UN recommendations seek to tackle greenwashing and push net zero governance forward
The UN recently published a report on the net zero commitments of ‘non-state actors’, including businesses and cities. Ian Higham examines the key ways the report’s recommendations advance the net zero accountability agenda and discusses potential pitfalls and possible next steps in global governance of net zero.
On 8 November 2022 at COP27, the United Nations’ High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities (HLEG) launched its final report, Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions. UN Secretary-General António Guterres established the HLEG earlier this year in response to growing concerns about the consequences of ‘greenwashing’ after the fossil fuel industry sent record-high numbers of lobbyists to COP26 in Glasgow, cumulatively outnumbering any other delegation. The recommendations in the HLEG’s report push the net zero agenda forward in several important ways, including by calling for a complete phase-out of fossil fuels and pressing national governments to regulate corporations on net zero.
The HLEG was tasked with developing recommendations on standards and definitions for ‘net zero’ targets by non-state actors; credibility criteria for assessing these actors’ objectives, measurements, and reporting; processes for verifying and accounting for progress in a transparent manner; and a roadmap to translate standards and criteria into international and national regulations in the context of a just transition.
Pleasingly, the new report delivers on all four objectives. Its 10 areas of recommendation, each calling for specific actions, are: 1) announcing a net zero pledge; 2) setting net zero targets; 3) using voluntary carbon credits; 4) creating a transition plan; 5) phasing out fossil fuels and scaling up renewable energy; 6) aligning lobbying and advocacy; 7) centring people and nature in just transitions; 8) increasing transparency and accountability; 9) investing in just transitions; and 10) accelerating the road to regulation.
Many concepts addressed in the HLEG’s report are ones that have been contested, including ‘net zero’ itself. Their recommendations provide some clarity as a useful point of convergence in policy and academic debates.
Recommendation 1 on announcing a net zero pledge defines net zero as referring to “a state by which the greenhouse gases going into the atmosphere are reduced as close to zero as possible and any residual emissions are balanced by permanent removals from the atmosphere by 2050”. The report defines a net zero commitment as one being made publicly by the entity’s leadership and representing a ‘fair share’ of the global climate mitigation effort. Detailed recommendations set specific yardsticks for determining when a non-state actor should be recognised as “net zero aligned” and as “having achieved” net zero.
The recommendations also establish clearly that the concept of ‘just transition’ should be conceived much more broadly than the Paris Agreement’s exclusive focus on labour. In the HLEG’s report, skills training for workers has a key role in facilitating just transitions, but the recommendations go further, stating that just transitions must enable developing countries to meet minimum needs and to industrialise with the latest clean technologies while creating green jobs, decent livelihoods, energy security, and financial resilience. The HLEG calls for particular attention to marginalised groups and recognition of the rights of Indigenous Peoples.
Recommendations in context
Perhaps the most significant innovations in the report are its unequivocal commitment to phasing out fossil fuels and its explicit call for regulation. Recommendation 5 states that there is “no room for new investment in fossil fuel supply” and highlights “a need to decommission existing assets”. The HLEG recommends that all net zero pledges “should include specific targets aimed at ending the use of and/or support for fossil fuels”.
Recommendation 9 delineates actions that states and other public actors should take alongside non-state entities in financing just transitions. The HLEG calls for “a new deal for development” that includes financial institutions and multinational companies working with governments and the multilateral development banks to assume more risk and set targets to scale up investments in clean energy transitions in developing countries.
Recommendation 10 goes further in instructing governments by calling for national regulation and for establishing a Task Force on Net Zero Regulation to reduce fragmentation and coordinate harmonisation of national regulatory standards and international institutions. The detailed recommendations state that projects like the Transition Pathway Initiative (TPI), whose Global Climate Transition Centre is based at the Grantham Research Institute, should inform regulation and “make it easier for governments to adopt rigorous regulations around net zero” – a point we made in a submission to the HLEG this August.
These developments are a major statement at a time when international institutions are reluctant to push for needed policies – evidenced by the failure of states at COP27 (where the fossil fuel lobby’s representation was even greater than last year’s record high) to reach an agreement on ‘phasing down’ fossil fuels. The report’s focus on financial institutions is also significant: it states that their net zero targets and transition plans “must include an immediate end” to lending, underwriting and investing in any company planning coal infrastructure, power plants, and mines and must have oil and gas phase-out policies that include a commitment to ending finance and investment in support of exploration for new fields, expansion of reserves, and production. The recommendations came just as news emerged that EU Member States were likely to exempt financial institutions from forthcoming sustainability due diligence requirements.
Urgent action is needed
The report’s recommendations are generally characterised by a sense of urgency. In her opening note, the Group’s Chair, Catherine McKenna, states: “We are at a critical moment for humanity. The window to limit dangerous global warming and ensure a sustainable future is quickly closing.”
The HLEG has set a timeline for many of the recommendations, calling for interim targets as soon as 2025, by which time non-state actors should also end activities resulting in deforestation. The HLEG also emphasises rapid carbon reductions over offsets, calling for voluntary carbon credits to be used only beyond value chain mitigation and not for meeting targets.
Guterres, too, highlighted the need for urgent action in his speech launching the report at COP27. He called for existing voluntary initiatives on net zero and for CEOs, mayors and governors to abide by these recommendations and update their guidelines “right away – and certainly no later than COP28”.
Still work to be done
The HLEG’s recommendations are welcome as an ambitious, authoritative statement of what makes a net zero pledge credible. The regulation Task Force that the HLEG proposes could have a major impact by promoting national regulation that integrates different policy domains and achieves a high degree of international harmonisation.
At the same time, there is more to be clarified. The HLEG highlights the need for regulation and verification, but some of the instruments specified for achieving both objectives may not be appropriate alone. The Transition Pathway Initiative, for example, can inform thinking on verification and regulation through its assessments of how corporate emissions reduction targets align with pathways to net zero, but it does not offer full verification of corporate emissions or transition plans. It is also designed to support investors rather than regulators, and certain design principles may not fully suit the aims of the HLEG. Scholars and policymakers need to think through scalable options for developing tools that enable governments and non-state actors to deliver fully on the recommendations.
Moreover, some key concepts remain to be defined and are highly contested. The HLEG does not fully clarify what determines a non-state entity’s ‘fair share’ of emissions. Sector-specific pathways need to be in focus, but defining which sector – and which entities within each sector – must cut emissions, by how much, and by which deadline remains a thorny political task for decision-makers.
These recommendations are an urgently needed step in the right direction but building consensus will be an ongoing challenge. Governments and other stakeholders must not waste time and will need to pay close attention to these issues in the coming months.