High-Level Climate Dialogue Series - Background Note
Accelerating Progress, Advancing Innovation is a high-level climate dialogue series that brings together leaders in business, government, economics, science and scholarship to work through major challenges to meaningful progress toward sustained global climate action.
The dialogues are a convening space where high-level innovators, thought leaders, and decision-makers can discover and share new thinking about ways to advance international and national transition strategies, while influencing or engaging in concrete action to build sustainable long-term economic opportunity for all.
Minneapolis: The Climate Opportunity (October 2015)
In the lead-up to the COP21 climate negotiations in Paris, a high-level dialogue was convened, under the Chatham House Rule, as the culmination of the climate action conference Minneapolis 2015: Last Stop before Paris. It was co-chaired by international business leader Marilyn Carlson Nelson and former U.S. Vice President Walter Mondale. The gathering brought together business leaders, major investors, trade associations, oil companies, government representatives, civil society leaders, economists and other environmental and climate experts.
A clear need was identified to bring together capable actors and innovators (businesses and other leaders) with decision-makers (government) and experienced advocates working locally and globally (civil society leaders), to address specific economic, political and technical challenges that need to be solved to achieve accelerated climate action on the scale required by the Paris Agreement.
The result was a strategy document titled A Convenient Opportunity, which outlines key areas of action, exemplifying a shift in the operational logic of how climate solutions are mobilized through collaborations between business, government, civil society, and communities.
Minneapolis 2015 laid the foundation for a dialogue series oriented toward ensuring the harnessing of transformational climate opportunities.
Subsequent dialogues have sought to solve a series of interrelated practical policy challenges to identify specific actions that can be taken by governments, businesses and communities to work together toward a more efficient, fast-paced implementation of Paris Agreement goals while motivating new investment.
Paris/COP 21: The Carbon Delta & Business Model Innovation (December 2015)
Building on the strategy document “A Convenient Opportunity”, a second dialogue was convened during the COP21 climate negotiations in Paris. Participants from the oil and gas sector joined policy advocates, sustainable investors, and national delegates, to focus on the carbon delta (the difference in value between investments loaded with carbon liability and those free of it). This dialogue explored the pressures brought on by rising carbon investment risk and addressed the challenges inherent in fast-paced comprehensive business model innovation.
To find answers to questions about the ways in which specific extractive industry practices can evolve into innovation-driven service-oriented energy practices, participants called for enhanced gathering of stakeholder insight and for economic instruments like carbon pricing, to shift incentives and motivate a reliable economy-wide transition to climate-smart enterprise.
Representatives from extractive and investment-focused businesses suggested government could provide serious and sustained support for a rapid pace of innovation and transition by putting a strong and irreversible price on carbon.
They also suggested that two particular tools would be useful for assisting businesses not already thinking this way to plan for the transition, namely:
- A business model innovation index — to track and foster practices that help enterprise transition to a standard where rapid, regular business model innovation is central to routine business activity.
- A detailed, interactive, and adaptive assessment of the carbon pricing value chain — examining where added price pressures also add future value by motivating the most efficient kind of innovation.
The historic outcome of the COP21, the Paris Agreement, globally mandates one hundred ninety-five nations to collaborate in “avoiding dangerous anthropogenic interference with the climate system”. This means a clear and steady global economy-wide signal—driven by policy and by shifting investment priorities—that will give low-carbon investments and business models a competitive edge going forward.
Moreover, Paris Agreement specifically “welcomes the efforts of all non-Party stakeholders to address and respond to climate change, including those of civil society, the private sector, financial institutions, cities and other subnational authorities.”
This mandate to non-Party stakeholders provides additional impetus to the intention and work of this dialogue series, specifically: connecting policy-makers, businesses, institutions, and communities looking to capture the opportunity to lead and make measurable impact alongside this new global framework.
Washington, DC: Assessing the Carbon Pricing Value Chain (April 2016)
Expanding on the tools identified during the COP21 in Paris, the next dialogue, during the 2016 Spring Meetings of the World Bank and the International Monetary Fund, looked closely at the Carbon Pricing Value Chain — with a focus on how to most effectively shift financial sector priorities and macro-economic planning priorities toward climate-smart practices and toward a business-model innovation standard.
Participants, building on insights from Minneapolis (the major investment opportunity of climate action) and Paris (how to demonstrate where unique value added comes from the business response to carbon pricing) focused on the carbon pricing value chain—the landscape of pressures and opportunities, through which an effective carbon pricing strategy exerts influence and drives change.
While economists agreed on the high value and operational efficiency of adding a policy-driven price to practices that emit greenhouse gases, decision-makers in business and government wanted to know more about which new cost pressures do the most to add capacity for producing, deploying, and capitalizing on climate solutions.
