3 principles for meeting the climate challenge: innovate, collaborate, regulate

Keynote speech by ICC Secretary General John Danilovich at the ICC Public Private Dialogue organized by ICC Mexico, CEPAL, and the German Development Cooperation.

Ladies and gentlemen,

Good morning.

On behalf of the International Chamber of Commerce, I would like to first thank our partners – ICC Mexico, CEPAL, and the German Development Cooperation – for co-organizing this Public Private Dialogue “Una Perspectiva del Sector Empresarial de la 21 Conferencia de las Partes, de la Convención Marco de las Naciones Unidas sobre el Cambio Climático, París, 2015”.

In particular :

• – Rodolfo Lacy Tamayo, Subsecretario de Planeación y Política Ambiental, SEMARNAT
• – Roberto Dondisch Glowinski. Director General  de Cambio Climático de la Secretaria de Relaciones Exteriores
• – Ma. Fernanda Garza. Presidente de la International Chamber of Commerce México
• – Juan Carlos Moreno Brid, Director Adjunto de la Comisión Económica para América Latina y el Caribe
• – Andreas Villar, Director de Programa Alianza Cambio Climático México-Alemania, GIZ México

The aim of this Dialogue is to strengthen the understanding between government and business in LAC countries on climate issues.

It is also intended to create a space for an informed discussion on the role of the private sector in tackling climate change and the role business can play in the UNFCCC process-both in the run up to COP21 this December and beyond…

In short: we view enhanced collaboration between the private sector and government as an essential factor in meeting the climate challenge.

A subject I will talk about at greater length later…

My intervention today will centre on ICC’s vision for the future of international climate policy.

But first I’d like to say a few words about the International Chamber of Commerce, so that you get a sense of who we are, what we stand for and the unique approach we bring on climate issues.

ICC was founded over 90 years ago with a clear mission to promote peace and prosperity through international trade.

To this day, we believe that facilitating commercial ties among nations is not only good for business… But that it is also an essential driver of higher global living standards, enhanced international cooperation, and stronger-and indeed sustainable-economic growth.

ICC was awarded the highest level consultative status with the UN in 1946… Since then we have represented the private sector in a broad range of UN activities including those of its specialized agencies and conventions.

We also work closely the World Trade Organization, the G20 and a range of other intergovernmental bodies.

I mentioned earlier our founding ethos to promote open markets and trade… Some people take to that to mean that we have little-if any-interest in society or the environment. In fact, nothing could be further from the truth.

Since our inception we have played a key role in promoting responsible business conduct the world over… In the 1960s, for instance, we were the first organization to set out good practices for businesses investing internationally…work which was instrumental in coining the term “corporate citizenship”.

In the 1970’s ICC developed the first ever environmental guidelines for industry to promote self-regulation and spread best practice.

Since then we have produced a range of guides to support responsible business practices. From our Anti-Corruption rules through to our sustainable development charter first launched in 1991… a new-and ambitious-revision of which we are delighted to launch tomorrow at this event!

And more specifically, on climate change.

ICC has played a central role in the UNFCCC process since its inception over 20 years ago as the global focal point for business.

We are also Observers to the Green Climate Fund established at COP 16 in Cancun. As well as an Advisory Board Member of United Nations Environment Programme’s Green Industry Platform.

So that’s a snapshot of who we are and what we do… I’d now like to say a few words on our vision for COP21 and the international climate framework that may follow from the landmark Paris conference.

Climate policy is an increasingly complex area… As a business person it can be difficult to get into the substance of the discussions without finding yourself in a sea of acronyms and alien concepts.

But our position-our vision-can be summed up in three simple terms:

Innovate…

Collaborate…

Regulate.

That’s to say that businesses are already innovating to develop the technological, organizational and financial solutions needed to reduce greenhouse gas emissions and to adapt to changing climate patterns.

But to scale up these solutions we need enhanced collaboration between business-and, more importantly, between the public and private sectors.

All of which needs to be underpinned by smart regulation including, where appropriate, self-regulatory frameworks to provide business with long-term certainty and to turn existing market failures into market opportunities.

Let me go back to each of these concepts in greater detail.

First, on innovation…

We often see business positioned as the “bad guy” when it comes to climate change.

But the reality is that today’s global climate and sustainability challenges require everyone to take shared responsibility and that means collective action by governments, business and society.

