The Relevance Of Climate Treaties For Business

Published on:
by Aaroshi Rathor
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The accelerating rate of anthropogenic climate change is self-evident now, visible through weather events all around the world that range from ‘unseasonal’ to catastrophic.

Be it the soaring rise of temperatures in Europe or the forest fires induced by extreme weather in Australia, climate change is quickly becoming more than a scientific prediction, and is instead an increasingly lived experience everywhere. This is the issue of our times that need to be dealt with on an immediate basis via legally ratified collaboration between all parties.

The United Nations Framework Convention on Climate Change (UNFCCC) was created in 1992 with the aim to combat climate change by limiting the average global temperature below 1.5 degrees Celsius and coping effectively with the impact of climate change through international cooperation. Over the years, countries have signed various international treaties on climate change, such as theKyoto Protocol,Paris

Agreement,COP24,COP25,COP26, and are about to sign their nextCOP27 in Egypt. So, while this represents the ‘high-level’ political ouvertures, one might ask how international climate treaties themselves are relevant for companies and business in general. 

Ready For A Sustainable Future 

Renowned global companies, along with small to medium enterprises, have realised the fact that the ‘traditional’ approach to doing business, that being via acquisitive, exploitative policies backed up by an externalised natural and human capital resource cost, is incompatible with the finite carrying capacity of our planet.

With the pandemic providing a ‘reset’ of sorts, many businesses across all sectors have been given the opportunity to switch gears and are slowly adopting effective and sustainable practices to remain relevant and thriving in the future. In our article ‘The Global Impact of ESG’, it was mentioned that organisations across the world are adopting practical ESG practices which are in alignment with the United Nations Sustainable Development Goals (SDGs), to address climate-related concerns while shifting to business models that place sustainability, and therefore long-term measured growth, at the centre.

It was also mentioned that a company’s reputation and brand image are of utmost importance as they want to be perceived by the public as an environmentally conscious and responsible company, as this boosts brand awareness among consumers and brand attractiveness to the growing class of youth employees who prioritise sustainability.

Large-Scale Opportunities 

The pandemic left many jobless, with companies cutting costs and some shutting for good. There is a sharper awareness of the vulnerability of business, and that in a highly globalised system, climate change is exerting more adverse effects on the global economy overall to reveal those vulnerabilities. In our article on ‘SDGs for SMEs-The importance of UN Goals for your business’, it was noted that businesses are changing rapidly, and integrating SDGs in their business strategy will lead to innovations that future-proof the business while providing diversifying job opportunities. 

Climate change treaties, most notably the COPs, provide a critical signal for companies. Positive progress opens the door to large-scale opportunities for people around the world with job creation, since companies can lock in near-term growth strategies in tandem with near-term climate mandates and their related subsidies, support, and incentives.

According to a report byBusiness and Sustainable Development, it was disclosed that global sustainable business models that take SDGs into their business outlook can help open economic opportunities up to 12 trillion US dollars and can help in job creation by providing 380 million jobs by 2030. Small and large companies can contribute to global initiatives through their expertise in specific areas such as renewable energy and the usage of low-carbon technologies. 

Attract Consumers 

Climate change exerts a drastic impact on consumer behaviour, and more people  are opting for companies that measurably and transparently place sustainability at the centre of their brand.

The very public, global visibility of the success, or lack thereof, of climate treaties, directly impacts how attractive brands are in relation to that success. Perhaps a solid alignment with environmental or climate-mitigating values may be ascribed to smaller cool startup brands, those that can actively position themselves from the outset as ‘green’. 

Whether their environmental claims are overstated or not, sustainability is now big business, with Unilever noting that one-third of consumers in certain territories state a purchasing preference for sustainable goods.

Many prominent multinationals have announced expansive environmental programmes and campaigns to raise awareness among their consumers. For example,Starbucks has committed to purchasing 100% ethically sourced coffee along with aiming to build 10,000 energy-efficient, green-retail stores by 2025. Time will tell whether such initiatives create genuine value and climate leadership, or will be seen as momentary opportunities for greenwashing. 

Featured Article: What Are The Main Greenwashing Tactics Companies Use?


Climate treaties, unless they result in binding multilateral agreements, cannot impose regulatory adherence on business. They can, however, send big signals. Is that enough? The question is rather one of how well top-down politics can nurture changing business models, to incentivize the acceptance of a necessary transition to sustainability and beyond.

As we see greater environmental devastation year on year, and as climate treaties face challenges in reaching legally binding solutions, the onus is ever more on companies to innovate towards sustainability, leveraging the evident public taste for climate-conscious practices. 

Perhaps measurable progress will ultimately arise from a mixture of public and private activity. The UNFCCC’s Race To Zero provides clear pathways for companies of any size to understand how they can participate, and whether COP27 is ‘successful’ or fundamental cooperation remains elusive due to ongoing political tensions between major powers, it is imperative that no business be left behind.

Nobody should believe that climate change, enormous as the challenge is, means that they lack the personal agency to be part of the solution. 

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