Proposals for COP26: Undue Influence on Climate Policy
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Make countries legally accountable should they run counter to their climate commitments
The COP should establish policies that push (if possible legal measures) member countries to fulfill their climate action commitments. The policies should apply to member states who promised to keep the global temperature to 1.5 or 2.0 degrees Centigrade but are likely to fail their targets due to lack of political will, conflicts of interest, and undue influence, or other related integrity issues. Such countries that need to act should be those that have "critically insufficient" and "highly insufficient" climate actions based on scientific and credible measurement systems, such as the Climate Action Tracker's system.[1] These countries include member states still maintaining and building coal plants as sources of energy, such as South Korea, Japan, Russia, Saudi Arabia, and China. These sample countries will highly likely fail their targets, significantly exacerbated by the pandemic. Also, a country negotiator might be having a conflict of interest should he/she maintain their national policy that promotes coal plants or coal plant construction (including management and maintenance, which is the case of South Korea) outside their country.
Urge Company Board Members to Support
Scientifically-informed Climate Corporate Governance
Board members of each company should be supportive and make the specific decisions using their voting rights to push for corporate climate action if they are investing in the environment, social and governance system, or other sustainable environmental programs. The push for climate action should gear towards resolving sustainability issues posed by the impacts of climate change. They should use their voting rights to promote/support climate actions based on credible study results, such as the UNFCCC's recent climate reports intended for policymakers. Board members' voting rights should be protected from any forms of conflicts of interests schemes by other members who merely think for sustainable economic value and not for a truly sustainable environment.
Disclose Climate Change-related
Opportunities, transition plans, and Risks
Companies should be transparent by disclosing climate-related opportunities, transition plans, and risks in line with the Task Force on Climate-Related Financial Disclosures (TCFD)[2] recommendations, which defines disclosure as relevant information, specific and complete; clear, balanced, and understandable, consistent over time, comparable among companies within a sector industry; reliable, verifiable, and objective; and provided on a timely basis. It means that disclosures should be standardized and enforceable methodology. In addition, the company's operation plans should align with the Paris Agreement temperature goals.
Companies Set Science-Based GHG
Emissions Reduction Targets
A policy should push companies to disclose their plans in reducing their gas emissions target based on credible and science-based results and predictions. Furthermore, the disclosure plans must align with the recommended Paris Agreement goals or targets. Domestically (in South Korea), Korean companies (including semi-government-owned companies) are busy advertising the Environmental, Social, and Governance (ESG) system. However, since many companies do not outline specific plans and methods of achieving the target ESG, the program merely becomes a greenwashing reporting activity which eventually yields negative impacts on some companies, such as the case of POSCO[3], which invested in fossil fuels while claiming to have been implementing the ESG and received A ratings.
Review Product Offerings and Underlying
Investments
Companies should examine and evaluate their products and investments. A company could be economically sustainable and enjoying great returns on investments. However, they could be having a portfolio that is socially and environmentally non-sustainable, such as investments in fossil fuels and weak in stewardship and transparency activities. Therefore, companies should transparently review their products and investments and be accountable to any negative externalities brought about by their business activities, such as third-party harms caused and environmental damages.
Establish Global ESG Standards and
Evaluation Criteria
Rating Providers should have a universal standard when evaluating and rating companies. So far, the ESG rating firms offer such service, but they have "no specific standard or industry guideline for establishing an ESG rating."[4] Moreover, because the providers have their methods, scope, and coverage, their ESG scores for the same company may also vary.[5] To resolve this issue, an "entirely new ratings system" is required to quantify business behavior's impact on ESG factors truly. The new rating system should measure businesses' environmental, economic, and human costs of "market failures." Market failures are related to business monopoly, negative externalities (directly harmed the third party), and environmental damage. With that new rating system, a company will not receive a high aggregate score if it gets poor ratings on a single factor with significant social or environmental costs.
Push countries to implement carbon tax
systems for all businesses and relevant entities
A carbon tax policy (or national law) should help push businesses and governments to reduce gas emissions. Some of the significant advantages of carbon taxes include internalizing the negative externality of carbon emissions, incentivizing businesses/entities to utilize and promote environmentally-friendly processes and products, and raising funds for environmental and climate actions or programs. "Putting a price on carbon emissions can drive efficient emission reductions, spur innovation and allow businesses and households to choose how they reduce emissions,"[6] according to World Resources Institute. The Institute added that in 2017 alone, carbon pricing raised USD33 billion in government revenues globally. Therefore, both developed and developing countries should be pushed to implement the carbon tax system. In particular, the tax system should target big polluters, such as manufacturers (e.g., steel, cement plants), energy-producing companies, oil producers, and coal plants.
Global Phase-Out of Coal Plants Policy
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