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21st March 2016

100 days on from COP21 Jonathan Grant looks at what’s changed for business.

Like a Rorschach test, or ink blot test, asking someone about the Paris Agreement often tells you more about the person than the climate deal. The reaction to the Agreement has ranged from over the top hyperbole to deep cynicism. But I feel that companies are genuinely taking the issue more seriously now and have shifted from talking about it, to taking more substantial actions. Those who made pledges in the lead up to the summit don’t want to be accused of faking it on climate change, as one CEO suggested they might be.

Signals & noise

If there is a clear signal from Paris, it is that all countries plan to be much more ambitious in their efforts to tackle the issue. Most in business recognise that the Paris Agreement is essentially a big political statement by all countries which converged on the need for urgent action. That signal is hard to ignore. But after that, there’s a whole lot of noise. And even steps backwards too, such as the US Supreme Court decision to put the Clean Power Plan on hold. 

At the heart of the deal is the fundamental contradiction between the hugely ambitious global goal to aim for 1.5°C and the rather more feeble national pledges (as illustrated in our well-worn Low Carbon Economy Index chart). If achieved, the national contributions are more in line with 3°C of warming.  So companies need to show to investors and others that they can thrive regardless of whether there is 1.5-2°C of climate policy or 3-4°C of climate impacts. This applies to both their current operations and their longer term investment decisions.

100 days on, here are five things business is doing differently: 

1. Risk analysis & reporting – The challenge to demonstrate that their business is resilient regardless of the emissions or policy scenario possibly presents the most immediate challenge to companies. Many investors, regulators, local communities and NGOs are calling for better information from companies on the impact of climate risks. Some companies are already addressing this today, often in response to concern about stranded assets.

This is being reinforced by the G20 climate risks disclosure taskforce which is developing reporting guidelines over the course of this year. The taskforce, chaired by Michael Bloomberg, will recommend appropriate disclosure standards by companies on the physical and transition risks of climate change. Its ultimate objective is that financial institutions will make more informed investment decisions which account for these risks. Some stock exchanges may make these disclosure standards compulsory for their listed companies.

2. Preparing for carbon pricing – Companies seemed pretty unified around this policy approach in 2015. This year, some are stepping up their advocacy for the roll out of market-based policies and internationally linked systems (and ensuring that all the government affairs folks are saying the same thing as the CEO).  

Other companies are now putting shadow carbon prices and incentives in place so that investment and operational decisions address climate risk. This year, we’ve been approached by half a dozen companies interested in exploring this issue, and, in the main, they are keen to understand  what other companies have learned when doing this, what the ‘right’ price is, and what organisational or process changes are needed. While many focus on analysing different prices to use in sensitivity analysis, the bigger challenge is likely to be shifting the mindset in the project teams and senior executives to incorporate the cost of carbon into their decisions.

3. Getting the Board on board – We’ve claimed in the past that climate change is a board level issue. In our CEO pulse survey last year half of CEOs said that climate change is on the board’s agenda at least once a year. But recent indications appear to show a surge in the level of board engagement on the topic. Often our work is prompted by a board member’s concern about the implications Paris and climate risk for their companies.

4. Action not words – There is little enthusiasm for more pledges, communiques or joint letters from the business community. In 2016, companies are more focused on acting on, and delivering, the commitments they made in the lead up to Paris. To start with they are making their commitments SMARTer (specific, measurable, achievable, relevant & time-bound), which isn’t easy if the goals are rather lofty. Companies are also working through practical and governance issues when collaborating either in industry-wide groups or sector-focused initiatives.  

5. Clean finance – Building on actions and pledges made in 2015, some financial institutions are now considering whether the Paris Agreement presents new investment opportunities in low carbon infrastructure. Others are looking at their energy portfolios and revising their investment policies – particularly with respect to coal mining and power generation.

We suggested in a blog earlier this year that clean investment may be hampered by low fossil fuel prices. While high prices force companies and consumers to consider alternatives, low prices take the pressure off, they reduce investment in the energy sector broadly and are expected to dampen investment in renewables. But clean investment is set to grow in 2016. According to Moody’s, the rating agency, the green bond market will reach around $50bn of issuance with growing interest in China and India.  

22 February 2016

19th Annual Global CEO Survey

The PwC 19th Annual Global CEO Survey was launched on 19th January 2016 on the eve of the Annual Meeting at the World Economic Forum in Davos, Switzerland. More than 1,400 CEOs from 83 countries and over 20 sectors shared their perspectives on various business trends and issues related to growth, stakeholder expectations, transformation and measuring success.

