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The COP Process is Broken — We Can Fix It

If you bang your head against a wall long enough surely it will only continue to bleed. It is time to recognize that getting all the world’s nations to agree unanimously on how to act on climate change is and has been a folly that needs to stop and be replaced by a process that can deliver a positive result. In the meantime, time is wasting, and we can fully expect the worsening effects of climate change to occur in the not-too-distant future.

One of the most confounding things is that the COP process continues to call for countries to agree, yet annual carbon emissions are generated by corporations as well as people and their collective choices of activity. Countries can set policies, but such policies can only be effective if a consensus of their people want those policies to be in place. We don’t have that consensus. Policies can easily be overturned in countries where there is sharp disagreement among the populous, whereby a leadership regime is simply voted out. Nothing could be clearer than the Australian case study on carbon pricing and subsequent elections in this regard. So how does getting all countries together to solve climate change make any sense? It didn’t make much sense before, and now it is simply the wrong way forward.

The power lies elsewhere. So, what will actually work instead?

Figures in shadow

The Fix

What is needed, in fact, is the direct opposite of what has been the annual COP process. Instead of a top-down, voluntary country-level, commitment-centered process, we need a bottom-up global “consortium of the willing” across all categories of actor that have significant impact on ongoing climate change and an agreement to follow a common agenda of specific changes in behavior and action that can create the outcomes required. This bottom-up approach would encompass the following dimensions:

Policies can easily be overturned in countries where there is sharp disagreement among the populous, whereby a leadership regime is simply voted out.

We need to agree on the source of the problem

Recognize that corporations and people generate 50-60 Gt of annual carbon emissions and other greenhouse gases that contribute to worsening climate change. Our own estimate (at the Carbon Tracker Initiative) has been that the global footprint is roughly 1/3 corporations and other non-public organizations and 2/3 people and their choices across the modes of transportation they use, the generation of the electricity they consume (and who they vote in to make energy mix relevant decisions), industrial processes that make what people choose to consume, in the operation of buildings where people work and live, and among nature-oriented issues such as food, land, and forests caused by consumption. Climate is primarily a demand-driven issue, as it is for many other impact issues as well.

Corporations need to be all-in

Given that companies represent 33 to 40 percent of annual greenhouse gas emissions, corporations need to be all-in on becoming more sustainable. There has been progress but also a very long way to go. We need to envision what public markets need to look like by 2030 and work backwards to what changes are required to see this achieved. The outsized performance of companies like Tesla, Nikola, and Beyond Meat — regardless of their actual revenue and earnings — suggests that growing numbers of people see that transformation is necessary and want to participate as investors in enabling future change. State-owned enterprises and private companies also need to move more in this direction, so we can expect pressure to increase on these important, often overlooked segments of corporations where problems could simply be hidden from stakeholders.

Child on protestor's shoulders

Investors also need to go all-in

Investment enables behavior, and with 78% of public companies by institutional investors — these investors have a responsibility to act, or they are otherwise endorsing the status quo as majority owners of business. The good news is that it is becoming an imperative for financial institutions to have a sustainability, impact, and/or environmental, social, and governance (ESG) focused team. That’s a great thing. And it’s why I push back on most recent greenwashing/ESG criticisms, as we need most investors participating. Let’s just do it better. Sustainable investing can perform well financially while supporting companies and impactful strategies driving positive change, and these sorts of investment strategies have increasingly become sources of wealth and opportunity. The more we go after ESG risks as investment opportunities, the more we can help transform markets into becoming self-correcting and problem-solving at necessary scale.

Climate is primarily a demand-driven issue, as it is for many other impact issues as well.

Citizens need to be all-in

Civil society needs to be fully engaged as well, so that citizens don’t vote well-meaning politicians out of office or otherwise install policymakers in place who act as barriers. We need to also have citizens act in concert to help prevent lobbyists from overturning necessary policy. People will need to be both vigilant and informed, and there is an important role here for observers, NGOs, think tanks, and academic institutions.

We also need to empower young people, as this is the future they will inherit. We expect empowerment to become a political paradigm as well. Consider that, today, fully two-thirds of global assets are controlled by (largely white) men over 60 years old, and only one-third by those younger than 60. This needs to change to better enable necessary action for solving the challenges of our day fully and adequately.

Taken together, a bottom-up consortium needs to be a global movement that everyone — corporations, investors, and civil society — can join. North, South, East, and West — climate challenges will only be solved if we take collective action, agree on a common path, and make each area of necessary focus come to life, checking seasonally on whether we are making adequate progress and taking steps to fill gaps as they appear along the way.

I call it the Cooperation Imperative — we all need to come together to make this happen and it needs to happen right now.

Cary Krosinsky is a leading sustainable finance author and advisor to fund managers/asset owners. He teaches at Yale, Brown and NYU. Cary is the co-founder of the Sustainable Finance Institute, which launched the Certified Sustainable Financial Analyst designation, hosts events/convenings, and produced his recent 7th book on the need for ... Read more
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