The Bottom Line – the Business Case for a Strong Global Deal

Climate change requires us to act quickly to contain potential risks from global warming and adapt in ways that are consistent with economic growth and development goals. The problem is solvable – many of the technologies required are available today, the policies needed are relatively clear, and the costs of transition appear manageable, even in the current economic climate.

A strong deal in Copenhagen will unlock the potential of business to do what it does best: to profitably invest, innovate and make affordable low-carbon products and services to billions of consumers around the world. A strong deal is essential to create the rules, price signals and risk-return incentives that business needs to:

• Scale-up new low-carbon markets, for example in forest-based carbon sequestration (up to 80 billion global value chain by 2020);
• Create a step-change in energy productivity, driving out the next 20% of energy costs in the energy-intensive industries;
• Accelerate the shift in consumer demand to products with much lower life-cycle carbon (and environmental) footprints;
• Meet the energy and transport needs of the 1-2 billion people at the bottom of the global pyramid with new low-carbon solutions;
• Drive technological innovation, creating the scale effects needed in, for example solar, to achieve grid parity over the next 10-20 years.

From a broader perspective, a strong and equitable deal would need to set the world onto a 450 ppm CO₂e¹ stabilization pathway by:

• Creating the commitments and incentives needed for a peaking of global carbon dioxide emissions between 2015-2020, followed by rapid further cuts in emissions;
• Scaling up the deployment of key low-carbon technologies globally and supporting the expansion of low-carbon trade opportunities;
• Delivering an effective mechanism to save the rainforests and provide better economic opportunities for the billion plus people who depend on the forests for their livelihood;
• Funding adaptation investments to prevent catastrophic impacts of climate change on the most vulnerable communities and nations;
• Accelerating the transition to a prosperous, low-carbon economy in which all nations, developed and developing, can participate.

A strong deal will usher in a transformative period for business. Inevitably, the transition to a low-carbon economy will be a period of creative destruction. A strong deal will need to provide unambiguous future direction to the markets, tipping expectations sufficiently to create a competitive race to the low-carbon economy. It will also need to be sufficiently flexible to minimize the economic damage created by the accelerated write-down of legacy (high-carbon) assets or the environmental damage created by regulatory asymmetries and cross-border carbon leakage.

Of course, the alternative to a strong deal is a weaker, less ambitious one – one that in the short run might require less political and business leadership. Such a deal would not only significantly increase climate risk, but it would extend the period of transitional uncertainty, and lead business – understandably – to treat the low-carbon agenda as a portfilio option rather than as a strategic imperative.