Participants from civil society, as well as policy advocates and economics experts, agreed that a process of collaborative information sharing would be vital to identifying and tracking specific carbon pricing pressure points and assessing their respective value for driving profitable change. Specifically:
- A matrix of best practices for designing economically efficient, environmentally effective carbon pricing policies was suggested. As the project connects with the work of various participants, it was agreed that the group would continue to share information in building this matrix in order to add these shared insights to ongoing policy processes.
- This dialogue set the stage for a focus on how to maximize future value by adding carbon pricing design elements to national climate plans in October 2016.
Oslo: Evolving a Climate-Smart Financial Sector (May 2016)
Carbon pricing value chain insights and recommendations from Paris and Washington, DC, informed the following dialogue at the Nobel Peace Center in Oslo, Norway, which focused on shifting the entire global financial sector (both public and private investment planning) to climate-smart practices. Four main issues were put to discussants:
- Ending dependence on externalization;
- Breaking path dependency in value considerations and standard practice;
- Valuing future climate resilience; and
- Assessing macrocriticality—how the global math affects our access to future value.
The most significant recommendation to emerge from this dialogue was that businesses should aspire to function at maximum efficiency while carrying their own costs. Avoiding the externalization of routine business costs allows for maximum competitive advantage, as such businesses are less vulnerable to policy changes and price shocks.
Policies that incentivize wider adoption of this standard move the global financial sector closer to full climate neutrality. New investment vehicles that account for and chart a course for future climate resilience (favoring low-carbon business models) were seen as a goal. Smart policies that facilitate such investments and enhance macro-critical resilience could add momentum to business innovation and the scalability and efficiency of clean energy technologies.
Representatives of conservation organizations, oil and gas companies, institutional investors, economists, and government representatives agreed there should be a joint effort to trace a roadmap to minimum climate impact, with a focus on macro-critical influences and long-term business resilience.
Specifically, it was suggested that a future report from the series to global leaders in business and government should include the insight that long-term business resilience depends on providing higher quality of life, more reliable environmental health, and climate resilience. Avoiding externalities, carrying all costs, and adding efficiency through service-oriented innovation, were put forward as critical drivers of a climate-smart financial sector transition.
Minneapolis: Building Macro-Critical Climate Resilience (June 2016)
Advancing work done in Oslo, the next dialogue focused on macro-critical resilience, defined as persistent access to value in the lived experience of policy choices that are not strictly measurable in economic terms, but which influence the overall life of the macro-economy. Investors interested in achieving more robust and reliable long-term value of climate-smart investments can use indicators of macro-critical resilience to judge the accuracy of net-present value assessments.
Business leaders called for more operational leverage in the marketplace to favor good outcomes, both on lived human experience of economic value and on climate stability. The goal would be, according to a shared brainstorm among key participants, to mobilize new measurement tools for business planning and supply chain tracking, to ensure people across the economy can make smarter, more informed choices about the kind of world they want to generate with their day-to-day choices. The “right to know” impact of one’s actions was seen as particularly high-value, given that consumers, investors, political leaders, and those who shape the cultural narrative of our time, can all inform the needed transition to a culture of reciprocal value.
This dialogue recommended that business, investment, national economic strategy, accounting, research, and diplomacy should come together in a coherent but complex assessment of how climate, peace and security interests interact in the realm of human decision and collaboration.
Referring back to the first dialogue in the series, one participant suggested that a Climate Opportunity Report be produced as a regular and updated outcome of these discussions, so that the whole picture of risks, opportunities, holdings, and revenues comes together to provide a clearer view of operational resilience and long-term value. This, together with clear signals to innovators and investors, can accelerate the pace of change and ensure macro-critical resilience is understood in raw numbers, built into routine business functions, and deliberately sought as an asset to enterprise.
New York: Climate, Peace & Security in the Global Goals (Sept. 2016)
During the 71st UN General Assembly in New York City, the series picked up the discussion of macro-critical drivers of economic value, by examining connections between climate disruption, solutions, the Sustainable Development Goals (SDGs) agenda, and long-term political and economic stability. 147 of the 169 SDG Targets for tracking progress tie in with climate impacts and solutions. As the SDG framework maps a landscape of human need and institutional and economic stability, shifting financial flows to climate-resilient priorities is, effectively, a global security safeguard.
With participation of provincial ministers, in dialogue with leaders in energy, investment, advocacy, and from UN agencies, it was business leaders who described the power of a shift to decentralized methods of power generation and energy management. Their view, which came to be a focus of the dialogue, was that policy should incentivize wider decentralization of influence, with investors and energy companies working to foster, not oppose, local innovation and entrepreneurship, empowering locally rooted innovation, in order to meet the climate, peace and security challenge.
An example of this standard, which was an outcome suggested by participants, was Smart Villages. By first solving the energy access problem, small remote communities long deprived of basic services can rapidly add household lighting, smokeless heating, clean indoor air, electrified refrigeration, more advanced medical clinics, digital communications, later library and school hours, and reliable internet access. While knowledge can move with people, many of these services require reliable low-cost, locally generated electricity.
Decentralized entrepreneurship incentives and power generation allow for the building of local assets, resources, and active capabilities for solving SDG-related challenges. So, the decentralization of power and investment is vital for building local capacity, to engender stable institutions and guard against the degradations that lead to conflict and migration.
This particular outcome recommendation will be developed more fully to relate specifically to future dialogues on carbon pricing impacts, national climate policies, and business model innovation related to the financial sector transition.
Washington, DC: Carbon Pricing as a Foundation for Future Value (October 2016)
Considering macro-critical resilience and the human-scale response to climate, peace and security challenges that can be tracked by the SDGs agenda, the dialogue series again opened the question of how carbon pricing can drive change to achieve the desired outcomes. Specifically, in connection with the annual meetings of the World Bank and the International Monetary Fund, a working session was held to drill down to precise policy design details, examining their role in the enhancement of future economic value, both internally to specific business practices and across the wider economic landscape.
A critical outcome of this dialogue was the assertion that carbon-pricing policies, optimized to national economic and administrative priorities, will provide measurable added leverage for investments in national climate action strategies.
The day-to-day experience of climate, energy, and development policy can be directly improved by connecting non-carbon policy details to carbon pricing policy design, to ensure investment achieves desired improvements on a faster time-scale.
In a high-level discussion with leading economists, governments, and policy advocates working on this subject, this working session revealed key policy design components that can make a carbon pricing solution more useful for attracting new investment to a given country’s national climate plan.
These components included: redirecting energy subsidies to ensure maximum value from any additional carbon price, ensuring local power generation regulations are optimized to the business models inherent in clean alternatives, and prioritizing research-related public-sector investment that facilitates energy sector transition strategies.
Again, participants reiterated that collaborative information sharing about best practices, successful policy design processes, specific measurable increases in low-carbon investment, and relevant economic data, would be useful for ensuring the maximum value added for national climate policy planning processes.
Marrakech: Accelerating National Climate Plans (November 2016)
During the 22nd Conference of the Parties to the UN Framework Convention on Climate Change (the COP22), the series convened leaders in government, business, science, and policy advocacy to outline pathways for accelerating national climate action. The nationally determined contributions to the Paris Agreement (NDCs) do not yet include pledges ambitious enough to meet the goal of limiting warming to 1.5ºC by mid-century.
The focus on NDCs allowed us to bring into one highly detailed discussion of national policy and local needs, the vital outcomes from previous dialogues: the value of policies that drive a faster pace of business model innovation, insights into the carbon pricing value chain (what impacts, where), macro-critical resilience, decentralization and the catalytic impact of smart villages, and the security value of shifting financial flows to a universal low-carbon standard.
With multiple key national negotiating teams represented, along with a UN agency focused on technical support to governments, there was a consensus that smart incentives that connect local needs to national strategic climate priorities are essential. In countries with millions of small-holder farms, for instance, off-grid and micro-grid power generation and digital connectivity can incentivize local entrepreneurship and a new shared prosperity for competitive, but low-margin farmers.
NDCs, then, should account for the need to empower farmers as individuals, communities, a major sector of the economy, and as small and medium-sized enterprises. Policies that measure soil carbon richness, or reward leaders in achieving carbon-neutral innovations, could be instrumental to deciding whether a country is capable of achieving its Paris Agreement commitments. Every participant was in agreement that all nations need to design still more ambitious national decarbonization strategies.
Of particular interest to both the businesses and governments at the table was the role that finance ministries play in shaping NDCs. The above example, along with other macro-critical influences on economic stability and progress, can allow finance ministers to see the direct additional value from each dollar of new investment in climate-smart practices.
A key outcome of the dialogue in Marrakech was the recommendation that the series, building on its outcomes and initiatives, begin to convene finance ministries, along with the other leaders and stakeholders, in a Track II process, which can inform and support intergovernmental negotiating processes and national policy planning.
Transitioning to this model will be the focus of our April 2017 dialogue.
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The high-level climate dialogue series Accelerating Progress, Advancing Innovation is co-convened, under the Chatham House Rule, by Partnership for Change and Citizens’ Climate Lobby, in collaboration with the Norwegian Nobel Institute.
More information about the dialogues can be found at AccelerationDialogues.org