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Published 9 noviembre 2022
The danger that greenwashing might allow nations and businesses to wriggle free of their responsibilities to contribute to halting climate change emerged as a key issue on the second day of the World Leaders Summit at COP27. The debate over paying for loss and damage and the struggle to hit the 1.5°C raged, with demands for “climate justice” being issued by leaders of countries hardest hit by global warming. Businesses were also in the firing line; a sharp reminder that corporate ESG strategies have to be clear, meaningful and deliverable.
The UN High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities, set up in March 2022 to tackle greenwashing, released a hard-hitting report. It focuses on financial institutions and other non-state actors, urging a crackdown on greenwashing and weak net-zero pledges that threaten to undermine global efforts to reduce greenhouse gas emissions. To prevent greenwashing, the report calls on financial institutions no longer to claim to be net-zero while continuing to build or invest in new fossil fuel supply. UN head António Guterres made his views on greenwashing clear at the launch of the report: “We must have zero tolerance for net-zero greenwashing. It is rank deception”.
In the main hall, leaders from the global south reminded the world that they are suffering the worst impacts of global warming and expect action to help them.
The Prime Minister of Pakistan, Shehbaz Sharifm, explained how the devasting floods in his country affected 33 million people, with estimated losses exceeding $30bn. He called on COP27 to deliver on loss and damage, asking “How on earth can one expect we will undertake this gigantic task on our own?”.
Tuvalu, the Pacific islands nation, joined its neighbour, Vanuatu, to call for an international fossil fuel non-proliferation treaty, to phase out the use of coal, oil and gas.
Gaston Browne, Prime Minster of Antigua and Barbuda, who also spoke for the Alliance of Small Island States, joined calls for a global carbon tax on the oil and gas industry to be used as a source of funding for loss of damage: “while they are profiting, the planet is burning”.
New Zealand, Austria, Germany, and Belgium have all made commitments on loss and damage funding.
Nine countries (Belgium, Colombia, Germany, Ireland, Japan, the Netherlands, Norway, the UK and the US) have joined a new Global Offshore Wind Alliance (GOWA) which aims to accelerate the deployment of offshore wind power. The UK has also pledged £65mn to developing countries for green technologies, a key theme of Prime Minister Rishi Sunak’s remarks at the summit.
Business must step up to the plate
The new report by the UN Expert Group is a reminder that despite COP being a conference for state signatories to the UN Framework Convention on Climate Change and Paris Agreement, it also provides a platform to highlight how non-state actors must contribute.
The Paris Agreement requires each signatory to produce a Nationally Determined Contribution, a document setting out its carbon reduction targets, every five years. Countries are free to set their own targets, as well as the national policies and initiatives required to meet them.
The UK government has committed to reduce greenhouse gas emissions by 100% of 1990 levels by 2050. This is enshrined in law in the Climate Change Act 2008. It is introducing regulation to achieve its goals. This includes the sustainability disclosure requirements (SDR) regime and the continuing efforts to create a UK Green Taxonomy. The SDR complements the Streamlined Energy and Carbon Reporting (SECR) policy that requires all large companies, LLPs and other entities meeting threshold criteria to report publicly on their UK energy use and carbon emissions.
The evolving regulatory picture is not the only legal risk to business. Year on year, we are seeing an increase in climate litigation against corporations and directors. Regulators have also stepped up, with the FCA warning regulated firms that financial products with ESG or financially sustainable characteristics must be accurately disclosed and marketed, and the CMA launching an investigation into three companies in the retail fashion industry.
The takeaway is clear: companies and directors must consider and act on climate change risks that apply to their businesses, while at the same time ensuring any green credentials, disclosures or ambitions are not overstated or misleading.
What does this mean for us?
At DACB, we are:
Our work stretches across all sectors (including Real Estate, Insurance, Disputes & Investigations, Employment, Health), helping clients identify robust ESG opportunities and manage associated risks.
This includes advice on setting up carbon credit trading schemes, advising on reputational and legal issues relating to environmental claims, acting in litigation relating to the proposal to build a third runway at Heathrow Airport, and advising commercial developers on their rights and liabilities associated with sites adjacent to water courses, woodlands or the green belt. Many more examples can be found on our ESG Microsite.
We also provide thought leadership and horizon-scanning (see our Informed Insurance Microsite), legal updates and market intelligence to keep both our clients and lawyers up to date, as well as engaging in environmental pro bono projects. Our health and social care sector team is currently running a pro bono thought leadership project looking at what is needed to create and maintain a sustainable health and social care system in the UK and the role of providers (including the third sector), regulators and governance systems in building that future.
Today is the first of the thematic days at COP27, and we will be following the commitments and progress made by both governments and the private sector.
Join DAC Beachcroft as it follows the key themes of COP27 in its daily blog. From 7 – 18 November, our sector experts will provide their insights on our COP27 collection as events unfold. Alternatively, click here to register for our daily COP27 updates straight to your inbox.
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