CEOs acknowledge that their customers as well as other stakeholders increasingly want them to do more to tackle important problems. The response for many has been to focus even more strongly on customer needs, as well as drawing on their companies’ own sense of purpose to define a more comprehensive view of how their businesses operate within society. Some CEOs are taking concrete steps to align this broader mission to their company’s core goal of profitability.

Key highlights from the global survey that touches upon sustainability themes include:

  • Managing expectations beyond shareholders alone is on the agenda - 84% of CEOs believe their business is expected to address wider stakeholder expectations
  • 80% of CEOs are trying to minimise their social and environmental impacts
  • 76% of CEOs define business success by more than financial profit
  • 72% of CEOs report on both financial and non-financial matters
  • 55% of CEOs think business could do more to measure the impact and value of innovation
  • 52% of CEOs say creating value for wider stakeholders helps profitability

For more highlights, take a look at the Redefining Business Success in a Changing World report

For more information, please visit our website at www.pwc.com/gx/en/ceo-agenda/ceosurvey/2016.


8 December 2015

Mid-COP update

At the half-way point of the climate summit, negotiators handed over a draft agreement for the next phase of the talks.  There was a rather self-congratulatory mood on Saturday afternoon despite the fundamental differences that remain in the draft and the fractious negotiations seen earlier in the week. 

Ministers, who arrive on Monday to manage the closing stages of the COP, will need to find compromises on the critical issues of finance and the mitigation targets* and bridge the divide between developing and developed countries. 

Despite the rhetoric from heads of state at the opening ceremony of the summit, their negotiating teams failed to lift off at Le Bourget airport where the event is being hosted.  Predictably, there was negligible progress made on paper during the first week. In fact the gap between developed and developing countries appeared to widen.  

The bloc of ‘Like-minded developing countries’, mostly emerging economies including China, India, Malaysia and Saudi Arabia, were particularly vocal and dominated the interventions of the whole developing country group.  This limited progress on nearly all aspects of the agreement – with little consensus found in either the plenary discussions (the ADP contact group) or in the facilitated (spin-off) groups focusing on particular sections or Articles of the agreement.

As is typically the case for week 1 of a COP, with little to report on the actual negotiations, the news vacuum is filled with announcements by companies and governments. These included:

  1. Low carbon alliances: Indian Prime Minister, Narendra Modi, launched the International Solar Alliance which includes over 100 countries and (unusually) business partners such as Areva, Engie and HSBC France.  Their aim is to install 175GW of solar capacity by 2022 in primarily tropical countries.  At around the same time, another group of governments and investors announced their Mission Innovation, designed to support the development of clean technologies such as innovative energy generation, storage and transport. 
  2. The Governor steps in: Mark Carney, Governor of the Bank of England and Chairman of the G20’s Financial Stability Board, announced that Michael Bloomberg will head a taskforce to assess the financial exposure of companies to the risks of climate change.  The taskforce is expected to recommend principles for voluntary disclosure by companies, so that investors are better informed of climate risks.

The handover of the draft to the French Presidency at the halfway stage was significant as it gives the hosts the authority to manage the talks and help build consensus.  Typically at COPs, the negotiators or subsidiary bodies retain control of the text until the last minute, making it hard for the Presidency to exert influence on the direction and conclusion.  But the French have managed the job well so far by openly setting out a clear timeframe and approach and providing excellent facilities in the ‘blue zone’.

It is encouraging at least that all countries are still round the table.  The issues to watch in week two are finance, the mitigation process, loss and damage, short term actions (pre-2020) and the long term targets.  Recently, attention has focused on policy developments and actions in the US, China and India.  Perhaps, this week is the EU’s opportunity to take the lead and build a ‘coalition of ambition’, as they did in Durban, including developing countries most vulnerable to the impacts of climate change.  The Paris summit will only succeed if countries can bridge the gap between developing and developed.  

Andrew Chan, PwC's South East Asian Sustainability & Climate Change Leader is in Paris for the summit as the firm has strong presence at COP events and facilitates a number of sessions.

* Strictly speaking, they are not targets, but ‘contributions’, and they are not being negotiated in Paris as they are ‘nationally determined’.  But the contentious point in this section of the agreement is the timing and approach to reporting on national progress and raising ambition in future.

For more information, please visit ww.pwc.co.uk/services/sustainability-climate-change/paris-2015.html and follow the Road to Paris Hub at www.businessgreen.com/bg/special/2415256/road-to-paris-hub.