Business is, to be sure, already taking decisive action to meet the urgency of the climate challenge…

ICC members, companies of all shapes and sizes from around the world, are taking the lead on delivering and deploying powerful solutions that support the global climate agenda and the COP21 negotiations.

We are already seeing business:

• – Proactively developing and implementing their own climate strategies
• – Adopting a life cycle approach which involves further minimizing their carbon footprint…
• – Integrating “environmental externalities” into corporate strategies… and
• – Establishing new business models to reduce emissions at the same time as creating shared value for society as a whole.

But, as ICC, we recognize that much more needs to be done to meet the climate challenge.

We need to turn potential and aspiration into action through enhanced collaboration.

Businesses, for instance, can look to further and strengthen collaboration between themselves to reduce emissions both in supply chains and at sectoral level.

We also see potential-if the right incentives are put in place-to establish large-scale, cross-sectoral partnerships that accelerate and scale up transformational technology solutions.

But we also need the public sector-governments-to engage and collaborate with business in an unprecedented way…

For instance by:

• – Creating new platforms for research and education cooperation… and public-private partnerships.
• – Consulting with business to identify priority areas where mitigation action has the greatest net benefit…
• – Establishing public funds targeted at leveraging private sector finance… and by
• – Providing opportunities for business to engage with policymakers to leverage their technical expertise in mitigation and adaptation options, technology, research and finance.

This latter point is especially important… And that’s why ICC is calling on governments to establish a recognized role for business in the implementation of any new climate agreement.

Our message is clear:

• – The better you engage the private sector…
• – The more effective the global response to climate change will be.

To give an example…

The business advisory panel of the Green Climate Fund is a good start on how better engage the private sector and leverage its expertise and resources.

But a limited advisory role for business along these lines will not be enough for the broadened ambition of the Paris agreement.

That’s why we think the new climate agreement must include a recognized substantive role for the private sector…

And ICC stands ready to work with governments and the UN to develop a mutually beneficial interface of this kind.

So that takes us neatly to the nature of the Paris agreement and the need for a robust global framework that that can transform market failures into market opportunities….

Providing a platform for smart and intelligent regulation to create a stable, predictable environment where businesses can properly plan and invest for a sustainable future.

And we believe that business self-regulation also has a key role to play.

At a minimum the future global architecture should incorporate:

• – an inclusive, long term UNFCCC agreement…
• – with ambitious national commitments, or I-N-D-Cs
• – and reliable accounting and reporting frameworks to measure emissions reductions.

It should also encompass….

• – global, robust and stable market mechanisms, such as carbon pricing schemes, to achieve global net emissions reductions at the lowest possible economic cost
• – and mechanisms to de-risk investment in climate friendly technologies, especially in developing countries… and to scale up technology development and innovation.

In the run up to COP21 we’ll be engaging our network in more than 130 countries to help secure a deal that works with business to address fully the climate challenge.

To the businesses in the audience I have one simple message: please work with us-through our excellent Mexican national committee-to secure the deal that we all need.

We should also recognize the role of other policy processes outside the UNFCCC.

In this connection, it’s important that we recognize the strategic importance of trade policy as a tool to meet the climate challenge.

There are three key reasons why trade is important…

First, trade openness can help efforts to mitigate and adapt to climate change. For example by promoting an efficient allocation of the world’s resources including natural resources.

Second, trade plays a key role in raising standards of living-particularly for the world’s poorest-which in turn drives demand for better environmental quality.

And third: trade policy has a central role to play in improving access to environmental goods and services.

The global market for environmental goods and services is currently estimated to be worth more than €1trillion a year… But green goods still face significant tariff barriers globally… with tariffs on some products as high as 35 percent.

Eliminating these tariffs could see “green trade” double by 2020 according to some estimates… potentially increasing trade in renewable energy products by some 20 percent.

That’s why we are supporting the rapid conclusion of ongoing WTO negotiations to establish an Environmental Goods Agreement that could eliminate tariffs on green technologies.

Concluding the agreement this year would be one of the most concrete, immediate contributions that governments can make to protect our environment and address climate change.

We all have an interest in seeing this deal secured this December at the WTO’s next ministerial Conference alongside a robust outcome to COP21.

Again: we need to work together to make that happen.

I look forward to our discussions today to map out opportunities for governments and businesses to work together to build a share agenda of solutions and actions.

Thank you all for making the time to attend the Dialogue. Our discussions are genuinely important-to our future businesses… but also to the planet as a whole.

Thank you.