- How has climate change impacted business?
Climate change is affecting the whole world because it is not just an environmental problem. It is believed that that the human socio-economic activities leads to climate change but the opposite is also true. Reports have shown that climate change affects labor productivity and hence, the performance of the company(Matsumoto, 2019).
Changing weather patterns, demand & resource availability and cost will require the businesses to update their business models (Folk, 2018, para. 2 ).
Use of water and plastic cans in Coca-Cola Company:
Water is a major source for soft-drinks company- Coca-Cola. In India, the locals felt that this extensive consumption of resource is causing ground water levels to drop. As a result, company had to close that plant and began to replenish water to improve water efficiency. It has a goal of reducing the carbon footprint of a drink by 25% and improve their water efficiency by 25%(Coca-Cola Company, 2018, para. 4).
McDonalds Reducing its Impact:
Fast food chain, McDonalds is doing efforts to become sustainable and reduce impacts. Starting right from supply chain, it ensured it gets beef from sustainable sources. McDonalds mentions this in their report that they are working towards climate change mitigation and conserving forests Also, it has deforestation-free packing using recycled wood fiber (McDonalds, Reducing Our Impact).
Nearly two-thirds of IKEA products use wood. This means company has to cut a lot of trees which contributes in climate change. To reduce this, it ensures minimal wood wastage and company is coming up with new mutlti-functional innovative designs in which less amount of wood is used( (IKEA, We Love Wood).
- What is the history of The Paris Agreement?
The adoption of Paris agreement took place in 2015 in Paris, France by the Conference of Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC). Next step for Parties was to sign the agreement from April 22, 2016 to April 21, 2017 (World Resources Institute, para.4). The threshold for entry into Paris Agreement was achieved on October 5, 2016. 30 days later, the Paris agreement came into force on November 4, 2016. This was the first time when countries from all around the globe came together and agreed on a common issue- Climate Change. Its goal is to keep the increase in global temperature to well below 2 degree Celsius above pre-industrial levels and to put a limit to the increase to 1.5 degree Celsius. This would diminish the risks associated with changing climate (UNFCCC, para. 1). Out of total 197 parties to the Convention, 185 parties have ratified.
The Paris Agreement focuses on all the important areas:
- Mitigation: Reducing carbon emissions to achieve the temperature goal
- Adaptation: Ready to tackle climate impacts
- Loss and Damage: Recover from climate impacts
- Support: Including financial to help reverse climate change together
It also requires countries to reduce their carbon emissions as soon as possible and present a future goals list that how are they planning to reduce the impact on the environment. This agreement also extends support to developing countries to
fight against climate change. UNFCCC has agreed to provide support including financial to developing countries for sustainable development. For instance, China and India were initially assumed to be against the agreement but later joined, in contrast to United States’ decision (Simon-Lewis, 2017, para. 10). Countries need to establish regulatory measures for companies to reduce their carbon footprints. Consumers have also become aware of the sustainability needs and are forcing companies to go green or go extinct. Countries are now responsible for immediate and long-term goal setting. Changes in policies and incentives for climate-friendly companies will encourage others for sustainable development. A rulebook is maintained to measure the global climate action. This will provide transparency between all the nations to make sure that everyone is involved in reducing the impact. Also, non-party stakeholders are also supporting governments in fighting against climate change (Espinosa, 2016, para.14). The companies which be financially accountable for the pollution that are doing to environment- $150 for 1 ton of CO2. This will also serve as a source of revenue (Simon-Lewis, 2017, para. 14).
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The agreement allows countries with greater GDP to help developing countries to structure plans for sustainable development. For instance, India before the Paris agreement relied a lot on coal. Now, it has made various steps towards renewable resources like solar and wind energy (Simon-Lewis, 2017, para. 17).
- Discuss how The Paris Agreement will or could impact global businesses?
The Paris Agreement does not directly dictate trade and investment policies. It has left this decision to the countries. Three types of rules that can have effect on trade are:
- Border Carbon Adjustment: This means applying taxes on imports according to the cost if the goods had been produced domestically with the climate regulations. And, also reducing border taxes for exports if the destination market does not have such climate related taxes or regulations. This idea has been proposed many times and rejected in the legislative or regulatory process. But, now as all countries have united to save the earth, there is a possibility that this could be put into action. Another way is that the price of a product should be inclusive of the environmental costs too. With this, trade would be environmentally neutral.
- Subsides: Governments could offer subsides in the form of land or cash, low-interest loans to green firms or sectors to encourage more companies to reduce their carbon footprints. This will support new businesses to flourish in competitive markets.