22 February 2015

The rapid decoupling of emissions from economic growth is essential to avoid the worst impacts of climate change. Since 2009, the year of the Copenhagen Summit, our Low Carbon Economy Index has tracked the progress G20 countries have made to decarbonise their economies. Our report shows that while countries have made progress in decarbonising their economies since 2000, emissions continue to rise. The carbon intensity of the global economy, however, has fallen by 1.3% on average each year since 2000, driven by energy efficiency improvements and the shift to less carbon intense service sectors.

The 2014 numbers particularly suggest a turning point: carbon intensity fell by 2.7%, the steepest decline on record. Despite this, there is still a big gap between current progress and what’s needed to meet the Intergovernmental Panel on Climate Change (IPCC) 2°C carbon budget.

Key messages from the 2015 Low Carbon Economy Index are:

1. A rapid uncoupling of emissions from economic growth in 2014. The global average annual reduction in carbon intensity since 2000 is 1.3%, however this increased to 2.7% in 2014. The EU, China and Australia all had rapid reductions in carbon intensity last year.

2. The Paris targets are ambitious. Achieving them will require a steep change in effort, but they fall short of the 2°C goal governments have agreed. Given the breadth of national climate plans submitted, in some respects Paris has already been a success, however it will need to include a mechanism to review progress and raise ambition in the future if it is to achieve the 2°C goal.

3. National regulation introduced to achieve the Paris targets will have big impacts on business. Obviously, coal is being targeted (through efficiency and emissions standards and carbon pricing) and low carbon infrastructure is being supported (energy mix & capacity targets). But the national plans are less clear on how the financial services sector will deliver the investment needed to achieve these goals.

For detailed global results and key implications, see PwC's global publication, "Low Carbon Economy Index 2015 | Conscious Uncoupling?", which can be found at www.pwc.co.uk/services/sustainability-climate-change/insights/low-carbon-economy-index.html

2 October 2015

The UN's Sustainable Development Goals: Global impacts, local results

Global goals are ratified this month that tackle the planet’s major issues with the launch of the Sustainable Development Goals (SDGs) by the UN in September at the UN Summit. The SDGs are the result of multi-stakeholder engagements with 193 governments agreeing to focus on the poverty, economic growth, infrastructure, and energy issues, with the overarching theme of the UN Summit being "inclusive and transparent intergovernmental process open to all supporters".  Once ratified, governments will formulate new regulation, incentives and strategies to support attainments of the SDGs. Hence, expectations on businesses will be high as they are seen as the driving force in achieving the 17 goals and 169 indicators posed by the SDGs. 

To better appreciate the approaches and opinions of the SDGs globally, PwC conducted a survey to reach out across the business and citizen landscapes. In total, 986 responses were received from the business community across 90 countries, and 2,015 citizens across 37 countries. PwC's Global Sustainability and Climate Change leader, Malcolm Preston, was able to share the survey highlights at the UN Private Sector Forum in New York on 26th September.

Key highlights from the survey:

  • SDG awareness is high amongst the business community (92%) compared to the general population (33%)
  • Governments are viewed as having prime responsibility of achieving the SDGs by both businesses (49%) and citizens (44%)
  • Businesses are already taking active steps in preparing to respond to the SDGs (71%), but only 13% have identified the tools needed and 29% are setting goals
  • 90% of citizens recognise that it is important for businesses to sign-up for the SDGs and that they would be more likely to buy goods and services from these businesses (78%)

More results and key implications can be found in PwC's global publication, "Make it your business: Engaging with the Sustainable Development Goals", which can be found at www.pwc.com/sdg.

3 July 2015

UN climate negotiations - Bonn

Leaders are coming together at the end of this year at Conference of Parties (COP) 21 in Paris to agree a deal on climate change.

The latest round of UN climate negotiations, before COP 21 took place in Bonn between 1-11 June 2015. Governments spent two weeks trying to slim down an 80-plus page negotiating document. There was little progress with the basic editing and even less on substance. But officials suggested that more progress was made with the political negotiations and building trust than is reflected on paper. The meeting concluded with an agreement that the co-chairs should edit the text down to a more workable length before the next negotiating session at the end of August.

