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How global business could be the unexpected COP26 response to climate change
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How global business could be the unexpected COP26 response to climate change

The sun shines over an office building with trees at its base.


Despite environmentalists claiming otherwise COP26 of “greenwashing,” broad disappointment with the final conference statementToo little too late and an ambivalent Global South, there is still hope for climate change solutions from an unlikely place — global business.

The goal of the Glasgow Financial Alliance for Net Zero (GFANZ)The April 2021 launch of ‘Net-zero Economy’ was a collaboration between the financial sector and the government.

In a US$130 trillion commitment announced during COP26, business leaders — including Mark Carney, the United Nations’ Special Envoy for Climate Change and former head of the Bank of Canada and Bank of England — announced a coalition of banks, insurers, pension funds, stock markets and others from across the financial spectrum aimed at tackling climate change.

GFANZ offers hope as it approaches climate change from a global, not a national perspective. GFANZ’s transnational approach recognizes that sustainability requires a whole planet strategy.

Global South hit hard

Attempts by nations to create climate change solutions have failed to meet expectations, especially in relation to interactions between the Global North and the Global South. The Global South continues to bear the bruntClimate change effects

A solution to climate change that relies on countries acting independently or multilaterally has never worked. We need to work together to find the solutions.

Global North and Global South need to work together in a coordinated effort to address climate change. How is this possible when larger emitters exit and enter their international obligations like a revolving window? (in particular, the United States and China)Stand on moral arguments for lower compliance (India)Or deflect attention from their per-capita emissions (Canada). and Australia)?

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It has been difficult to reach consensus at the national level and legislate solutions.

Global standards being adopted

That’s why GFANZ’s announcement is so timely. The relentless march of global business has shown that national governments have lost their influence. This was highlighted by the adoption voluntary international standards on everything. Basel Capital AccordsFor banking to ISO 9000Quality management

There is a transnational realm that extends beyond individual countries. It includes multinational corporations, think tank and non-governmental organisations that follow voluntary standards and practices. Adoption of those standards is occurring globally.

This cooperation is independent from national governments and sometimes leads to the adoption transnational standards as national laws. For example: voluntary banking standards such as the Basel Capital AccordsGlobal North central bankers established de facto global standards that have been adopted by the Global South.

The sun shines over an office building with trees at its base.
A coalition of global businesses could bring about real climate change.
(Scott Webb/Pexels)

GFANZ is strikingly comparable to the adoption of Global North financial standard in the Global South. Global business is poised, rather than waiting for governments to take action, to establish a voluntary financial standard transnationally by offering guidance on how to use large sums of money in an eco-sustainable manner.

Four responses

Recent research has revealed four distinctive types of responses of the Global South in responding to Global North financial standards: reformist (highly motivated), disobligingTalk is not an action Cosmetic(faking it). instigative(Activists who push for internal change).

ReformistBehaviour is about doing the right things. To enforce environmental standards, governments use carrot and stick methods. This puts global interests first, rather than short-term national agendas. If all major carbon-emitting countries were reformists and were setting and enforcing high targets, COP26 could have been a huge success. However, this was not the case.

DisobligingThis behavior is indicative of lower standards being adopted nationally. There may be motivation to take action but fear of regulatory or political reprisals by unsupportive national institutions negates this desire.

Cosmetic behaviour is the financial equivalent of environmental greenwashing — an attempt to make consumers believe your company or government is doing more to protect the environment than it really is.

It involves both business and government officials adopting the rhetoric of standardization and concealing the lack of substantive change. The sloppy implementation of the Paris Agreement on climate changeAn example would be:

Protesters hold a large banner that reads COP25 Act Now
Climate activists take part in a demonstration against ‘greenwashing’ near the COP26 Climate Summit in Glasgow in November 2021.
(AP Photo/Alastair Grant)

InstigativeGFANZ is an example of this type of behaviour. It is when financial institutions that want real change leapfrog the government’s inaction by acting transnationally. Transnational business behemoths are what cause change. Local regulators, as well as political elites, then reap the benefits of national officials working with transnational partners.

While reformist countries do their best, and deserve our support, GFANZ offers a transnational alternative for those who want change regardless of government positions. The strategy for climate change is therefore both top-down by the reformist national government, and bottom-up by transnational instigative financial institutions.

The next step: GFANZ must ensure that positive outcomes aren’t eclipsed by inadvertent colonial behavioursGlobal North wealth is often invested in the Global South. However, with both reformist actions and instigative steps, the transition towards a net-zero economy could be one step closer.


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