Capitalism is failing Africa. A relatively small number of entrepreneurs have prospered on the continent in the past decade, becoming the face of the “Africa Rising” narrative. But hundreds of millions more have remained poor and unemployed, and lacking electricity, good schools and access to adequate healthcare.
The collective gross domestic product of the continent’s 54 nations is roughly $1.5tn — less than that of Brazil alone, at more than $2tn. Africa, with 70 per cent of the world’s strategic minerals, has about 2 per cent of world trade and 1 per cent of global manufacturing.
Capitalism has been the greatest creator of national wealth in world history, lifting billions out of poverty from Singapore to China, and from South Korea to Brazil. But Africa stands on the cusp of a lost opportunity because its leaders — and those who assess its progress in London, Paris and Washington — are wrongly fixated on the rise and fall of GDP and foreign investment flows, mostly into resource extraction industries and modern shopping malls.
They are in thrall to orthodoxies better suited for more mature economies. African countries need to focus on creating broad-based growth across sectors and social classes in order to promote jobs and labour productivity. This is what improves GDP per capita, which has remained stagnant at less than $3,000 in most African countries. Africa must stop counting malls and measure jobs and their productivity instead.
There is no shortcut to that outcome that can ignore building industrial economies based on manufacturing. African nations must reject the misleading notion that they can join the west by becoming post-industrial societies without having first been industrial ones.
Africa should be striving for self-sufficiency and to become part of the globalised production value chain. This requires the consistent development of skilled labour, linking innovation to industrial production, as well as investment — both domestic and foreign — in infrastructure and manufacturing.
Fossil power has turned out to be a mirage in countries such as Nigeria. They need to switch to a strategy based on renewable energy that is often quicker to install and is increasingly cost-effective.
If countries across Africa are to achieve inclusive economic growth on this basis, another shibboleth must be confronted: the one which decrees that for economies to prosper and grow, governments must get out of the way of business. On the contrary, governments must lead the way, with a firm hand on the wheel and by setting policy that creates an enabling environment for market-based growth that creates jobs.
They must also keep a careful eye on market actors with regulation and oversight that has wider social objectives in view. Markets must work for society and not the other way round. That, surely, is one of the lessons of the global financial crisis.
This is not an argument for a heavy-handed statist approach that would choke productivity and stifle competition. Nevertheless, a strategic role for governments remains essential. The question is whether African governments are capable of making the right policy choices. Ethiopia and Rwanda offer hopeful examples.
African countries need to remove incentives for systemic corruption if the proceeds of growth are to be widely shared. The Nigerian government under President Muhammadu Buhari has rightly withdrawn subsidies and deregulated the importation of refined petroleum products. Next, it should review its policy of maintaining an artificially fixed exchange rate, in the face of depressed income from crude oil. This has bred corrupt arbitrage in currency markets and hurt productivity.
Another key to manufacturing-based, inclusive growth is “smart protectionism” — temporary tariffs that would protect nascent industries from the cheap imports that have rendered African economies uncompetitive on the global stage. For developing countries, such as many of those in Africa, this can be achieved within the rules of the World Trade Organisation.
For capitalism to work for Africa, just as it has for China and much of east Asia, public policymakers must shake off the shackles of orthodoxy.
They say in Africa, it is often easier, faster and more reliable to get from one country to another by connecting through an airport out of the continent.
For instance, the quickest route from Nairobi to Bangui in the Central African Republic, a distance roughly equal to that between Chicago and Miami, is to fly eight hours north to Paris, change planes and fly eight hours south.
Getting from Africa to Europe is relatively simple, thanks to lingering ties from colonial days, but hopping across the length and breadth of Africa can be a nightmare. You cannot compare this with flying from Nairobi to Entebbe which was once mentioned as one of the most expensive routes in the aviation industry.
Again, flying from London’s Heathrow to Istanbul is not a difficult undertaking. It is a given that the journey will be direct and will take four hours or so. The only ‘task’ is deciding on which meals and drinks you would dine on the flight.
