Key COP27 takeaways for companies so far

Cop27 is nearing its end. Deciphering the full impact of new initiatives and resolutions for companies and organisations will take time. However, several things are already becoming apparent.

Definitions, net zero, accountability, greenwashing, and commitment are central themes at Cop27. Each impacts businesses and organisations and their ESG and sustainability initiatives.

Here we present a short overview of what has happened so far and what it may mean for companies and organisations.

More new guidelines launched

Early in Cop27’s proceedings, the UN stated that targets, including net-zero targets, set by companies and nations need better definitions and follow-through to become more credible.

• Some of the related developments include:

• Research has shown that top-level, long-term net-zero commitments are often not backed by science-based interim goals or solid definitions.

• The High Level Expert Group on Net Zero Emissions Commitments of Non-State Entities has recently published a new set of recommendations on developing, defining, and implementing such goals.

• Last week, the International Organisation for Standardisation followed up with a net-zero guideline paper which is available for free.

• The UK’s Transition Plan Taskforce published its best practice climate transition guidelines for private sector firms.

Greenwashing accusations abound

In the run-up to Cop27, the UN released a report stating that “it is time to draw a red line around greenwashing." It further says that climate pledges by companies, banks, and cities may sometimes amount to little more than greenwashing.

The Glasgow Financial Alliance on Net-Zero (GFANZ) was a poster child of Cop26. Initially backed by funds and companies representing $130 trillion of investments, it has struggled in 2022.

One reason, as highlighted by Al Gore in September, is greenwashing risks in part due to GFANZ’s evolving ESG and sustainability definitions and goals.

It is one of many organisations facing such issues. For example, ShareAction has pointed out that many banks participating in the net-zero banking alliance (NZBA) are missing targets and failing to close loopholes in target-setting.

Related fields, such as carbon markets, are also coming under closer scrutiny where greenwashing is concerned.

Business call for action

One of the highlights of Saturday was the declaration from the We Mean Business Coalition on behalf of hundreds of businesses.

It highlighted how delegates at COP27 should view 1.5C as "a limit not a target," and the need for negotiators to work with the private sector to mitigate the worst of the climate crisis.

The businesses also note that progress has been falling short since the commitments of COP26.

Where does this point to for companies?

For companies and organisations, some of the lessons and takeaways in bullet form include:

·        Definitions: Defining climate-related initiatives and their goals remains challenging. New frameworks and guidelines may help, but companies must remain vigilant during project definition, follow-through, KPI setting, and progress reporting.

• Net-zero: Net-zero is a central goal for companies and countries alike. Reaching it is a long journey. Like with other ESG and sustainability-related initiatives, interim objectives and solid definitions are central to ambitions being viewed as credible.

• Accountability: Clear definitions and targets are vital to reaching your goals. Companies will be held accountable for "moving the sticks" on target-setting or their goals, thereby losing credibility. Another area to consider is a clear action strategy if targets or goals are missed.

• Greenwashing: Without the above preparation and attention to detail, companies’ risk of greenwashing accusations increases dramatically. With consumers and collaborators ever more focused on companies' sustainability and ESG performance, this can translate into reputational and revenue losses.

• Commitment: The morale is that events at Cop27 have put a thick line under the fact that many companies are proactively engaged in sustainability and ESG. Clear targets and accountability are vital to optimise the impact of their efforts and avoid risks. Achieving this demands organisation-wide commitment, a shared understanding of the goals, and a sustainable corporate culture that promotes action, inclusion, and accountability.

At enteleco, we look forward to following the debates and discussions about nature-centric solutions to combat climate change at COP27.

We also welcome the opportunity to talk to companies, organisations and individuals about how nature-centric approaches can be part of their ESG and sustainability initiatives.

So please reach out if you have questions or comments or want to talk to us about unleashing the power of human potential for sustainable impact.