The Paris Agreement on climate change is an essential pillar of the transition to green growth and climate compatible development. It complements and underpins the Sustainable Development Goals, approved in 2015, which bring together for the first time, and at global scale, the issues of growth, environmental protection and poverty reduction.

The Paris Agreement entered into force on 4 November 2016. Further momentum has been imparted by the agreement to phase out hydrofluorocarbons, reached at the October 2016 meeting in Kigali of Parties to the Montreal Protocol on substances that deplete the ozone layer; and by the agreement reached in the same month by the International Civil Aviation Organization to stabilise and offset carbon dioxide (CO2) emissions from aviation. Taken together, these agreements lay down a challenge, and also open significant opportunities for the private sector.

However, as observed by Christiana Figueres, the distinguished Costa Rican diplomat who led the UNFCCC, Paris was the departure station, not the arrival station, for international climate action.

In this opinion paper, adapted from an address to private sector leaders in Bogota, Colombia, in late 2016, CDKN’s Executive Director Simon Maxwell concludes:

Action on the scale required to tackle climate change will inevitably require a new industrial revolution, touching all countries. This is both a challenge and an opportunity for the private sector – one to which it is responding. New technologies, investments, financial instruments and industry initiatives are multiplying, with support from governments. Low carbon competitiveness is recognised as key to realising new opportunities. At the same time, there may well be market failures limiting the take-up of private sector action, and there may be interests and lobbies holding back progress in some sectors. There are also likely to be losers as well as winners in society from disruption and innovation associated with climate action; in this sense, there are strong parallels between the debates on climate change, globalisation and automation. For all these reasons, public policy has a big part to play in shaping, directing and supporting the private sector response to the challenge of climate change. There are no universal recipes that guarantee results in different political and socioeconomic environments, but many potential ingredients. Strong multi-stakeholder processes at country level can help mix these in the right proportions to deliver sustainable results.