- Product Carbon Footprint Rating: Another step which can be taken by Governments is to mark every product with Carbon footprint rating. This figure will reflect CO2 equivalent emissions from product’s entire life cycle from production to disposal. As the consumers are becoming aware, demand for goods has increased which have little impact on environment. This is an indirect way of benefitting companies which comply climate change regulations.
- Free trade: Asia-Pacific Economic Cooperation (APEC) has managed to cut tariffs on 53 goods. The advantage of this is non-tariff barriers and services. Countries can introduce this free trade policy for goods with zero environmental impacts (Cosbey, Organization for Economic Co-operation and Development).
- What are Nationally Determined Contributions (NDC)?
Paris agreement target is to keep global increase in temperatures well below 2 degree Celsius. To achieve the target, countries need to take regulatory steps. Nationally Determined Contributions (NDC) means target of green house gas reduction and mitigation efforts. It is a legal obligation because the target is defined by countries itself. This contains efforts of the country to reduce national emissions and adapt to changing climate. With this, each country is required to present the steps taken or it plans to take to reduce human impact on environment. Since NDC is not fixed, it is easier for countries to change targets when needed (Calkins, 2018). The report gives provides different data for all sectors like Agriculture, buildings, energy, transport and so on. It also mentions the cost estimates required for implementation (The World Bank, 2016). (The NDC Paltform, 2016) NDC will be implemented beyond 2020. Before the ratification of Paris Agreement, countries submit the Intended Nationally Determined Contributions to United Nations Framework Convention on Climate Change (UNFCCC). After ratification, INDC is officially registered as NDC and each country needs to implement the NDC. This altogether decides whether the world has succeeded to achieve the target of Paris Agreement or not. According to that, steps should be taken to reduce the green house gas emissions. It will take longer for developing countries to achieve the targets because they need to fight with issues like poverty, which is a major roadblock for developing countries (United Nations Climate Change). Developing countries have developed National Appropriate Mitigation Action (NAMA) and submitted reports to UN. They are getting support for financing and measures to combat pollution levels (Overseas Environmental Co-operation Center).
- For the country that you selected answer the following questions based on the research done:
For the country selected, North Korea, officially Democratic people’s Republic of Korea, signed the Paris agreement on April 22, 2016 and ratified it on November 3, 2016 (United Nations Treaty Collection). North Korea was one of the last countries for ratification of Paris Agreement but it has set up ambitious goals in NDC and is working to fulfil them. North Korea was world’s 14th largest producer of coal so the majority of carbon emissions come from coal. 93% of emissions in 2008 came from coal, 3.4% from liquid petroleum and the remaining from cement manufacture. Nearly 50 % of electricity in North Korea comes from coal plants According to a WHO report in 2017, the pollution mortality rate was world’s highest (Chung, 2019). The government has accepted the effects of carbon emissions but they believe they have very limited access to cleaner resources. North Korea has strengthened its legal policies to reduce green-house gas emissions. Few of those are listed below:
- Law on Environment Impact Assessment
- Law on waste disposals
- Law on Energy Management
- Law on Forest
- Law on Science and Technology
- Strategy for Agriculture Development
North Korea is also working to increase energy use efficiency and move towards renewable sources. North Korea is using UNFCCC to get financial assistance from all over the world to improve its energy production and transmission. It is sing strong incentives to fight against climate change.
Businesses play a very important role in how a country does in completing its targets to reduce green-house gas emissions. Companies use a lot resources such water, fossil fuels for the production of goods and if no regulation is put, it is their choice to use renewable or non-renewable sources. It is beneficial for them [financial incentives and subsides] and society as a whole to use cleaner resources.
Obviously general public wants a cleaner environment to live in because they are choking in highly polluted environment
North Korea is considered as a country which is an outsider to international world for actions such as testing nuclear weapons. Despite this, government is taking measures to fight climate changes. The prime reason for that is its vulnerability. It is struggling with food shortages, energy shortages and a rigid political system. So, North Korea is putting efforts to reduce emissions to get help from other nations (The Guardian). Country is also having sanctions which are preventing companies from entering the market. Also, every company needs basic resources such water and electricity which are not fully available in the country. The Chinese, Japanese companies which tried to establish in North Korea got their assets confiscated. So, economy relies on a few domestic companies (Stevenson, 2018). There is no direct proof over how government has given regulations to those for reducing carbon footprints. But according to the INDC submitted by North Korea following points can be taken out:
- Water resource: Due to climate resources, the quantity and quality of this resource is deteriorating and the laws against waste water disposal will effect how companies use and then dispose water (INDC of Democratic People’s Republic of Korea, Page 8)
- Energy production: As Government is planning to reduce the consumption of coal and move towards renewable sources. It is also offering huge incentives for that, it is a good opportunity for companies to utilize that.