Now imagine if the same journey was routed here in Africa where convoluted flight itineraries are unfortunately the norm.
So far, some of the notable factors for these and that stop African airports from becoming international hubs are lack of cooperation among countries and stifling air connectivity, growth and development are misaligned government policies. Consequently, this has since discouraged the middle class who would wish to use airline between two neighboring countries, and instead opt for road transport which is so tedious.
Nonetheless, once African countries open up their policies to ease air traffic, as it looks, given recent endeavours, ramping up consumer demand will become paramount.
As it stands, passengers have reason to avoid African carriers; the continent is home to some of the most expensive airfares on planet earth. They are subject to excessive levies in the form of airport fees, jet fuel taxes, excise duties and more. There is also strained connectivity due to un-relaxed Visas.
Meanwhile, the problems caused by an unconnected Africa are not limited to inconvenient travel schedules and exorbitant air tickets. Far bigger are the opportunity costs to the economies of the African nations.
Trade and tourism is hindered and investment opportunities lost. And it is not just about economics. Aviation connects people. Africa would be a less fragmented continent with greater air connectivity. It is time to demystify air transport!
The continent cannot take off economically while its runway is incomplete. Governments in Africa need to treat aviation as a strategic asset and not as an instrument of foreign policy.
Africa’s past has long been defined by national insularity; its future lies in liberalization. There is more need to open up the aviation industry and promote it as core sector in economic development.
Air travel is no longer a luxury but a necessity, it is not like those days when flying across the continent was a trip back in time for Americans and Europeans, to the days when passengers brought their own food, when missing a flight meant a three-day wait for the next one and when a seat was not truly confirmed until you were sitting in it and the plane was airborne aftermath.
Despite a notable growing awareness of the role of the aviation industry could play in the development of the continent, the industry is still not meeting this expectation.
As we advocate for increased understanding of the African aviation industry and the growing presence of foreign companies, African governments must all be willing to open their skies and stop fearing that foreign competition would outshine national airlines, some of which have long ceased to operate.
Today, Africa has some of the world’s fastest-growing cities and is renowned for its indomitable entrepreneurial spirit, people have a greater need to move goods and services between markets, and when they have disposable income, they want to travel.
Making flights affordable will unlock the dreams that are often blocked by inability to fly across the globe. Air travel is imperatively essential to the prosperity of Africa as it opens up opportunities that did not exist before.
Talk about East African Community; fostering the African aviation industry may be one of the driving forces of integration in the region. Better connected African countries and regions through a viable air transport industry could be the vehicle that can boost intra-African business, trade, tourism as well as cultural exchanges.
Developing the aviation industry may also represent an opportunity to ease constant transport problems facing African countries.
Just like Rwanda’s national airline, RwandAir, on its heels of expanding rapidly into Africa, this is a recipe for more achievements considering that Rwanda is one of the fastest-growing economies in Africa.
Connecting Rwanda to its neighbouring countries and to the rest of the world will not only bring vast economic gains, but also presents a chance for Rwandans to access other opportunities that would have otherwise gone untapped.
As governments and customers start asking more specific questions about a company’s sustainability and emissions performance, those that can answer them are likely to have a distinct advantage.
When hearing about the science of, or human response to, global climate change, there is sometimes a temptation to just ‘switch off’.
The issue is no longer novel and the days when Al Gore was presenting ‘An Inconvenient Truth’ and receiving the Nobel Prize were almost ten years ago. In 2015, as much as awareness of the problem remains high, there is a sense that the political, policy and economic responses continue to lag.
This is a dangerous mindset; climate change, much like the Internet, is here to stay, and with each day, it only gets worse, not only because of the growing scientific evidence and lived experience of its effects, but also because changes in policy by government and others have the potential to either save or cost a business money.
This December, at ‘COP 21’ in Paris, nations have been tasked with negotiating an international climate agreement. The agreement has the potential to generate a cascading effect through the global economy, with all significant businesses being asked by government and civil society the extent to which they are helping or hindering emissions reduction.
