Deciphering COP28: How Companies Can Embrace Climate Action

Written by

Emilie Prattico Senior Strategy Director |

Dec 05, 2023 · 8-minute read

This is the third article in our BCG BrightHouse blog series about Environmental and Social Impact.

COP28 has just launched and similar to other years, it opens with the promises of ambitious pledges and the certainty of pivotal discussions. At the same time, as with every new COP, the urgency of action at scale to reduce emissions while at the same time increasing the world’s resilience to the impacts of climate change increases. The world’s largest gathering of “Parties” (or countries, in plain speak) also attracts a variety of stakeholders including civil society in all its forms and corporates – each with their own interests, contributions, and perspectives. BCG is on the ground, as a consulting partner to the UNFCCC, strengthening current collaborations and working toward innovative solutions to the pressing challenge of climate change – all by leveraging its extensive expertise in all sectors and with the world’s leading companies.

Given the complexity of the process and the technicality of some of the issues at stake, how can a company navigate the negotiations, decisions, and outcomes? In what ways can these general results become meaningful for a company? How can your company take on these solutions in a way that makes sense of who you are authentically, making sure you’re not only following and complying, but also taking a stand that is authentic and will mobilize employees and stakeholders? Here’s a short guide.

What’s at stake?

Every COP, since the first one in 1995, is characterized by the pressing issues it’s trying to solve. This year, 27 years after COP1, and 8 years since the pivotal COP21 that gave us the Paris Agreement, the docket includes four core issues: the Global Stocktake (or countries’ positions and progress on their climate plans), Energy Targets, Loss & Damage (or the mechanism by which countries who suffer the most severe impacts from climate change can be supported and compensated), and Climate Finance. Nothing new here, including the strong focus on energy – but the specificity of this year’s edition is that it is even more focused on how to operationalize decisions around these topics – and that’s where from highly technical and political outcomes, companies start to see how this may impact them.

What does this mean for you?

Dropping costs for solar and wind power. Historic public investments in clean energy and climate action. An unprecedented tide corporate leaders committed to help advance solutions by calling for the phase-out of fossil fuels. Almost 7,000 companies – in all sectors, across the globe, and of diverse sizes, are setting near-term emissions reductions targets (e.g., 2030 targets) through the Science-Based Targets Initiative, including hundreds that are setting the more ambitious net-zero targets for 2040 or 2050, in line with science. This weekend at COP, the launch of the Global Decarbonization Accelerator was announced, a comprehensive plan for the transformation of the energy sector designed to reduce emissions drastically and speed up the energy transition, with an impact on both supply and demand of energy. In this context, 118 countries have already agreed to triple installed global renewable energy generation capacity to at least 11,000 gigawatts and to double the annual global average rate of energy efficiency improvements from approximately 2 per cent to more than 4 per cent every year until 2030.

The landscape of climate action is changing at a pace we have never seen before, transforming sectors and aligning companies along the urgent needs outlined by science. This is bound to have implications not only for your operations – but also on how you will approach your company’s climate strategy and perhaps even your corporate strategy.

How to make it work for your company?

It’s easy, in the face of the daily announcements coming out of Dubai since the opening of COP28 last week, to think that the biggest impact on your company will have to do with new regulation and new rules on compliance. Indeed, as countries make commitments and pledges, it is implied that they will implement new policies that will require companies operating there to change, for instance, their energy mix. How can you go beyond compliance and make these transformations work for you in a way that is aligned to your vision and purpose, helping you reap benefits ranging from the reputational (with talent, with customers) to the strategic (turbo-charging innovation, entering strategic partnerships…)?

Demonstrate Your Courage
There are so many organizations working to comply with changing regulation, your organization can benefit by courageously going beyond what’s legally required. This is particularly relevant for global corporations where standards and regulation may vary by region. Your organization, and the world, will benefit by keeping environmental standards at the highest possible level, regardless of which regulatory body a particular facility is subject to. Indeed, you’ll be sending signals to peers as well as to policy-makers that companies in the private sector are ready to lead in this field and expect ambitious regulatory frameworks. This courage makes organizations stand out and raises the bar for all, including your competition. It’s how you move from compliance to courage and start to take a holistic approach to embedding authentic ESG into every part of your organization. Read more on this topic: From Compliance to Courage in ESG.

Find Your Focus and Lead with Purpose
Move from focusing only on what’s material to shifting what’s meaningful. Embrace the interconnectedness of societal and business interests and navigate complex landscapes with a more holistic perspective. Anchor your actions on a broader mission and recognize the transformative power of purpose-driven leadership to create a positive impact beyond business metrics. In other words, lead with purpose. While regulation may affect a whole slew of areas for action, and compliance will be non-optional, there are areas where you will have permission to be bolder and to be more vocal: those areas for action that lie at the intersection of your business interests and the role you serve in the world. Rather than spreading efforts thin, find your focus and double down. Read more on this topic: Authentic ESG in Action

Broaden the Lens on Climate Impact and Action
For instance, by exploring the intersection between your commitment to inclusion and your climate strategy. Climate impact is not gender-neutral, and neither are climate solutions. Indeed, research shows that effectively tackling the crisis requires us to embrace gender inclusivity. What’s more, there is a strong correlation between representation of female leadership in organizations and positive impact on their green transformation efforts – and so a straightforward yet often overlooked solution to the climate crisis lies in promoting more women into leadership roles. Beyond this example, we know that viewing climate through the gender lens accelerates action. Read more on this topic: How Female Leadership Helps Accelerate Climate Action

Lead Your Industry
There are clear benefits to being a first mover in this space. Beyond the obvious benefits to our world, first movers see a benefit to recruiting and retention as well as some market effects from consumer choice. When a consumer has the option between a responsible company and one that has not been taking sustainability seriously, they are frequently willing to pay more for a product made responsibly. But leadership is more than making commitments, it’s following through and staying committed to transparency. Which often will involve being open to innovation. When you move first, you’re often building the foundations on which others will follow. This requires an openness to sustainable innovation and an understanding of where to focus. Read more on this topic: The Sustainability Imperative in Emerging Markets. Which is why the next part is key:

Increasing Your Impact
Each company has a unique footprint and therefore a unique opportunity to contribute. When BCG first explored our footprint we found that plane flights were the largest part of our environmental impact. Our reduction and mitigation plan has been an important part of our net zero strategy. An organization must start by determining their footprint and thinking through where they can have the biggest impact. Then, they can begin to innovate and lead with the data needed to succeed.

As COP28 progresses, we have 7 more days ahead, marked by ongoing negotiations amidst a backdrop of significant national and corporate announcements. Most notably, there is a growing sense of anticipation surrounding critical topics like Climate Finance, Climate and Health, Energy, Industry, Transport, the Built Environment, and Food and Land Use. This ambitious agenda underscores the urgency of the climate crisis, which continues to escalate. Stay tuned for the next installment in this series after the conclusion of COP28, where we will delve into the implications for companies aspiring to take purpose-driven leadership in the realm of climate action.

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