PwC’s Jonathan Grant who is Director of Sustainability & Climate Change in UK reviewed the climate change negotiations that took place last week. A full report on the outcome of the discussion is attached below. Some key highlights of what you will find in this report are as follow:

  • Insights on how the meeting went and discussions that took place
  • Insights from G7 leaders' discussion on climate change further down the road, literally and metaphorically. Among key outcomes is a call for an ambitious and inclusive Paris agreement which tracks progress towards targets and promotes increased ambition over time. Carbon markets got a welcome nod of approval as did the role of the private sector in mobilizing climate finance. The G7 also pledged to increase support for vulnerable countries and committed to eliminate fossil fuel subsidies
  • Status of decarbonisation of the global economy over the course of this century to meet with Paris targets equivalent to annual reductions of 3.1% for Japan, 3.9% for Canada and the EU and 4.1% for the US (against 1-2% per year currently)
  • Insights on what will be agreed in Paris, and discussions on critical component of the agreement which covers the process for reporting and reviewing national progress on emissions with the aim of ratcheting up the ambition
  • Concerns regarding the negotiating text that needs to catch up with the progress that is being made in bilateral discussions between countries and in other fora. The concern is that governments plan to agree a legal document in Paris and need time to get the language right
  • Outcome of the meeting and next steps before the next Bonn session starting on the 31st August

For more insights

Refer to the report that presents Jonathan Grant’s review on the UN climate negotiations in Bonn last week.

17 July 2015

China's latest climate plan

Earlier this week, China published its climate targets (or Intended Nationally Determined Contribution) following Monday the recent UN climate summit with the EU. The 20-page INDC includes targets for carbon intensity, energy, and forest carbon, details on the policies needed to achieve these targets, and its point of view on the different sections of the draft Paris agreement. PwC's analysis shows that China's Paris target for 2030 is roughly on the same track as its Copenhagen target to 2020.

Jonathan Grant, Director for PwC UK's Sustainability & Climate Change practice, and his team reviewed China's INDC and prepared a full analysis, attached below. Here are some key highlights of what you will find in this review:

  • A summary of China's main climate targets announced in the INDC, including a 60-65% reduction in carbon intensity compared to 2005 levels, and a roughly 20% increase in the share of primary energy consumption from non-fossil fuels

  • A review of how these new targets compare to the 2020 targets previously voiced in Copenhagen, and the regulatory and business implications for China, which may include more stringent climate laws, the incorporation of climate-related goals into the national development plan, and lower coal consumption

  • A global viewpoint to place China's decarbonisation objectives into the global context, compared to the EU and US target. China's targets will require faster decarbonisation than its global peers, with an expected peak around 2030 or earlier

  • Insights based on PwC's Low Carbon Economy Index model to determine the level of ambition of China's targets, and 2030 projections for China's emissions and carbon intensity levels based on different action scenarios. Depending on assumptions regarding China's economic growth rate over the next 15 years, PwC's model suggests the emissions peak may occur as early as 2020

For more insights

Please refer to the analysis of China's INDC by Jonathan Grant and his team.

To view all PwC's analyses of the G20 targets, please visit our Paris2015 page, linked below:


25 September 2015

Road to Paris 2015

Hosted in association with PwC, BusinessGreen launched the Road to Paris Hub that aims to help businesses navigate the global efforts to tackle climate change. The Hub is a space to facilitate a Solutions Agenda between business, financiers and governments that will complement the United Nations Framework Convention on Climate Change conference (COP 21) in Paris at the end of the year. To achieve this Agenda, the Hub will focus on the economic and business implications that will occur as a result of the Paris agreement, and will feature:

  • The latest news on negotiations
  • In-depth analysis of what it means for businesses
  • Exclusive interviews with senior business leaders, ministers and diplomats

Please follow the Road to Paris Hub here

For more information, please visit our website here

What is the COP 21?

The COP 21 will occur from 30 November to 11 December this year, and 196 UNFCCC member countries will meet to sign a new climate change agreement in an effort to make a significant difference to the ability of individual countries to tackle climate change. The agreements should provide a clear target for businesses and guide investment toward low carbon outcomes.

Pre-conference discussions are in full-swing, and most recently, governments met in Bonn, Germany for the latest round of climate talks. The co-chairs agreed to develop a new document which will reflect the feedback given by countries and provide a better basis for actual negotiation and compromise. Additionally, the co-chairs will also establish a new drafting committee a the next session, starting on the 19th of October, which should accelerate the development of the Paris agreement.

21 October 2015

Sustainable Development Goals: Perspectives from businesses and citizens in South East Asia

Following the previous issue of Ahead on sustainability featuring the Global results from the SDGs Engagement Survey, this issue provides specific highlights for South East Asia.

The Sustainable Development Goals serve as a guide to the post-2015 development agenda, which was ratified in September at the UN Summit as the result of an inter-governmental set of targets for "people, planet and prosperity". Businesses should recognise the potential impacts the Goals can bring to the economic landscape, business marketplace and regulatory environment, because governments that adopt the Goals are likely to formulate new regulation, incentives and strategies to support attainment of the Goals. Hence, expectations on businesses will be high as they are seen as the driving force in achieving the 17 goals and 169 indicators posed by the SDGs.