It is potentially the most significant international meeting on global climate change since the first Earth Summit in 1992.
Ten years ago, I was working at 10 Downing Street as the senior advisor to the British Prime Minister on climate change and sustainability. It was critical then, and it is critical now that people understand that climate change is far more than an environmental problem. With the dynamics that lead to emissions growth, global warming and a heightened risk of severe climate events being intrinsic to economic activity, it is vital that economic actors understand how they can reduce emissions and improve wider sustainability performance.
Each year, there is a growing body of evidence that the global climate problem is far more than a future environmental challenge. Whether it is
- the costs associated with severe weather events such as Hurricane Sandy which devastated New York in 2012;
- the destruction wrought by Typhoon Haiyan killing more than 6,000 people in the Philippines in 2013;
- the emerging policy environment as China and the United States agree on bilateral approaches to reducing the risks of climate change, or
- President Obama establishing powerful domestic policies to promote clean energy,
climate change is far more than an issue of concern to environmentalists. We are now at a stage where any major business seeking to grow in new markets must consider whether, and how much, they might contribute to emissions.
And as the evidence of climate change being a clear and present risk becomes more evident, consumers and environmental groups are increasingly concerned about the environmental performance of global businesses.
Look at major agribusinesses operating in Southeast Asia such as Syngenta, which is implementing their ‘good growth plan’ or Unilever, which is seeking to address human development goals and reducing the risks of climate change at the same time.
Tackling climate change is no longer a niche concern among just a few firms, for corporations, measuring, understanding and reporting on emissions performance is part of building and maintaining their corporate reputation and positioning as ambitious players in the global economy.
I am much looking forward to being in Singapore in November to be part of the Responsible Business Forum. It is a conference taking place at the right time – just before December’s climate change conference in Paris – with the right people involved, and in the right place, Singapore. The city is at the heart of Sutheast Asia, the region predicted by the Organisation for Economic Co-operation and Development to enjoy strong average growth of 6.5 per cent a year between 2015 and 2019.
Whether this growth will worsen the global climate problem or be a chance for Southeast Asian firms to demonstrate that development can be achieved sustainably, is a matter of choice, for many businesses operating in southeast Asia responding to the risk of climate change could be a powerful opportunity. As governments and customers in distant markets start asking more specific questions about a company’s sustainability and emissions performance, those that can answer them are likely to have a distinct advantage.
To the raucous applause of relatively few people, the U.N. General Assembly quietly adopted the 2030 Agenda for Sustainable Development last week, and with it, 17 technicolor goals for fixing everything in the world. These are the Sustainable Development Goals (SDGs), 2015–2030’s answer to yesteryear’s Millennium Development Goals. Pony up, humans; we’ve got some sustainable things to develop:
Seventeen: Just enough to make achieving even one feel insurmountable.
The first thing to note is that each of the goals is an amalgamation of targets that allow for measurable progress. There are 169 of these targets, which is to say that any governments interested in hitting the goals — and 193 of them just signed up to do exactly that — will be tracking at least 169 new indicators to demonstrate how well they’re doing. (To be clear, we don’t actually know the indicators for the targets yet. Those will be adopted at a future U.N. session.)
But let’s zoom the lens in on one of these goals and see what’s going on. Goal 11, for example, is to “Make cities and human settlements inclusive, safe, resilient and sustainable.” I think we can all agree those are reasonable asks. But what does it actually mean to be a sustainable city?
That question was the concern of a March 2015 position paper by the Local Authorities Major Group, a channel through which a collection of NGOs and subnational government stakeholders sends feedback to the U.N. Among the authors’ proposed metrics for pairing with the targets were numbers like “percentage of people within 0.5 km of public transit running at least every 20 minutes,” “percentage of urban solid waste regularly collected and well managed,” and “area of public space as a proportion of total city space.”
