Corporations will take center stage at this year’s climate talks in Glasgow, the welcome mat having been rolled out by UK Prime Minister Boris Johnston who is keen to make post-Brexit London a center for “green capitalism.”
He has hung the success of the November meeting on a series of “deals on trees, cars, cash and coal” between countries and corporations designed to accelerate voluntary climate action.
This comes as thousands of corporations make “net zero” climate action commitments under the Race To Zero campaign that is aligned with the UN.
While there is no doubt every sector, every corporation will need to rapidly cut emissions if warming is to stay within the Paris Agreement threshold of 1.5C, the way corporate action is currently included in the UN gives pause for concern.
The vast majority of corporate action commitments are voluntary, vague, and impossible to verify. Many corporations have made commitments but have no plan to implement them. Almost all have not moved the capital to align with their net-zero commitments.
Voluntary, unregulated corporate action has not shifted the needle.
Now, COP26 could bring corporations closer to the UN system, making them de facto parties to an agreement they are not signatories to. It could give them all the rights and none of the responsibilities of the countries who are in the Paris Agreement.
What’s more, COP26 could open the floodgates for offsets markets. Corporate net-zero commitments already rely heavily on “offsetting” emissions they plan to continue releasing. But the vast majority of offsets are fundamentally incompatible with deep emissions cuts. 90% of current offsets projects claim to “avoid” emissions, such as building renewable energy projects that displace coal power plants. In other words, they do not really offset at all, as they do not reduce emissions in the absolute toward net-zero.
That means over-reliance on offsets is cheating. It feigns climate action but really it delays emissions reductions and it could result in a situation where we blow through our temperature targets because the offsets weren’t permanent but they gave us a false sense of security of action being underway.
When this state of affairs is ultimately unearthed, it will be governments who have to pick up the pieces just as they did after the subprime mortgage crisis that triggered a global economic meltdown over a decade ago.
The solution to this state of affairs is a regulated standard on non-state actor net-zero commitments, not a cobbled-together set of voluntary frameworks. It is a separation between the campaigns encouraging net-zero commitments and an independent entity doing the evaluation.
The risk here is clear – there is a growing demand for offsets, but the only effective ones – permanent removal in the geosphere that is verified – are expensive and rare. That creates a market mechanism to incentivise cheap, unverified and temporary carbon removal, and “avoided emissions” offsets.
The opportunity to put hard barriers around the growth of offsetting to ensure it doesn’t become an unstable, risky system prime to collapse are passing fast.
Instead of coal, cars, cash and trees, the legacy of COP 26 could be opening the floodgates of cheating on climate action by legitimizing offsets as part of the climate action framework. The climate knows that these indulgences don’t cut emissions, it’s about time our leaders faced up to that too.