The United Nations COP26 climate change conference recently closed in Glasgow. COP stands for Conference of the Parties and this is an annual event that has been held each year (except 2020) since 1994.
Countries that have signed the United Nations Framework Convention on Climate Change (UNFCCC) are invited to attend each COP and – as you will remember from a few weeks ago – the conference generates a huge amount of media coverage, but what does it mean for companies? Should companies and individuals be paying attention to a UN conference?
After all, itâ€™s one thing for governments and regulators to set standards and guidelines, but for real societal change to happen it needs to come from regular people. This is where companies can start influencing behaviour because companies have employees, customers, and suppliers all connected together in their supply chain.
The advisory firm McKinsey has a sustainability practice and they recently published advice on where and how business leaders can take lessons from the COP discussions. You can follow the link to read the detailed advice, but I think the top five principles suggested by McKinsey are worth repeating:
- Net zero is now an organising principle for business: there is no longer a question about whether your company needs to take action, this is becoming a principle that all companies need to take action on.
- Companies can gain advantage by translating pledges into plans: many business leaders have made pledges and set future targets, now turn those pledges into real action and start delivering.
- Markets and institutions are needed to channel capital: investors are looking for green opportunities, the finance is coming. Your business may attract interest specifically because you are taking action on climate change.
- Using greener materials will mitigate risk: some industries will struggle to quickly achieve net zero – steel or cement production for example – but the faster you can start on the journey, the lower the risk of future supply chain problems.
- Be open and transparent: use digital tools and automation to measure your net zero progress and publish the information openly, donâ€™t submit the absolute minimum to a government annually – embrace this journey.
The McKinsey analysis is pragmatic, but also emphatic. Itâ€™s now time to change and time to start taking action. The report concludes: â€śNotwithstanding any debate about whether COP26 was a success, the general direction for business has been established. Momentum has shifted toward net zero, providing businesses with a new organising principle. The transition to net zero will be complicated. The best leaders can hope for is that it will be relatively orderly, rather than punctuated by sudden, unexpected shifts.â€ť
That is a call to action. Across all industries and in companies large and small, there needs to be a shift from pledges to plans. This is how the world will address the risk, with each company gradually changing the behaviour of their employees, partners, and customers.Â