COP27 and ESG: What businesses should look out for at this year’s conference

It’s time for our wake up call. We are being warned that we are at the tipping point of irreversible climate change. And the evidence is all around us, staring us all in the face.

From countless wildfires in southern Europe, to record-breaking heat waves across the continent and unusually warm weather in late October, these extreme events are adding to mounting concerns around climate change and its devastating effects.

It’s the hour of reckoning for us, and it’s now or never for us to take a united and strong stance to combat climate change. As COP27 takes place this year, we hope it brings strong opinion and robust positive action to go with it.

As key decision-makers from government, business, and non-governmental organisations (NGOs) gather in Egypt for the COP27 summit, the challenge for companies will be how to drive environmental, social, and governance (ESG) efforts that benefit people, businesses, and the planet. For those of us working in technology, this will be a reminder of the responsibility we have to innovate and think differently about how we can contribute to the fight to lower emissions.

Incorporating ESG goals into their strategy is increasingly necessary for any business looking to stay ahead of the competition and create meaningful change. Today’s consumers scrutinise how the brands they engage with are acting on key issues around climate change, social justice, and corporate ethics. According to PwC, more than three-quarters (76 per cent) would “discontinue relations with companies that treat employees, communities, and the environment poorly.”

Here, we look at the key summit themes that companies should look out for and consider when planning their own ESG commitments and actions.

The United Nations (UN) climate conference: A quick overview

The first UN climate conference was held in 1995 when representatives from countries that had committed to the UN Framework Convention on Climate Change (UNFCCC) met in Berlin. The UNFCCC was a treaty signed by many countries around the world in 1992 that would limit average global temperature increases. Since then, the Paris Agreement has been arguably the most notable outcome of the COP climate conferences. Negotiated in 2015 during the COP21 Paris summit, it set the goal to keep global warming well below 2°C, with the target of limiting it to 1.5°C. The COP26 summit, held in Glasgow last year, brought together 197 countries to accelerate action towards reducing greenhouse gas emissions and combating climate change.

COP27: What’s the focus of this year’s climate conference?

The conversation around climate change continues at COP27 in Egypt this November, with finance, fossil fuels, and industry likely to be firmly in the spotlight. The key areas of focus to watch are:

1. Decarbonisation of industry and transport

   
   Carbon-intensive activities, materials, and fuels are a huge challenge in the drive towards achieving the Paris Agreement’s 1.5°C goal. Significant investment and planning are required to phase out and replace carbon-intensive materials and fuels with cleaner, greener options. Talks on these issues will likely be followed by many business and industry leaders as they strive to incorporate decarbonisation into their policies and operations.

2. Climate adaptation

   
   According to the most recent IPCC Assessment Report, almost 3.3 billion people live in highly vulnerable climate contexts. Funding for climate adaptation is therefore critical to support the most at-risk communities. Yet as well as the obvious humanitarian, environmental, and ethical motivations for doing so, there’s a strong business case for climate adaptation too. It’s sure to be front of mind for business and industry leaders at COP27.

3. Nature

   
   Nature and land use will play a key role in limiting global warming to 1.5°C. The future of land use, food production, and safeguarding natural environments, such as forests and oceans, is a key area of focus. Discussion around this topic will likely involve conservation groups, scientists, activists, and NGOs.

4. Food and water

   
   There’s much to discuss on the topic of food systems, water supply, and the effect of floods and drought caused by climate change. The countries, communities, and businesses that are most impacted are therefore likely to keep the debate around food and water security high on the COP27 agenda. The extreme floods and droughts seen in the last year will also be a priority concern.

What will the European Union (EU) be focusing on at COP27?

The EU has highlighted that its key priorities for COP27 will be ending fossil fuel subsidies, phasing down the use of coal, reducing methane emissions, and aligning targets with the 1.5°C goal.

Ursula von der Leyen, president of the European Commission, explains, “We must work relentlessly to adapt to our climate–making nature our first ally. This is why our Union will push for an ambitious global deal for nature at the UN Biodiversity conference in Montreal later this year. And we will do the same at COP27 in Sharm el-Sheikh.”

Driving ESG: Businesses are powering change

The drive towards 1.5°C is a global effort. This means that businesses worldwide must play their role in cutting greenhouse gas emissions while protecting the welfare of both workers and the environment throughout their supply chains. Acting now through planning and policies is essential for businesses that want to measure progress, make a difference, and future-proof themselves against any tightening of regulations in the next decade.

Whatever the outcome of COP27, as businesses, we’re responsible for prioritising ESG and incorporating greener, cleaner processes into our day-to-day operations. This will require us to be bold, imaginative, and resilient, and to adapt fast to changing conditions.

ESG and technology

Business momentum towards ESG is growing, especially in Europe. According to 2022 research from the Harvard Law School Forum on Corporate Governance, nearly a third (31 per cent) of European investors describe ESG as ‘central’ to their investment approach, compared to 22 per cent in Asia-Pacific and 18 per cent in North America.

In other words, it’s clear that ESG and the transition to a low-carbon business model will play an ever more important role in corporate decision-making and planning.

So, what actions should businesses be taking now? The answer will, of course, be different for every organisation–and this is where technology can help. Using the right tech solutions can enable businesses to reduce waste, increase efficiency, and support emission-lowering activities, such as remote and hybrid working.

We often think of technology as a tool to increase productivity and profit, but it can also be a powerful ally for ESG activity and measurement. The start of COP27 reminds us of the urgency of addressing climate change. Although the overall task is large and daunting, we can all use the tools available to us to play our small part and bring about the change we all need to see.

Here at Zendesk, we’re passionate about incorporating ESG ambitions and actions into the strategy, operations, and culture of our organisation. And we’re equally committed to supporting our clients as they pursue their own ESG goals. Take a look at our recent four-minute read on ESG below to learn more.