While the Local Authorities Major Group doesn’t decide which metrics the U.N. will adopt, you can imagine several like these making the cut. But this is where a central contradiction of the SDGs reveals itself: For all the grand and all-encompassing nature of the goals themselves (cf. “End poverty in all its forms everywhere”), developing appropriate metrics for the 169 targets gets persnickety pretty quickly. It threatens to devolve into pegging arbitrary, ultra-specific definitions to things like “reduce the adverse per capita environmental impact of cities” (Target 11.6). What’s more important to the U.N., a given city’s carbon emissions or its water pollution? Both? Either? Fix all of the things in all of the cities? ¯\_(ツ)_/¯?
Among Goal 11’s other targets are items like “provide access to safe, affordable, accessible and sustainable transport systems for all,” “strengthen efforts to protect and safeguard the world’s cultural and natural heritage,” and “enhance inclusive and sustainable urbanization and capacity for participatory, integrated and sustainable human settlement planning and management in all countries.” Although these targets are admirable, 15 years is a pretty tight deadline for reaching them.
But not all is lost. If the SDGs actually mean anything for cities, it’s that massive multilateral institutions like the United Nations are recognizing the potential of local governments — something that rarely happens in the U.N.’s rooms of noble conversation and dark suits. At a meeting at the New School last Friday, a global coalition of governors and mayors endorsed the SDGs and noted their own role in holding up Goal 11. “When it comes to sustainability, environmental protection, social inclusion, and creating a prosperity that can spread, mayors can do something about that,” said California Gov. Jerry Brown. “To do any of this, though, it will take heroic efforts,” he added.
Indeed. At the same event, speaking on behalf of U.N. Secretary General Ban Ki-moon, U.N.-Habitat head Joan Clos i Matheu said that Goal 11 “calls for an urban transformation that requires political will and the capacity to coordinate many actors and stakeholders. … Most importantly, [mayors] can give a voice to their citizens.”
And that’s where the SDGs really start to matter. The U.N. argues that the Millennium Development Goals “galvanized” governments to lift hundreds of millions out of poverty. That may well be true. (There’s no good way to be certain about what motivated that achievement.) But there’s a difference between government galvanization and actual citizen empowerment. Embedded deep in the SDGs, in the thicket of Goal 11, is the acknowledgement that people count, local governments have a serious role to play in development, and some of the U.N.’s lofty solutions are going to have to come from the bottom up.
President Barack Obama’s trip to Kenya and Ethiopia has focused on trade, investment and entrepreneurship.
One of the highlight of the visit occurred this past weekend when he hosted the Global Entrepreneurship Summit in Nairobi, where thousands of top business leaders, entrepreneurs and politicians gathered to discuss opportunities and challenges in today’s Africa. Obama called on American investors to fund African entrepreneurs to support job creation, backing it up with a pledge of more than US$1 billion in new private and US government commitments for start-ups.
Less discussed, however, was infrastructure investment and the role it plays in driving employment, particularly as China and others pour billions into projects across Africa.
Africa has seen a surge in infrastructure investment in recent decades, most notably in the construction of roads, ports, bridges and airports, yet the continent still has a serious infrastructure gap. The World Bank estimates the continent must spend $93 billion a year through 2020 to close it.
More importantly, however, questions linger over how successful these investments have been in promoting long-term growth in employment.
In particular, concerns have been raised that many of the recent developments suffer from a short-term mindset and make only a small dent in employment beyond the life of the project. Others, such as some financed by the Chinese, bring in their own labor force for much of the work, which further limits the long-term impact on local employment.
So the question is: with hundreds of billions of cash in the pipeline, how can countries on the continent get the most out of all that investment?
An infrastructure surge
Africa has experienced a surge in major infrastructure development projects over the past two decades, which has created many employment opportunities for local communities. They’ve also boosted the marketability of local products.
For instance, due to lack of viable railway infrastructure and machinery, the food chain supply between rural communities (zone of production) and cities (place of consumption) has been disconnected, creating food insecurity for many people. To address this challenge, the Democratic Republic of the Congo invested $31 million in new locomotives and millions more restoring railways to make it easier to market and sell local products.
