The Paris Climate Conference (COP21) in December last year culminated in a global agreement to limit the temperature rise to less than 2 degrees compared to pre-industrial levels.
While the accord was widely hailed as historic, it raises a number of important issues for corporations and governments as well as ordinary citizens. At the heart of many of them is a simple calculus between the costs and benefits of compliance with a new regime that is designed to deliver a ‘universal good’ – ie for the whole of humanity. For many businesses, complex changes will be required to meet obligations and contribute towards the attainment of targets made by national leaders; this points to increased reputational risk and greater public focus on corporate responsibility. For developing countries, a critical issue will be the availability of funds to effect the transition towards a greener economy; many of them will have to be strike a new balance between the wider interests of the global community and the narrower pursuit of comparative advantage.
- How credible are the promises that countries made by signing the agreement and how will they be implemented?
- How will the private sector work towards the desired energy transition without a carbon tax?
- Will there be sufficient financial support to support developing countries to limit emissions?