Environment & Climate Change, News

Paris Climate Agreement signed: UN Global Compact calls on companies to set internal carbon price

UN Global Compact Network Australia | April 22, 2016

Global action on climate change was galvanised on 22 April, the first day of signing of the Paris Climate Agreement.

In December 2015, world leaders collaborated on an unprecedented scale and agreed to limit global warming to below 2°C – the threshold beyond which science tells us climate risks become unacceptably high – and strive for 1.5°C.

On 22 April, the Paris Climate Agreement was signed by 175 countries – a record number of signatures to an international treaty on its opening day. Australia signed the agreement, along with the world’s largest carbon emitters, the US and China.

On the signing of the Agreement, the UN Global Compact has called on companies to take a lead in transitioning to a low carbon economy by setting an internal carbon price at a minimum of US$100 per metric ton – the minimum price the UN Global Compact considers necessary to spur innovation, unlock investment and shift market signals in line with the 1.5 to 2°C pathway.

“The Paris Agreement sends a clear signal that business and investors must put climate at the heart of decision-making,” said Ms. Lise Kingo, Executive Director, UN Global Compact. “We believe that setting a [US]$100 internal price on carbon is one of the most effective ways to drive climate deep into corporate strategy and investment. While leading companies have taken steps to price carbon, we need to see an ascent in ambition and price across the board.”

“Both Governments and the private sector must align their investments and infrastructure decisions with the below 2 degrees target,” according to UN Secretary-General Ban Ki-moon. “The Paris Agreement gives the private sector an unprecedented opportunity to create the clean energy, climate-resilient economies of tomorrow, today. It provides a durable yet flexible framework. And it answers the private sector’s longstanding call for clear policy signals.”

Caring for Climate – the UN’s business leadership platform on climate change, led by the UN Global Compact, UNEP and the UNFCCC – is encouraging companies to take on the triple challenge of setting, advocating for and reporting on an ambitious price on carbon. In the lead up to COP21, Caring for Climate partnered with the World Resources Institute to release The Executive Guide to Carbon Pricing Leadership, providing insights and best practices for companies to become Carbon Pricing Champions.

Find out more here.

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UN Global Compact Network Australia