More broadly, the value of mega-projects under construction in Africa soared 46% last year to $326 billion, according to Deloitte. Almost half of that was in southern Africa, and 80% involved the transport or energy and power sectors.
Such developments have provided significant opportunities for both skilled and unskilled residents alike as the projects are usually quite labor-intensive.
Every $1 billion invested in infrastructure has the potential to generate, on average, about 110,000 related jobs in oil-importing countries and 49,000 jobs in oil-exporting countries, according to the World Bank.
In 2012, the African Development Bank raised $22 billion from a pan-African infrastructure bond to invest based on its Programme for Infrastructure Development in Africa (PIDA) project. Another $368 billion is expected to be invested through 2040 on roads, ports, hospitals, schools and other key infrastructure, which is expected to create hundreds of thousands of jobs.
Resource-rich Angola in the south and Kenya in the east are two countries that have been among the biggest beneficiaries of this growing investment and show how these projects can facilitate strong economic growth.
Angola, for instance, is a prime example of the success of state-led infrastructure spending, primarily through its partnership with China. The impact of these projects on job creation has been encouraging, helping reduce unemployment to 26% in 2014 from 35% eight years earlier. That’s still quite high, but it’s a start.
Kenya, where Obama spent most of his Africa trip, has invested mainly in its energy and railroad infrastructure. That investment is estimated to have boosted growth in the country to 6%–7% through 2017, compared with 5.4% in 2014, providing its citizens with additional employment.
These examples and many more demonstrate how promising infrastructure investment in Africa can be.
Costs versus benefits
But the promise isn’t always fulfilled. One of the main concerns about these projects is that they are contract-based, tied to the duration of the development.
While they generate useful economic opportunities during implementation, many of them often provide only short-term employment gains and fail to provide a long-term sustainable solution to Africa’s persistent underemployment problems. Because the initial jobs are tied to contracts, most people employed in these infrastructure development projects will not be able to secure long-term employment at the closure of their contracts.
Other complaints include the poor working conditions, which are often below international standards and provide limited safety, especially in labor-intensive infrastructure projects. And again, their contract-based nature mean they lack minimum wages, legal protections and security.
The question then becomes: are these projects worth it, despite the problems?
Anticipating what comes next
All in all, despite the shortfalls, infrastructure development in Africa has been positive. Whether in developed or developing countries, the economic benefits of such projects can generally be seen over the long run.
But these projects give a greater boost when they are linked with critical economic sectors such as agriculture, energy and farming. Or when officials anticipate what economic opportunities could be kickstarted by a project and ensure they translate into serious long-term employment.
In the Democratic Republic of the Congo, for instance, roads, ports and other projects are serving as a means toward developing other economic sectors, notably agriculture, tourism, mining and trade. This serves as an anticipatory mechanism within government planning to help ensure sustainable economic growth and social development.
Policies along these lines will be of greater benefit to other African countries as well.
How to get the most out of a project
Governments can follow a few policy suggestions to help ensure they get the most out of infrastructure investment.
For example, governments and other stakeholders should emphasize skills transfer so that after a project is complete, locals can be employed in keeping up the road or bridge. The Democratic Republic of the Congo can be used again as example of how local governments are establishing maintenance and public recycling groups in major cities. This will not only help ensure sustainability of the infrastructure, it will also guarantee long-term jobs for a large number of people.
Anticipating what comes after a project ends is key so that during its development workers can be trained in other jobs that will result, thus offsetting the sudden drop in unemployment at completion.
Africa has complex economic and politic issues and huge infrastructure needs that will drive growth and employment for decades to come. The benefits are many. By taking a careful strategic approach, countries can ensure the short-term projects translate into long-term economic and employment gains.
How can water be better managed to ensure enough supply for a growing global population? Our panel of water experts have their say.
