The stakes for this year’s UN Climate Change Conference couldn’t be higher. But what can we expect from the talks in Glasgow? And how will the summit impact industry?

What is a COP?

‘COP’ simply means ‘Conference of the Parties’. In the world of climate change, ‘the Parties’ are the governments that have signed the UN Framework Convention of Climate Change (UNFCCC).

The COP brings these signatory governments together once a year to discuss how to jointly address climate change crisis.

COP conferences are attended by world leaders, ministers, and negotiators but also by representatives from civil society, business, international organizations, and the media.

The COP is hosted by a different country each year and the first such meeting – ‘COP1’ – took place in Berlin, Germany in 1995.

COP26 is the 26th climate change COP. It is being co-hosted by the UK and Italy. COP26 was originally scheduled to take place in November 2020 in Glasgow, UK but it was postponed by one year due to the COVID-19 pandemic. It is now due to take place 31 October-12 November 2021.

The ‘pre-COP’ (a preparatory meeting) took place in Milan, Italy, from 30 September-2 October.

COP26 builds on the Paris Agreement, an international treaty signed by almost all countries in the world at COP21 in Paris in 2015. This landmark treat aimed to keep the rise in the global average temperature to ‘well below’ 2 degrees above pre-industrial levels, strengthen the ability to adapt to climate change and build resilience; and align all finance flows with ‘a pathway towards low greenhouse gas emissions and climate-resilient development’.

The Paris Agreement has a ‘bottom-up’ approach, namely, each signatory country was to decide by how much it would reduce emissions by a certain year. These countries communicate these targets to the UNFCCC in the form of ‘nationally determined contributions’, or ‘NDCs’.

Goals of COP26

COP26 arrives at an important time in the global climate action debate. If the world is to have a chance of limiting warming to 1.5 degrees, emissions must halve by 2030 and reach ‘net-zero’ by 2050. Unprecedented action is needed if this goal is to be achieved.

It has long been argued that the NDCs submitted in 2015 were not ambitious enough to limit global warming to ‘well below’ 2 degrees, never mind 1.5 degrees. The signatories of the Paris Agreement are, however, expected to submit new – and more ambitious – NDCs every five years, known as the ‘ratchet mechanism’.

COP26 is the first test of this ambition-raising function. One of the main ‘benchmarks for success’ in Glasgow is that as many governments as possible submit new NDCs and, when put together, these are ambitious enough to put the world on track for ‘well below’ 2 degrees, preferably 1.5.

As of September 2021, 86 countries and the EU27 have submitted new or updated NDCs to the UNFCCC.

A few governments, like China and Japan, have pledged new 2030 targets but are yet to submit them officially.

The UK has, for instance, pledged to reduce emissions by 68 per cent by 2030 compared to 1990 levels, and 78 per cent by 2035. The European Union (EU) is aiming for a reduction of at least 55 per cent by 2030 relative to 1990 levels, and the US target is ‘a reduction of 50-52 per cent’ compared to 2005 levels.

However, the NDC updates only narrow the gap to 1.5 degrees by 15 per cent at most.

Around 70 countries are yet to communicate new or updates targets. And several – Australia, Brazil, Indonesia, Mexico, New Zealand, Russia, Singapore, Switzerland and Vietnam – have submitted without raising ambition.

A successful outcome in COP26 is for developed countries to honour a 2009 pledge of mobilising $100 billion per year by 2020 to support climate action in developing countries. This goal has not been met to date.

The recent announcement by President Joe Biden to double US climate finance has been welcomed but more will need to be done to restore credibility and strengthen trust between developing and developed nations.

No doubt discussions at COP26 will focus on mobilizing finance but other issues will be touched upon, especially how best to operationalise the Paris Agreement’s.

Against this background, here below are COP26 main goals:

1. Securing net-zero by the middle of the 21st century in a bid to keep global temperature increases below the critical 1.5C threshold.
2. Making progress on climate adaptation measures to protect lives, ecosystems and economies from the impact of global warming.
3. Mobilising private finance to address the climate challenge.
4. Fostering international collaboration to accelerate progress on climate goals.

Ways your pharmaceutical business can get involved

The World Economic Forum has identified environmental degradation, climate and environmental disruptions (like extreme weather, droughts, wild fires and resource depletion) as the greatest dangers to businesses going forward.

This is because of the ability of these factors to reduce the availability of raw materials, disrupt supply chains, wither demands for goods and services, and change resource availability while increasing costs.

The New York Times referenced a study which asked companies to calculate how climate change could affect their business financially. After analyzing submissions for 215 of the world’s 500 biggest corporations, it was potentially put at $1 trillion in costs related to climate change.

But it’s not just the Fortune 500 firms that face substantial losses, because when the environment loses, the whole world loses. According to a report by insurance giant Swiss Re, the world’s global domestic product (GDP) could drop up to 18%, or $23 trillion, by 2050 if no action is taken.

Experts agree the poorest nations would be most adversely affected by climate change, although even the major economies would suffer irreparable harm. The U.S. GDP could dip as much as 10.5% by 2100.

This is not just an issue for companies that rely on oil, natural gas, or other natural resources. Any business that uses petroleum-based plastics (over 99% of plastic is produced using fossil fuels) along its supply chain or generates greenhouses gases has a part to play. The pharmaceutical industry is not immune – the vast number of precursors used in synthesis are petroleum derived, not to mention the energy used as well as other inputs need to make pharmaceutics.

This is why every company, irrespective of size, influence, or availability of resources, can and should make a collective effort to address climate change.

So here’s how pharmaceutical businesses can join the climate action plan and do their bit:

1. Set science-based and net-zero targets

Setting a net-zero target in line with a 1.5°C future is necessary for businesses to make a dent in limiting the worst impacts of climate change. Join the Business Ambition for 1.5°C, which is an urgent call to action from a global coalition of UN agencies, business and industry leaders, in partnership with the Race to Zero.

2. Take the lead by going 100% renewable

While many companies are already reducing their carbon emissions, they could go further and commit to using 100% renewable power and resources.

3. Switch to electric transportation

Keeping global average warming below the 1.5°C thresholds requires a large shift in the way companies operate. Making the switch to electric vehicles is something that many companies should immediately consider, if they have not yet done so.

4. Reassess supply chain choices

All good charity starts at home, and while companies can concentrate on their own internal practices, greater change can be achieved if businesses reach out across their value chains, and probe the environmental commitments of suppliers and partners to ensure they are aligned with their own environmental goals

5. Prepare to be held accountable

All around the world, people want companies to lead on climate change instead of waiting for governments. They expect CEOs to speak out and champion change and not just talk the talk. But expectations come with accountability, and businesses can soon expect the public to start demanding answers.

Final thoughts

Pharmaceutical businesses can play a pivotal role in achieving new climate targets, and also integrating needed changes. Climate changes creates risks to all businesses regardless of the exact outcome of the conference, with changes needed within corporate strategy, governance, finance and operations.

We hope that COP26 acts as a catalyst for businesses to set the new standards on climate stewardship, with a specific focus on practices and encourage them to step up to the challenge, tackling climate risk head-on.

Resources:

UN Climate Change Conference (COP26) at the SEC Glasgow 2021 (https://ukcop26.org/uk-presidency/what-is-a-cop)