PwC's Sustainability and Climate Change team collected over 300 survey responses from businesses and citizens in South East Asia.

Key highlights from the survey include:

  • Businesses and citizens believe that the top action to respond to the SDGs is identifying the Goals relevant to each business
  • 80% of citizens say they are more likely to use an organisations' goods and services if it signed up to the SDGs
  • 87% of citizens believe it is important for businesses to sign up to the SDGs, however, only 45% of businesses plan to assess their impacts on the Goals
  • 97% of businesses have plans to address the SDGs in the next five years
  • Taking urgent action to combat climate change and its impacts is not only high on the list of Goals that businesses can impact, but also what citizens think is most important

More results and key implications can be found in our SDGs Survey highlights for South East Asia. It features:

  • A summary of the purpose of the SDGs
  • Highlights of key results and insights on what this means for the South East Asian marketplace
  • Steps that businesses can take to successfully engage with the SDGs


SDGs Paving the Way To Market Leadership

PwC conducted a survey in order to understand South East Asian business and citizen perceptions of the Sustainable Development Goals (SDGs) in advance of the launch by the United Nations in September 2015.

For more information, please visit our website: pwc.to/1Xj3eeD.

Additionally, global results and key implications can be found in PwC's global publication, "Make it your business: Engaging with the Sustainable Development Goals", which can be found on our Global website: www.pwc.com/sdg.

27 November 2015

What is the COP 21?

The COP 21 will occur from 30 November to 11 December this year, and 196 UNFCCC member countries will meet to sign a new climate change agreement in an effort to make significant difference to the ability of individual countries to tackle climate change. 

Pre-conference discussions are in full-swing, and most recently, governments met in Bonn, Germany for the latest round of climate talks. The co-chairs agreed to develop a new document which will reflect the feedback given by countries and provide a better basis for actual negotiation and compromise.  

Our pre-COP briefing report, as attached, highlights the current content of the draft Agreement, which includes:

  • Limiting temperature increases to 1.5°C or 2°C
  • Reducing emissions through global and national targets, mechanisms and time frames 
  • Amplifying cooperation between countries, offering financial support to developing countries and implementing reporting requirements
  • Implementing and improving the pricing of greenhouse gas emissions
  • Reporting national action on emissions and the provision of finance


Making business sense of the UN Climate Summit

Making business sense of the UN Climate Summit. #Paris2015 Pre-COP briefing. Jonathan Grant gives a preview of the climate negotiations which start on 30th November in Paris.

For more information, please visit our website at www.pwc.co.uk/services/sustainability-climate-change/paris-2015.html and follow the Road to Paris Hub at www.businessgreen.com/bg/special/2415256/road-to-paris-hub

14 December 2015 

COP21 Post Summit Report

To a standing ovation and some tears of joy, all governments adopted the Paris Agreement on Saturday night. The deal is more substantial and, with a 1.5°C temperature goal, more ambitious than many expected. 

The attached report highlights the outcome of the Summit and outlines some of the main Articles of the agreement, which include:

  • Purpose & objective – One of the more surprising outcomes of the Agreement is that it raises global ambition by aiming to limit warming to 1.5°C (Article 2).
  • Mitigation – Article 3 of the Agreement formally recognises the nationally determined contributions and states the need for progression over time.
  • Reducing emissions from deforestation and forest degradation (REDD+) – The Coalition for Rainforest Nations finally have their approach to REDD+  recognised in Article 5 of the Agreement.
  • International Emissions Trading – Article 6 describes how countries can pursue voluntary cooperation in the implementation of their nationally determined contributions, or in other words trade emissions.
  • Adaptation; loss and damage – The Kyoto Protocol was once described as a mitigation agreement. This time in Paris, countries included as much detail on adaptation, and loss and damage, (Articles 7 and 8) as in the mitigation articles.
  • Finance – Article 9 states that developed countries shall provide financial resources to developing countries for both adaptation and mitigation. The mobilisation will continue through to 2025 and the collective goal should rise from a floor of US$100 billion per year.
  • Differentiation – The division of responsibilities and actions of countries is described in many aspects of the agreement.


PwC COP21 briefing: Paris Climate Summit

To a standing ovation and some tears of joy, all governments adopted the Paris Agreement on Saturday night. The deal is more substantial and, with a 1.5°C temperature goal, more ambitious than many expected.