Developments at COP 27

The world is presently seeing the largest reallocation of capital in its history. A mighty economic transformation is underway which is indicative of growing trends in driving businesses with net-zero emission goals and is set to attract $3.5 trillion, every year. Governments, businesses, cities, and regions are pledging to drive transformational changes. Marking 30 years of the adoption of the United Nations Framework Convention on Climate Change (UNFCCC) and almost a decade after countries agreed on the Paris Agreement, COP 27 has some considerable key factors to look upon.

Notable developments made in COP 27

Countries accounting for almost half of the global GDP collaborated to announce a sector-specific ‘Priority Actions’  framework with 25 collaborative plans to fuel decarbonization efforts in power, road transport, steel, hydrogen, and agriculture. Under the ambit of the agreement, essential infrastructure projects will be ramped up, global demand for green industrial goods will be stimulated, and technological and financial institutions will be strengthened. After lengthy negotiations, the landmark loss and damage fund to assist developing countries in mitigating climate change crises have been approved.

Why should businesses bother about COP?

The decisions and directives adopted in the summit will cascade down to government targets, laws, compliances, and further, investments, which businesses have to be vigilant about. Every 2 out of 3 people in the world are aware of the recently -ended summit. It will be of substantial importance for businesses because nearly 65% of the public holds them accountable for driving key climate change innovations. This can severely influence people’s decision-making and further, brand growth. Adaption to sustainable practices will not only expand the business footprint but also build a future-resilient growth trajectory.

Closer to $1 trillion in tax measures and lending-related incentives for green innovation are available currently. This is highlighting the potential of green innovation. This would certainly drive the growing investor sentiments inclined towards businesses incorporating ESG goals. Private equity and banks, alike are part of this entire transition.

Foreword to Sustainable Transformation:

Businesses should readily build their capabilities to drive a sustainable transformation in recent times. Considering metrics reporting will be important for businesses to factor in. The UN’s latest crackdown on greenwashing net-zero ambition amongst corporations and government is indicative of the importance of transparent reporting. Businesses need to make comprehensive reporting on sustainable transformation for garnering maximum investor confidence. It is also essential to increase traceability in the supply chain to drive better and more optimized solutions.

Monetizing opportunities such as investing in research capabilities, leveraging technology, and fostering a sustainable ecosystem can help both as an imperative for social responsibility as well as scaling overall execution strategies. Businesses need to offer solutions and re-think ways of operating where it aligns with the new consumption culture. Value creation is of utmost importance for businesses to stay relevant in today’s market. As climate change is readily becoming personal, it has the potential to significantly influence people’s decision-making, thus businesses must create relevant value propositions.

Considering the fresh developments made in the overall ecosystem for building solutions to mitigate climate change at a global scale, businesses should leverage the benefits by involving in multi-stakeholder collaborations. Engaging with governments industry players and local community leaders will help in developing hyper-local, relevant prospects which can benefit brand image creation and heightened consumer perception.

Depending on the sectors, businesses need to evolve at a much greater pace to build transformational solutions to mitigate the risks of climate change and build a resilient venture for the years to come.

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