Focus on climate change

New climate goals

Fuelled by concerns that we need to do more to ensure that global temperature increase will stay below 2˚C, a new global agreement between all countries of the UNFCC was proposed at the end of last year. With the goal of reducing greenhouse gas emissions to zero sometime between 2030 and 2050,each country has new targets.

Five years ago, the UNFCC established the goal to limit global temperature increase to 2˚C (3.6˚F) above pre-industrial levels. However, scientific research has indicated that our current activities are not enough to guarantee that global temperature increase will stay below this. The UNFCC has called for more action and has set a new goal to limit the global temperature increase to 1.5˚C, which some scientists believe will require us to reduce our greenhouse gas emissions to zero sometime between 2030 and 2050.

A new agreement

The UNFCC has established a new, binding and universal agreement on climate from all nations of the world for the first time in more than twenty years of UN negotiations. This was achieved at the most recent UNFCC Conference of Parties (COP21 or CMP 11), held in Paris, France, between 30 November and 12 December 2015. At the conference, 195 parties from around the world agreed on a global pact to reduce emissions towards reducing greenhouse gas – The Paris Agreement.

The participating countries pledged to reduce their carbon output “as soon as possible” and to do their best to keep global warming “to well below 2˚C to limit global temperature increase to 1.5˚C”. It was also agreed to mobilize a flow of $100 billion (€89 billion) per year from developed to developing countries to help them reduce emissions and adapt to the effects of climate change. These funds will come from both public and private sources from 2020 onwards. The twelve-page agreement was adopted by all the countries by consensus on 15 December2015 and is due to be signed in April 2016.

The new agreement will require each country to contribute and work towards its own goals and targets, with progress reporting every five years. Parts of the new agreements are legally binding within the United Nations’ framework. Regular review and submission of emission reduction targets, for example, will be legally required, as will funding from developed economies to help emerging and developing nations move to cleaner energy sources. Emission targets, however, will be determined by individual countries. These targets are known as ‘Intended National Determined Contributions (INDCs)’ in the agreement. Almost all countries have now submitted their INDCs.

Impact

How it will affect business will vary according to where you are and how you conduct business. In developed countries, the impact will largely depend upon how committed individual governments and leading businesses are to achieving their targets. It could affect how much tax you are required to pay, transportation and other costs. However, if we do not commit to achieving the goal of limiting temperature rise to well below 2˚C, then the cost of adapting to the impact of a changing climate system will also affect our costs.

Pressures

Implementation of the new agreement could lead to changes from 2020, including:

• Tougher regulations on business to limit emissions of carbon and other greenhouse gases and to improve energy efficiency, and higher penalties for non-compliance with the new and existing regulations.
• Higher costs worldwide, as carbon pricing is implemented in more countries, either in the form of carbon taxes or trading systems. Over time, national carbon pricing systems are likely to be connected internationally.
• More extensive reporting requirements on carbon emissions across the entire value chain.
• More pressure to be transparent both about contributions to the goal of keeping global temperature rise below the 2˚C limit.
• Increase in shareholder and consumer scrutiny.

Opportunities

It could, however, also lead to increased opportunities for many businesses through:

•  More incentives to develop and use low-carbon products and services such as renewable energy and low-carbon transport.
•  Possible access to new to subsidies.
•  Increased interest from shareholders and consumers in companies that are successful in low-carbon business.

Prepare for change

Undoubtedly, it will be an enormous challenge for the world to deliver a package of measures that will result in limiting global temperature rise to 1.5˚C, but just as any other sector, companies active in the pet industry must prepare for change. Some ideas for an action plan might include:

•  Be proactive about reducing your emissions continually.
•  Explore with your country’s INDC (national contribution) and how this could affect your business.
•  Prepare in advance for the likely effects on your business through adapting your strategy and business processes.
•  Be prepared for more stringent carbon reporting.
•  Be prepared for more stringent regulations.
•  Tap into innovation.

The new climate goals will have a significant impact on most industries around the world, including the pet industry. It is, however, too early to speculate on the specific consequences for the pet industry.