U.S Rejoins Paris Climate Accord: More Companies will Pledge Net Zero

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U.S Rejoins Paris Climate Accord: More Companies will Pledge Net Zero

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President Biden on his first day in office signed 15 executive orders, far more than his predecessors. Biden’s orders cover the rejoining of the Paris Climate agreement has been long anticipated and is a clear win for the environmental groups.

Paris Climate Agreement

The Paris Climate Agreement also referred to as COP21 is an ambitious global pact designed to limit greenhouse gas emissions to a level that would prevent the global temperature from increasing more than 2-degree Celsius.

In June 2017, the Trump administration announced the withdrawal from the Paris Climate Agreement and all participation. Soon after the announcement, several states like California and New York continue to make state-level policies to grow renewables and mitigated federal emission policy rollbacks.

At the organization levels, many have taken the initiative and pledged to be net-zero carbon emissions organizations to meet the Paris Agreement.

Net-Zero Carbon Emission

To be a net-zero organization means that the organization plans to have carbon emissions produced from their entire operations and value chain no more than they can remove.

For some companies, that would be an impossible commitment because of the sheers amount of electricity and transportation fuel needed to operate their businesses.

One of the popular methods of reducing carbon emissions is by offsetting its own emissions. Carbon offsets are Renewable Energy Certificates (REC) that represent the reduction of carbon from green energy projects such as green attributes from solar farms or reforestations.

Getting to net-zero by organizations often involved buying carbon offsets to balance their carbon emissions to get to near zero and even negative.

According to the UN Climate report released in Sept 2020, there are currently 2000 businesses and cities that have pledged to net-zero emission by 2050. Businesses worth mentioning are Facebook (NASDAQ: FB), Ford (NYSE: F), IKEA, and Ericsson (NASDAQ: ERIC), and major cities around the world.

In 2020 with the on-going pandemic COVID-19, businesses have continued to support net-zero movement and nearly doubled the number of companies in 2019.

U.S Rejoining Paris Climate Agreement will prompt more companies to pledge net-zero in 2021

U.S Biden’s Administration Support

With the U.S rejoining the Paris Climate Agreement, there will be strong federal support at the environmental, housing, and transportation agencies level to promote Biden’s environment initiatives.

Many are expecting to see more announcements on climate change policies and executive orders to revert Trump’s orders. One of many expected actions are the standardization of climate-related disclosure framework and raising EPA auto emission standards.

At ESG Enterprise Data Research, we are starting to see more companies beginning to track their carbon emissions and disclose sustainability performance for the first time.

Of 5000 public companies ESG Enterprise tracks, about 3% are publishing their sustainability report for the first time. Many have increased the scope of their carbon reporting. Notably, ExxonMobil (NYSE: XOM) has disclosed the full scope of fuel emissions.

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