Durban gives business a new focus on results

At this winter’s UN Climate Conference (COP17) in Durban, I was pleased to be a member of the largest private sector contingent to attend a COP to date. And there was a great deal for business to engage with and digest, especially given the fact that a ‘Durban Platform’ was agreed, against expectations, effectively extending the Kyoto Protocol.

By committing to an “outcome with legal force” that, for the first time, includes all major emitters, business has, in a broad sense, secured greater certainty around future regulation and investment opportunities as the international community signalled its intention to progress the climate change agenda.

The private sector will be challenged to respond, from complying with continuing market-based mechanisms and reporting guidelines to exploring a positive role in the financing and delivery of initiatives that address climate change. Critical developments for business include progress around the Green Climate Fund (GCF), which aims to mobilise $100bn annually to help developing nations reduce emissions and adapt to the effects of a warming climate.

I was pleased to have my concerns that the private sector would be sidelined allayed when Durban confirmed that, as well as sourcing funds from the private sector, the GCF will be able to lend to business.

Corporate mitigation and adaptation activities, funded by the GCF, have the potential to generate significant change in developing countries, tackling climate change, as well as building green industries, creating jobs and improving infrastructure.

Another crucial output, somewhat linked to the GCF, is the suggestion that a robust emissions reduction monitoring reporting and verification (MRV) system could be developed. This reason for the importance of progress on MRV is that it could help to increase the flow of private sector capital. If business is to invest at scale, it will seek robust international frameworks to assess the performance of investment projects.

So it’s unsurprising that activities funded by the GCF are intended to be subject to “regular monitoring for impact, efficiency and effectiveness” – in other words, it will be results focused.

A significantly advanced framework for the reporting of emission reductions for both developed and developing countries was also agreed. Developed countries must report on their emissions and reduction projects while developing countries must submit information about their nationally appropriate mitigation actions (NAMAs) and low-emission development strategies, in order to obtain financial and technical support by developed countries. This represents movement on a subject that has been resisted by developing countries viewing it as a breach of their sovereignty.

Though many details are outstanding, business can and should take away from Durban the fact that the climate agenda took a big step forward. The private sector will do well to address the impact of this on their operation, and to approach sustainability strategically.

Vincent Neate is KPMG’s UK head of Climate Change & Sustainability
email: vincent.neate@kpmg.co.uk