Companies call on G20 to act on climate change

October 8, 2021

Over 600 of the world’s largest companies are calling on G20 leaders to strengthen their national climate targets and deliver climate financing at the G20 and COP26 summits.

Signatories including Unilever, Netflix and Volvo Cars were among the 600 companies representing over $2.5trn (£1.8trn) in revenue signed the open letter which was organised by non-profit We Mean Business Coalition.

It coincides with a report from the Organisation for Economic Co-operation and Development (OECD), titled Financial markets and climate transition which explores climate transition risks such as stranded assets, production processes and renewables transition strategies.

The report explores policy options that can support the transition which it says can be done by helping markets incorporate price changes and incentivise companies to take measures that address climate-related risks and opportunities over time.

The open letter said that G20 countries have a “collective responsibility” and “opportunity” to address climate change since it represents approximately 90% of global GDP and nearly 80% of global trade and greenhouse gas emissions.

Proposed actions include allocating $100bn for green infrastructure in developing countries, removing fossil fuel subsidies by 2025 and making climate-related disclosure mandatory for corporations.

Although mandatory climate-related disclosures is a good thing, Minerva points out that large companies have the power and resources to make such disclosures now. Rather than waiting for the governments of the world to agree on what standard climate-related disclosure regulations may look like, businesses could be applying pressure through action.

In 2019, the Task Force on Climate-related Financial Disclosures (TCFD), set up by the G20’s Financial Stability Board said that firms were failing to disclose enough detail about how exposed they were to the potential risks of climate change.

Since then, there has been some improvement. The TCFD’s 2020 Status Report found that nearly 60% of the world’s largest public companies support the TCFD report in line with its recommendations or both. In 2019, energy firms and materials and building firms were leading on disclosure.

However, greenwashing is still a major concern. Regulators including the UK’s Financial Conduct Authority and the U.S. Securities and Exchange Commission have published guidance to help firms avoid greenwashing.

The pressure on firms to align with low net zero has been heightened as the United Nation’s published its code red for humanity report and COP26 approaches.