Calculate the water available: We need a better accounting of our “water balance sheet”. In many places, we don’t have any idea how current and near-term future demand matches up with the available surface and groundwater supplies. The WRI’s Aqueduct tool has a water supply/demand indicator – called “baseline water stress” – that gives a good preliminary read on whether local water use is sustainable or not. Betsy Otto, global director – water programme, World Resources Institute, Washington DC, US, @wriaqueduct
Link global water use: Although the Swiss are quite efficient at using water within our country, we have a huge water footprint because of all the food and goods we import, often from very water stressed parts of the world. Globalisation means there is a global water economy at play. Government regulation or taxation could nudge behaviours onto a more sustainable path. Sean Furey, water and sanitation specialist, Skat, St Gallen, Switzerland, @thewatercyclist
Think across sectors: Currently, those who work on “water services” think almost exclusively in terms of access, and those who work on “water resources” think in terms of sectors and water usage. I think the water service people (myself included) need to think harder about where the water for increasing coverage is going to come from, and how we can best implement sanitation services that protect water resources. Sophie Trémolet, director, Trémolet Consulting, London, United Kingdom, @stremolet
Treat water resources better: For a long time we treated water as limitless, and the incentive structures in cities and rural areas pushed people towards unsustainable practices. Water distribution being highly subsidised by governments doesn’t help create awareness about its actual value. We must make measurable efforts to change water-use habits in a global scale. Carlos Hurtado Aguilar, manager – sustainable development of water resources, FEMSA Foundation, Monterrey, Mexico
Develop water monitoring and regulation: Governments can provide both regulatory sideboards – such as requirements for full cost recovery on water tariffs – and incentives – such as cost-share on water reuse and rainwater harvesting systems. For developing countries (and many developed countries) this may feel like a daunting task, but governments do this sort of thing for education, energy, and other sectors. It’s high time to do the same for water. Betsy Otto
Establish accountability mechanisms: To secure a safe water supply for the poorest people, service providers should get into trouble when they fail to provide the services the poorest need. There should be cross-subsidies between the rich and the poor but most importantly cross-subsidies that work in reverse should be eliminated. With the money saved, direct subsidies can be given to the poor. We should also encourage the poorest people to be more self-reliant (e.g. encourage rainwater harvesting practices) and to demand good quality services as customers. Sophie Trémolet
Construct better water points: I’ve been looking at water point data in various countries and the number of boreholes and wells that are reported dry or seasonal only is shocking. In places like Sierra Leone, Liberia and Tanzania, more than 15 to 20% of water points fail in the first year after construction. That’s why we are working with Wateraid and Unicef to improve water well drilling practices. Poor communities often have to contribute a great deal for a new water point, so it clearly isn’t right when they are left with a dud. Sean Furey
Invest in simple, efficient irrigation technology: Some means of beating water scarcity in agriculture – for example, farming close to rivers – are cheap but unsustainable. This could of course be prevented if there is an effort to invest in simple but efficient technologies for irrigation. This would break the vicious cycle where water scarcity leads to the invasion of marginal lands near rivers, which in turn undermines the ability of the river system to replenish its water resources, leading to further scarcity. Greenwell Matchaya, researcher and economist, International Water Management Institute, Pretoria, South Africa, @IWMI_
Promote rainwater harvesting: We need to challenge the way that rainwater harvesting is thought of. Everyone knows about it, but its use and implementation is piecemeal and I don’t see any big agencies or donors pushing it forward. Can we have a ‘reinvent rainwater harvesting’ challenge? Sean Furey
Secure sufficient financing. To guarantee future populations have reliable access to water and sanitation, the top priority is securing the money to ensure that systems are built and adequately maintained over the years. Sophie Trémolet
Work with communities: The sustainability of water interventions is essential if we want communities to actually have better opportunities for development in the future. Helping community leaders take ownership of their water solutions and transferring that to their neighbours is one of the best ways to ensure projects remain a part of people’s lives. Carlos Hurtado Aguilar
Invest in staff skills and capacity: To get good water data requires skilled hydrometric staff. It isn’t sexy and it is often the first budget line to be cut when departments are squeezed but it’s essential. I worked in Liberia (before the Ebola outbreak) last year and one of the major challenges for managing water resources we found is that there are hardly any measurements of anything and it’s difficult to guarantee the quality of the information that does exist. Sean Furey
Apply smart strategies: WRI’s global analysis is finding that future water stress is driven far more by demand than supply. Even in areas that will experience big hydrologic impacts from climate change, unmanaged demand will be a bigger impact. Ironically, that is cause for some optimism. If we apply the smart strategies that we already know work in the urban, rural and agricultural contexts, we can reduce future conflict and secure more water for equitable development and growth. Betsy Otto
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The UN’s climate change chief, Christiana Figueres, has today issued a heartfelt plea for businesses to support the push for a global climate change agreement, arguing they are crucial to the success of any deal reached in Paris later this year.
