where do I want to be in 10 years, in 15 years, in 20 years, right? That's very difficult for politicians, but for businesses, it is possible. I mean, if they expect to be alive, you know, so they really should be looking at this process as something that has to do with their own survival.

And in terms of the long-term perspective, Patricia, do you see the NDCs as being a way that we could now sort of help to give governments and businesses a longer-term vision if it was something that was taken seriously by governments and the nationally determined contributions were Lots of people said they should now be investable. I mean, is that a really key thing to have to create this longer-term vision?

Well, I do believe that the NDCs are a very, very important instrument in order to drive this agenda forward, because I mean, if you don't have a plan, then, you know, it's really impossible that you get anywhere. So I think So just the fact that you need to deliver a plan is, in my view, very important. Now, in putting together those NDCs, those plans, it's also, in my view, important to work together with the private sector and to see how private sector can also support the goals and the ambitions that can be reflected in NDCs. By their own contributions towards sustainability. And to be able to create synergies between the NDC and those plans is really just an incredible, in my view, an incredible way of accelerating the process.

Okay, great. And Elliot, you mentioned the trade associations. I mean, we ran a piece recently on sustainable views, where it seemed to be quite clear, especially in the US, that even very progressive businesses sort of tend to hang on in trade associations, which are not necessarily lobbying at a government level in their interests or in line with where these companies' climate plans are. I mean, do you see this as a problem? And secondly, is it time for businesses that are progressive that are moving to be more vocal and start perhaps voting with their feet, or at least being very public about what they're seeing?

Yes, to both, to both questions. I mean, uh, yes, it's clearly a problem. There is clearly value to being part of the trade associations, have established relationships, infrastructure. They provide a service to businesses that businesses have valued for a long time. And so it's not, it's a network effect benefit as well. So often it's not like a thing that you can buy off the shelf, which isn't an easy thing for businesses to to step out of. But I think that many businesses have been a bit slow to kind of raise these questions with their trade associations. I would absolutely say, you know, the first port of call should be engaging in trying to shape the position of those trade associations and making sure that, because actually there is often a sense of a body that has been set up almost from defensively to prevent damaging regulation reacts to the climate conversation as a kind of, you know, we have to, we have to, we have to fight this. And actually, I think, I think some of, we've seen examples where those business associations or trade associations have moved, have shifted. So I think the first thing is that businesses should engage with their trade associations and encourage them to be more representative, because I think a representative view of business is probably not as progressive or pushing the boundaries as I would like, but it's certainly not united as a voice against the transition because there is so many businesses who understand this, so much understanding now of the real risks of failing to move on the transition. And in fact, I would say the dominant consensus in the business world is this is something that needs to be managed, even if there's less consensus about how to manage it. Um, the, the, but I think over and above that, and maybe I would say this because one of the things that CSL does is is run and organize these groups such as our corporate leaders groups that provide a progressive voices. I think those businesses that want to actively take the lead, think they have, they want to be heard in shaping what the economy of the future looks like. And they think they've got a positive message around that should be organizing and investing and putting real resources into that. And I think many have, but I think we could scale that up. I think there's a big opportunity to have a louder more proactive and positive business voice for trying to shape the economy of the future. And, you know, we're seeing it in places. We've seen geographic examples and sectoral examples, but I think that when you compare it to the size of the, should we say, the defensive lobby, I think we can go much further.

And Patricia, if business has a bigger role, I mean, we heard from some of the campaigning groups after the final agreement at COP29 that too much reliance on the private sector or private sector finance sort of could lead to corporate capture whereby, you know, the corporates kind of take over the process. But at the same time, we need that money. So, you know, do you think there is a danger of the private sector sort of privatizing, you know, the climate action, or is there a way that this can be managed sensibly so that the money is provided, the change happens, and it's a mixture of public and private? Sort of finance, but also interests?

Well, I think that the one point I would make is that within the process, it's the governments, the ones that take the decisions, right? So that cannot be taken over by the private sector. That is a space that belongs to the governments. Now, at the same time, what we also know, and you know, I've been repeating this for a long, long, long time, is that the transformation that is needed cannot be done by governments alone. It requires the participation of businesses. So I think that in the way that the agreement was reached, in a way I would see it's similar to what we had originally regarding the $100 billion because it said that the developed countries would mobilize $100 billion, right? And mobilize, it didn't specify the fact that it would come from all different sources at that time, but now it is very clear. So it's coming from different sources. Being realistic, I think that is what is going to happen. Now, the public money that is going to come should be also helpful in allowing countries that normally are not able to attract investment or attract financial resources to de-risk those projects and be able to get the resources. So I think that there is not a situation where we would say the business, we take over and governments will be, you know, left aside. I think it's a, it's an equation where you need both sides to be there and both working together.

