Climate Change Pledges and the Business Environment Impacts

Countries have submitted their climate pledges in the run-up to the COP26 this November in Glasgow.  The effects of climate change and the increasing pressures for governments to make bold commitments have made climate policy a prominent political and social issue, which will impact the business environment.

The Economist Intelligence Unit (EIU) report, “COP26 Examining the business environment impact of climate pledges,” examines how climate pledges and climate policies will affect the business environment and the mechanisms governments will use to make these changes happen.

The EIU hosted a virtual seminar under the same title on 21st October. The online event explored the following topics:

• Current political environment and economic policy on climate heading into COP26
• Potential impacts of COP26 on the business environment
• Developed vs. developing world policy landscape around carbon emissions
• Climate financing landscape and changes to the regulatory environment
• Key policy implications for businesses and investors

The EIU report also aims to help investors understand the potential impacts of climate pledges on the business environment through more significant regulation, innovation, and global industrial transformation in the following decades.

It presents that advanced economies like the US, UK, Canada, and many EU countries are already on a downward trajectory in their emission. Pledges by the US show that they will decrease 50% from their peak by 2030, and EU at 55% decrease. China, the world’s largest carbon emitter by far, accounting for 29.2% of the total global emissions in 2019 and almost 50% above the US, have pledged to peak by 2030 and expressed to reach net-zero emissions only after 2060. China has yet to submit its NDC for the COP26.

The focus is now on developing countries as their emissions have grown significantly. In the past climate talks, developing countries have insisted that they should not be barred from using carbon to achieve similar economic growth as those of developed countries.

Developing countries make two pledges, first, an unconditional one that outlines their emissions cuts without aid, and second, their emissions pledges with sufficient financing from developed nations.  These pledges will make the level of assistance to emerging economies and what form it will take to achieve the COP26 targets.

The report also discusses the “Fit for 55” proposals by the European Commission, a range of policy measures to achieve the EU’s ambitious climate goals to cut CO@ emissions by 55% from 1990 levels by 2030 and become carbon neutral by 2050 fully.

The report examines what the impact of “Fit for 55” proposals will be on various sectors – electricity, industries, automotive, shipping, aviation, construction and building, and agriculture, and what it will mean to businesses and households, and possible challenges that will arise from its effects.

To download and read more about the EIU report, click the link below: