COP20 / CMP10 Lima Peru In Summary

The COP20 CMP10 had just ended in Lima, Peru on 12 Dec. I was nominated to join as a youth delegate but was unfortunately unable to attend. However, I’ve heard many things from people about this year’s conference. Quite frankly, whenever it comes to UN conferences on climate change, my skeptical mode switches on. From last few years’ learning from conferences such as the one in Copenhagen, it seemed like all talk, little achievements and no solid conclusions. It has been notoriously known that countries come together not to work in peace and harmony on a coordinated plan to mitigate climate change but rather to pit against each other with their own interests.

What have been agreed

  • US: Committed to cut their emissions (Also first time that the US Secretary of State engaged directly in climate talks, giving a lot of teeth in the negotiations) by shuttering hundreds of coal-fired plants
  • China: Offered to set date of 2030 for peak emissions
  • EU: 40% cut in emissions by 2030 and new targets w.r.t. renewable energy.

What haven’t been agreed

  • No obligation from BRICs to cut emissions, but accepted that world needs a cap as whole
  • Developed countries’ commitment to the emerging economies to assist and provide funds for their carbon-cutting initiatives

The Kyoto Protocol was set in 1997 to engage countries (mostly developed) in the common bid to fix global temperature rise to 2 degree celcius and 350ppm as carbon output level. The commitment will expire on 2020. The 194 countries who attended the Lima conference reached key decisions that will influence the climate change pact for the 2015 Paris conference, and hopefully by 2020 the world shall see the results that it had set out to achieve more than 20 years back.

Six Pillars of Sustainable Business and Reporting

ACCA released a policy paper on sustainability business and reporting matters, comprising 6 pillars that would facilitate a better and more responsible business environment —

  1. sustainability reporting
  2. integrated reporting
  3. assurance of non-financial reporting and disclosures
  4. climate change
  5. natural capital
  6. green economy

Like how good audit standards and regulations would help prevent potential financial frauds and scandals such as Enron, non-financial reporting and accountability for companies’ insidious impacts on social and environmental aspects are certainly needed as well.

Currently, businesses are not required to adhere to any sustainability reporting requirements. The traditional model of reporting tends to however be restrictive and short-sighted, not accounting the potential non-financial damages that can be done to the environment around us.

After having spoken to some of the professionals working at Big Four firms in Singapore, I was told not many companies are paying attention to the external impacts made from their business decisions, nor are they invested in sustainability reporting. Only large companies that come under public scrutiny such as BP would try to comply with corporate social responsibility frameworks. Furthermore, end-users of financial statements themselves are generally not as keen in understanding beyond the financials of companies.

However, it is truly important that regulators start realizing the importance of laying out the ground rules for sustainable accountability. Companies should start developing metrics, information systems, reporting and designing economic instruments that help make our economy greener, looking beyond economic output to factor in non-traditional measures, such as human well-being and natural capital.

Note on ACCA and sustainability reporting:

ACCA works with standard setters, governments and regulatory bodies to ensure that standards and regulations concerned with corporate sustainability are fit for purpose. They are involved with the 2012 Rio+20 Earth Summit; technical working groups and governance boards of key standard setters, for example the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Climate Disclosure Standards Board (CDSB), the Sustainability Accounting Standards Board (SASB) and the Natural Capital Declaration (NCD).