- Increase financial support: Government plans to increase funds for low carbon development in all the fields.
- Based on your research, what do you believe will be the best way to achieve real and lasting change towards solving the climate crisis?
- I think it all comes to every individual’s responsibility when issues such vast as saving our humanity exist. People have become aware of the consequences of the climate change and they know that immediate action needs to be taken. If people of a region or country are not aware, governments should start awareness programs like in North Korea, people are encouraged to decrease the use of coal in daily activities and switch to biogas usage(Chung,2019, para. 10).
- The term Gross Domestic Product(GDP) needs to be updated to have a broader scope not just the goods and services. GDP should include factors like well-being of a country’s citizens which should reflect that if we keep running towards fast-paced growth at the cost of nature, nothing is going to stay (Semuels, 2016).
- Paris Agreement involves transparency, standardization and robust international structures and a clear goal. Even if parties fail to achieve the below 2 degree Celsius increase in global temperature, reduction from 4 degree Celsius projected increase will be helpful. However, time will actually tell the effectiveness of the agreement. If parties keep increasing their goals every 5 year through NDCs, this will demonstrate its effectiveness. Its been only 2 years since Paris agreement came into effect, there have been significant changes in some countries. For instance, China is all set to overachieve its NDC targets. The case is similar with India (Calkins, 2018).
Paris Agreement is serving its purpose of raising awareness and bringing all the countries on a table to discuss the global issue- CLIMATE CHANGE
- Calkins, J. D. (2018). Paris When it Sizzles. Washington International Law Journal, 523.
- Chung, J. (2019). N.Korea’s push to use more coal clouds environmental future. Retrieved May 22, 2019 from CNBC: https://www.cnbc.com/2019/01/28/reuters-america-n-koreas-push-to-use-more-coal-clouds-environmental-future.html
- Company, T. C.-C. (2018, August). Improving our Water Efficiency. Retrieved May 22, 2019 from Coca-Cola: https://www.coca-colacompany.com/stories/setting-a-new-goal-for-water-efficiency
- Cosbey, A. (n.d.). Retrieved May 23, 2019 from Organization for Economic Co-operation and Development: https://www.oecd-ilibrary.org/docserver/5jlz7nd44q8r-en.pdf?expires=1558827897&id=id&accname=guest&checksum=199A43104246264AE0A55B44A56E0D74
- FAQs about How the Paris Agreement Enters into force. (n.d.). Retrieved May 22, 2019 from World Resources Institute: https://www.wri.org/faqs-about-how-paris-agreement-enters-force
- Folk, E. (2018, November). How Climate Change Will Afftect Business. Retrieved May 23,2019 from Renewable Energy Magazine: https://www.renewableenergymagazine.com/emily-folk/how-climate-change-will-affect-businesses-20181109
- Matsumoto, Ken’ichi (2019, April). Climate change impacts on socioeconomic activities through labor productivity changes considering interactions between socioeconomic and climate systems. Retrieved May 26, 2019 from Journal of Cleaner Production : https://doi-org.eztest.ocls.ca/10.1016/j.jclepro.2018.12.127
- Paris Agreement. (n.d.). Retrieved May 25,2019 from United Nations Treaty Collection: https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXVII-7-d&chapter=27&clang=_en
- Reducing Our Impact. (n.d.). Retrieved May 22, 2019 from McDonalds: https://www.mcdonalds.com/ca/en-ca/about-our-food/environment/packaging.html
- Semuels, A. (2016). Does the Economy Really Need to Keep Growing Quite So Much? Retrieved May 24, 2019 from The Atlantic: https://www.theatlantic.com/business/archive/2016/11/economic-growth/506423/
- Simon-Lewis, A. (2017, November). What is the Paris Climate agreement and who has signed it? Retrieved from May 23, 2019 Wired: https://www.wired.co.uk/article/what-is-paris-agreement-on-climate-change
- Stevenson, A. (2018, June 12). Who Wants to do Busniess in North Korea? Retrieved May 25, 2019 from The New York Times: https://www.nytimes.com/2018/06/12/business/north-korea-business-kim-trump-summit.html
- The NDC Paltform. (2016). Retrieved May 25, 2019 from The World Bank: http://www.worldbank.org/en/topic/climatechange/brief/the-ndc-platform-a-comprehensive-resource-on-national-climate-targets-and-action
- We Love Wood. (n.d.). Retrieved May 22, 2019 from IKEA: https://www.ikea.com/ms/en_CA/img/pdf/wlw_en.pdf