So before we finish then, we now have this sort of Baku to Belém roadmap that needs to be mapped out over the next 12 months. Eliot, what would you like to see from governments to sort of help enable businesses more, but also in terms of businesses, you know, what do they need to start doing now to show that they are serious? Players in this domain and they genuinely want to move forward with climate action?

It's a really good question and probably not a question that makes, that lends itself to particularly short or simple answers, but let me do my best. If I think about it in terms of both, should we say the mitigation piece, the energy transition piece, and then the adaptation piece. And I think it's interesting because I was just reflecting on what Patricia was saying in terms of public versus private finance. We increasingly can see the shape of a lot of the energy transition. So if we take something like cars, we know that the future of road, light road transport, battery electric vehicles, almost every, there's a pretty big consensus around that now. And I think that's a, that's a great example because would you want public money building your car factories? Nope. It's, that's a fairly, uh, sort of, shouldn't say niche position these days in the global economy that the, The reputation for state-owned car companies is not great. You might want some form of public money to leverage in private investment because you want to build those car factories more quickly or in different locations or all those kinds of things. So there is some public finance that might be needed, but in some senses, the clearest thing that is needed is clarity from governments that they believe this is the future that they're going to, and regulation that makes that future predictable so businesses can invest knowing that they have got a future market. So it comes back in many ways to things like the NDCs. There are other things, of course. So again, if I take with this example, you know, we can think of like, well, you can't have battery electric vehicles if you don't have a good infrastructure in terms of charging and all of these other areas and repair and sales and so on. So yes, there is a role for public finance in, in, in delivering that, but it's got to be thinking about the shape of the, the, how the economy is changing. You won't get the private finance spent if it's not going to generate some money. That's what private finance does. Money is spent to make money. So you, there's got to be a profit in there somewhere, but I think we can start to see the shape of what needs to happen. And it's got to look like smart use of public fund combined with good regulation that gives private sector clarity and confidence about the way forward. It's similar but different when it comes to the adaptation and the loss and damage side of things in the sense that there are things that the private sector will be involved in delivering. So, you know, if we're, if we're building, put it very simply, like a flood defense, you might have a private contractor, but ultimately it's going to be paid for by the, by the public sector because Nobody's, you're not making money from that. You're just actually, you're reducing the risk. Arguably, the private sector can help reduce some of its own risks and should be taking the burden on of some of that. And I think there is, there's a huge role to play in terms of sharing out the costs. So using things like insurance and so on to share out. And that way, that doesn't make the costs go away from the public purse, but it can, it can spread them and it can diffuse them and make them easier to swallow. When we talk about these costs, most of them are investments. They are modernizing parts of our economy, changing parts of our economy so it works better and doing things that we would want to do anyway to enable our economies to grow, our people to thrive, all of those kinds of things. You know, it's about making sure that we've got that upfront investment to be able to do things in the future. What does that mean in terms of the roadmap? It's got to have this kind of clarity in terms of like really signalling where we're trying to get to, signalling that the policies will be in place to give people confidence about that, and thinking smartly about how, what public finance needs to cover and what it doesn't need to cover and where it can leverage other things.

Great, thank you. That was very concise and you did it in the right amount of time, so that was super and gave us plenty of food for thought. Patricia, the same thing to you, the Back to Bellingham roadmap, what would you like to see in there to enable businesses really to transition and to have the confidence to do so, as Elliot's just said?

Well, I fully agree with the points that Elliot has so eloquently and clearly made. I would say maybe just to underline the importance of really looking at ways to deploy alternative sources of energy as wide as possible around the world. We already have that solution there. It's proving to be very economically attractive, competitive. We should also embark really enormously on energy efficiency, which is another aspect that is very, very relevant. One of One of the developments that I would like to also point out is the Oil and Gas Decarbonization Charter and the different commitments under it, including commitment to eliminate methane in the production of fossil fuels. It's a fact that we will not see fossil fuels ending from one day to the next. So these kind of commitments, in my view, are very relevant. We need to have that. To try to give a general idea, it would be really making sure that the solutions that are already there become available and as widely disseminated as possible.

Perfect. Thank you very much. Thank you very much to both of you. That was a super interesting and I think a very pertinent discussion. Discussion. So thank you very much. That was a Sustainable Views podcast. If you want to listen to more episodes, please go to sustainableviews.com.