Global Climate Action and Responsible Business Conduct: What does itmean for business to act responsibly in the face of a climateemergency?
COP 25 Global Climate Action Side Event
Tuesday 10 December 2019, 3:00-4:30pm
Room Torres del Paine

Background Note
The business response to the climate emergency
The latest UNEP Emissions Gap Report 2019 indicates that global greenhouse gas emissions require reductionsof 7.6% annually if the Paris Agreement’s target of pursuing a below 1.5 degrees Celsius increase in temperaturerise is to be met. Currently we are on a trajectory for a 3.2 degrees Celsius temperature rise, which will havecatastrophic consequences for people and the planet. 1 There remains an urgent need for collective action
requiring necessary and unprecedented leadership from not just governments but also the private sector.
On the part of the private sector, this means ambitious mitigation action to reduce greenhouse gas (GHG)
emissions and thereby the adverse climate related impacts of their operations, on people and the planet.
It also means strengthening the climate resilience of companies and their supply chains in order to address andadapt to the physical and transitions risks 2 of climate change on their direct operations and their supply chains- including impacts on workers, local communities and the natural environment.
Companies which are able to increase mitigation and adaptation responses to climate change risks and impacts,
are better able to meet investor and consumer expectations, maintain their social licence to operate, mitigate
reputational damage, increase competitiveness and protect their bottom line.
Global trends in climate change litigation and legislation requiring supply chain due diligence and climate changereporting are also increasing pressure on companies to act.

UNEP 2019; https://www.unenvironment.org/resources/emissions-gap-report-2019
The Taskforce on Climate- related Financial Disclosures (TCFD) defines physical risk as: risks resulting fromchanges in climate patterns as a result of GHG emissions. These risks can be event driven or longer-term shifts,resulting in a range of impacts associated with water availability, sourcing, and quality; food security; andextreme temperature changes. Transition risks are defined as risks resulting from policy, legal, technology andmarket changes to address climate mitigation and adaptation – these types of risks can pose varying levels offinancial and reputational risk to business.. https://www.fsb-tcfd.org/publications/final-recommendationsreport/
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The Montreal Pledge, the Portfolio Decarbonization Coalition, the Science Based Targets initiative and therecommendations of the Task Force on Climate-related Financial Disclosures (TCFD), are key initiatives
encouraging business to set targets and disclose climate related information.
However, more must be done to ensure that every business is taking a comprehensive approach to respondingto expectations for critical business climate action – including identifying, prioritising and addressing climatechange risks, adverse impacts and opportunities to contribute to climate solutions.
Such expectations and actions are captured by internationally recognised and accepted standards on
Responsible Business Conduct (RBC), backed by Governments and endorsed by business. What these
expectations are, and more specifically, what Governments and society at large expect from business – has been
negotiated, agreed and set out in the OECD Guidelines for Multinational Enterprises (the OECD Guidelines)

OECD Guidelines for Multinational Enterprises
The OECD Guidelines are the most comprehensive governmentbacked instrument on RBC, representing international consensus
on all areas of business responsibility in addressing adverse
impacts on people and the planet.
The OECD Guidelines include a number of expectations extending
to business action on climate change – thereby offering a
supporting framework and practical actions to drive morecohesive, comprehensive and ambitious climate action.
These expectations include setting targets that are consistent
with international commitments, assessing and addressing
adverse impacts on people and the environment, disclosure ofsocial and environmental risk with a particular focus on GHG
emissions, providing goods and services that have no undueenvironmental impacts and reduce greenhouse gas emissions;providing consumers with accurate information on theenvironmental implications of using products and services, , andimproving the environmental performance of the company
through emission reductions.

Implementing RBC expectations on climate change
To help business put the recommendations of the Guidelines into practice, a number of practical tools havebeen developed in close cooperation with policy makers, business, trade unions, and civil society:•••

The OECD Due Diligence Guidance for Responsible Business Conduct (OECD Due Diligence Guidance)
provides recommendations for companies on how to implement due diligence according to the OECD
Guidelines in their own operations and in their global supply chains. These recommendations include
guidance on how businesses should prioritise and address their risks and adverse impacts across a rangeof areas, including climate change and climate related risks.
The OECD has also developed sector-specific due diligence guidance to help business address risks,
including climate related impacts in specific sectors, e.g., in the garment and footwear, minerals,
agriculture and financial sectors.
The UNFCCC Secretariat is developing sectoral initiatives in the fashion and sports sectors to promote
specific goals and concrete actions. These initiatives provide examples of ways to define concrete
climate actions for companies and enable collaboration across sectors.

