The global community took a historic step in Paris this weekend by collectively adopting a framework intended to navigate all countries–developed as well as developing–through a global energy transformation. As the presiding conference President, France’s foreign minister, Laurent Fabius, gaveled the Paris climate agreement in acceptance, thousands of delegates erupted into cheers and celebration. This has been a very long road for many and, of course, there are still concerns as to what it means as we, a global community, commence writing our next chapter.
Below, you will find a high level overview of the Paris Agreement. This is not a deep dive into the nuances of the agreement nor will it provide a roadmap through this new paradigm, but we hope it provides a general sense of what it means.It is very likely the Paris Agreement will undergo as much scrutiny as any international document in the history of the United Nations. Evaluations are already pouring in from governments, media outlets, and Non-Governmental Organizations (NGOs).
WHAT IS THE PARIS AGREEMENT?
It is a United Nations (UN) agreement by 195 nations after several years of intense negotiating that outlines a path towards limiting the worst effects of climate change. The final text was adopted by consensus in Paris and will formally take effect once 55 countries have ratified it. Signatures are being requested starting at the UN meeting in New York City on Earth Day 2016 (April 22).
IS IT LEGALLY BINDING?
Yes and no. The Center for Climate and Energy Solutions has a robust analysis of the agreement and its legality. A “hybrid” approach was taken, by using words such as “should” and “shall” to differentiate between directional and legally binding statements largely due to the roadblocks the U.S. currently faces relative to enacting additional laws such as formal reduction targets and financing.
SO, THEN WHY DOES IT MATTER?
Markets, businesses, and investors need clear signals in order to transform and change. The unified signal coming from governments world-wide is this: the energy transformation is here and here to stay. This is an important indicator of increased momentum, and continued changes to world-wide markets, business as usual, and investor relations.
HOW AND WHEN WILL IT AFFECT MY BUSINESS?
This signal doesn’t fundamentally change the direction of corporate responsibility, but it certainly solidifies it as a business imperative. The trajectory of corporate energy and sustainability management has been growing for years, albeit with ebbs and flows, and the private sector has increasingly been weighing into this debate. For example, our parent company, ENGIE, played a role in coordinating a group of business leaders to contribute to the climate negotiations in Paris, called the Business Dialogue. ENGIE CEO, Gérard Mestrallet was quoted in an interview with Le Figaro earlier this year stating “Involving the world of business in the climate change negotiations is extremely positive.” Businesses that approach this challenge as an opportunity will be well served in the years and decades ahead.
The path ahead is relatively uncharted but it is a path, nonetheless, and a path with greater clarity and direction than existed before the Paris Agreement was gaveled into acceptance. We welcome the Paris Agreement and the energy transformation it serves to cultivate.