Writing for BusinessGreen as part of the site’s new content hub, Figueres said the long-running negotiations to deliver a new international climate change treaty had entered an exciting new phase whereby businesses and governments were no longer stuck in a deadlock over who should act first to curb greenhouse gas emissions.
“The historical catch 22 around who should act first on climate change – governments or businesses – has finally been broken,” she said. “What we are now witnessing is a “co-responding” effort from both the public and private sector, responding to the reality that green growth and a wider understanding of what is wealth, is the growth-engine of the future.”
Figueres insisted she was increasingly confident a deal can be reached at the Paris Summit at the end of the year, in part because 46 nations have now submitted detailed climate action plans ahead of the talks and in part because of “the rising ambition and action of companies and investors”.
“At the close of this year, we can be confident we will have that new agreement which needs to put the world on track to a low carbon economy by charting a defining and definitive course towards limiting a global temperature rise under 2 degrees Celcius this century,” she writes.
Figueres also argued that the long-term plans for governments and businesses are more aligned than ever. “Governments, through decisive and bold action – such as the recent announcement by the leaders of the G7 countries to phase out the use of fossil fuels by the end of this century – are signalling that investment in green technology is a sure bet as the world transitions to a low-emission economy,” she said. “Similarly, companies that recognise that climate action makes good business sense are committing to invest in innovative technologies, which are transforming the energy market.”
However, Figueres argued businesses could support the summit further by signing up to cross-industry commitments to curb their greenhouse gas emissions and environmental impacts.
“Ultimately, one of the most compelling ways that businesses can build the will for a climate agreement is by signing up to initiatives that are truly transformational in terms of putting us on a trajectory towards steeply declining emissions such that in the second half of the century everyone can live and breathe in a climate-neutral world,” she writes. “This can mean setting a target for 100 per cent renewable energy use, committing to include climate change information in financial reports, or calling for a price on carbon – as six major European oil and gas companies did last month.”
Businesses are expected to play a key role at the Paris Summit where governments from around the world are planning to finalise an emissions reduction treaty that would then come into effect from 2020.
The treaty is expected to be based on a system of national climate action plans, known as INDCs, and as a result will have a major impact on national economies and policy regimes. Businesses will be expected to deliver on the national emissions reduction commitments through clean tech investments and new business processes. Meanwhile, the private sector is also expected to play a key role in delivering on a previous international commitment to mobilise up to $100bn of investment a year in helping poorer nations tackle climate change.
Growing numbers of business have voiced their support for the UN’s goals, arguing an international climate change agreement will help reduce climate-related risks for businesses, drive green growth, and create a level playing field between different jurisdictions.
Figueres stressed that the support of the private sector will be crucial if any UN agreement is prove a success. “We are counting on the business community to acknowledge their role in this new trend toward sustainability, seize the opportunity at hand and to work with their countries and their communities as we seek to mitigate the effects of climate change; build more resilient societies and help move every man, woman and child into a more healthy and prosperous future,” she wrote.
The UN’s latest intervention came on the same day a major new study from Grantham Institute argued that economics is no longer a barrier to tackling climate change. It claimed almost all measures to curb global temperature rise to under two degrees will bring a net economic benefit to individual countries.
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