OECD Due Diligence Guidance for Responsible Business Conduct
Due diligence is understood as the process through which enterprises
can identify, prevent, mitigate and account for how they address actualand potential environmental and social impacts, including those related
to climate change.
Business action on climate can take many forms. Implementing due
diligence helps companies prioritise and address key climate risks andimpacts, as well as the actions they are best placed to take in positively
contributing to climate solutions.
As due diligence processes recommended by the OECD Guidelines goesbeyond climate risk to also include human rights, labour, corruption andother impacts, the process can be useful for companies inunderstanding the intersections between climate change and othertypes of risks - and how to manage competing priorities in taking action.
Disclosure is an important core process recommended by the OECD Due Diligence Guidance. Reporting onclimate due diligence can demonstrate the level of ambition and robustness of a company’s approach to
managing climate risks. It can also demonstrate the relative significance attributed to climate-related risks inrelation to other risks such as labour, human rights and development impacts. The OECD recommends that due
diligence reporting include information about a company’s policies on climate and other RBC issues, information
on measures taken to embed those policies into management systems, identified areas of significant risks, aswell as specific priority risks areas, and the actions taken to prevent or mitigate those risks. Theserecommendations are aligned with the recommendations of the Taskforce on Climate-related FinancialDisclosures (TCFD). In this regard, companies conducting climate due diligence will also be well positioned toalign with what the TCFD has recommended.

National Contact Points for RBC and Climate Change
The OECD Guidelines also include a binding commitment on each adhering government to set up a National
Contact Point for RBC. Each NCP is mandated to promote the OECD Guidelines and related due diligenceguidance, and handle cases related to the non-observance of the Guidelines by a company.
About 30% of the over 450 cases handled by NCPs deal with business impacts on the environment, including
climate change. Recently, the Dutch National Contact Point handled a complaint against a financial institutionalwith respect to climate related impacts. The final statement of the NCP affirmed that the “cause, contribute,directly linked” language of the OECD Guidelines and relating to the scope of business responsibility to address
impacts and risks, also applies to business’ (including banks’) responsibility to address climate impacts.

UNFCCC and driving action by the private sector
The Global Climate Action area of the UNFCCC secretariat leads a number of initiatives to encourage, supportand recognize action by the private sector, among other stakeholders. Companies following the RBC Guidelines
from OECD can look for synergies and opportunities for further recognition and strengthening of their efforts
through them. These include:•

Climate Neutral Now: recognition for companies that commit to strive to achieve climate neutrality
and to contribute to immediate action by estimating their climate footprint, acting to reduce it, andcompensating all or part of the remaining emissions with recognized carbon credits.

•Sectoral engagements: the UNFCCC secretariat has developed sectoral initiatives in the fashion, sports
and travel and tourism sectors to promote concrete climate goals and actions. These initiatives provide
examples of ways to achieve those concrete climate actions and enable collaboration across value
chains in these whole sectors.

•Global Climate Action Platform: an online platform where leading initiatives, governments andorganizations showcase their commitments and their progress on climate action.

•Action for Climate Empowerment: organizations engaging with the general public, youth oreducational and cultural institutions can coordinate efforts through this program of action that
promotes public awareness, access to information, education, youth empowerment and generalcommunications.

High Level Climate Champion
The role of the High-Level Climate Champion was established by the Parties to the United Nations Framework
Convention on Climate Change (UNFCCC) at COP 21 in Paris, 2015. The role of the Champions is to strengthen
high-level engagement of non-Party stakeholders and increase pre-2020 ambition – including reductions in GHG
emissions. The current High-Level Climate Champion for Chile, Mr. Gonzalo Muñoz, and is the first private sector
appointee in this position.
Since COP 24, 2018, Mr. Muñoz has been supporting the mobilization of the private sector under the Global
Climate Action area of work of the UNFCCC Secretariat; encouraging increased climate ambition and action bybusiness. Examples include support to the Fashion Charter for Climate Action and the Sports for Climate Action
initiatives, and his leadership of the Marrakech Partnership under the UNFCCC.

For more information
Stephanie Venuti,Policy Advisor and Legal Expert, OECD Centre for Responsible Business Conduct,
http://mneguidelines.oecd.org/
Miguel Naranjo, Programme Officer, UN Climate Change, https://unfccc.int/