Ratification of the Paris Agreement – Reaction from PwC’s Sustainability & Climate Change team

By the 5th October enough governments had ratified the Paris Agreement to trigger its entry into force in 30 days time (4th November).  Our Sustainability and Climate Change team made the following comments:

Celine Herweijer: “The speed of entry into force is faster than even most optimists anticipated. It shows that climate action is a top priority for world leaders; a geopolitical issue not just an environmental one. But optimists would also recognise that to prevent dangerous climate change we need a huge acceleration in the low carbon transition – one that enables us to reduce carbon while we grow, create jobs, and reduce inequality. Governments must now send consistent signals in the economy – carbon pricing, risk disclosure, removal of maligned subsidies – in order to encourage consistent responses in boardrooms and amongst consumers”

Jon Williams: “With the Paris Agreement coming into force, businesses should expect governments to accelerate implementation of national policies. This may well increase the transition risks and opportunities that companies face, and for the financial services sector that lend to, invest in and insure them. Better disclosure of climate-related impacts on strategy, business models and financial plans will go some way to ensure the transition is a smooth one and avoid the build-up of risk in the global financial system. The work of the FSB Taskforce on Climate-related Financial Disclosures is at the heart of this.”

Lit Ping Low: “With past claims of climate leadership, it’s a surprise that the UK isn't in the list of countries which have ratified. Its largest trading partners in EU, alongside US, China, India, have all done so. In her closing speech at the Conservative Party Conference, Prime Minister Teresa May stated that the UK government must keep its promises and ratify the Agreement.  Ratifying the Paris Agreement isn't just a procedure, it is a signal of willingness to engage in international cooperation on an international issue.”

Jonathan Grant: “This is good news and a bit of a surprise: governments acted quickly on ratification and have maintained momentum on tackling climate change.  The Paris Agreement should catalyse action at the national level.  Carbon prices are planned or in place in many countries and can stimulate low carbon investment.  But the price signals today are too weak to have much effect on companies’ or consumers’ decisions. Agreeing to targets is a lot easier than hitting them, so as governments turn their Paris pledges into policies and try to raise their ambition they should work closely with business to put a real price on carbon and make the shift to a low carbon economy.”

Sam Bickersteth (CEO Climate Development Knowledge Network):  “Rapid ratification at the international level now needs to be translated in to domestic legislation, regulation and policies to avoid locking the world in to even greater warming. We need action at scale and pace on reducing emissions and our exposure to climate risks.”

Kiran Sura (Head of negotiations support, Climate Development Knowledge Network):  “The Paris Agreement has shattered previous records to become the fastest international agreement to come in to force. This should give us hope the need for urgent and ambitious action is finally being taken seriously. Governments, societies and businesses all now have an important role to play in putting us on path to avoid dangerous climate change. But we also have a duty to help each other deliver the Paris Agreement, and now more than ever we need to see finance, technology and capacity-building support flowing quickly to developing countries and those on the front line of climate change to help them manage the impacts of climate change and transition to a low carbon future.”

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