Action on trade is needed for businesses to meet net zero goals, study finds
– Study finds companies are actively pursuing or are ready to accelerate emission reduction programs, and trade policy action can accelerate this shift
– Eight actions could help adapt the complex global trading system to climate action
– Solutions to mobilize trade policy to support climate action include reducing tariffs on climate-friendly products, unlocking access to technology and aligning with carbon-based trade policies
– World Economic Forum launches public-private program to continue dialogue on these issues
Geneva, Switzerland, September 20, 2021 – For companies to meet their emissions targets, the global trading system must adapt and companies are calling for change.
These are the main conclusions of the Implementing a Climate Trade Agenda: Industry Outlook Report published today by the World Economic Forum, in collaboration with Clifford Chance.
The six-month study is based on research and interviews with global companies, across industries, including transportation, energy, manufacturing and consumer goods. The objective of the research process was to identify the necessary changes to the current global trading system and how to best incentivize and accelerate decarbonization. The resulting study presents eight key actions that, if taken by governments and businesses, could make global trade a better catalyst for climate action.
Sean Doherty, Head of International Trade and Investment, said: “Traditionally, trade and climate policy making has taken place in separate silos. The urgency of the climate crisis calls on us to break down these silos through public-private cooperation to accelerate emissions reductions while ensuring prosperity for all. The good news for policymakers is that businesses are ready and willing to support this change. ‘
Jessica Gladstone, partner at Clifford Chance, said: “International trade will play a key role in achieving a just transition to a sustainable, low-carbon global economy. Businesses are poised to lead this transition, but governments can help by ensuring that the right legislative and regulatory structures are in place. Our report explores global and national policy actions that can create climate-friendly trade that is fair, transparent, and based on technology and innovation. ‘
The interviews revealed the following ways for commerce to help businesses decarbonise and grow in a sustainable manner:
Tariff cuts on key products Parallel treatment of non-tariff distortions Phasing out fossil fuel subsidies Building coherence around carbon-based trade policies Supporting trade in digital and climate-related services Encouraging climate-smart agriculture Aligning trade agreements with climate commitments Facilitating trade green investments
The graphic below provides examples of how the global trading system can, through continued dialogue between governments and the private sector, harness trade for climate action.
The report includes a preface co-authored by the Director General of the World Trade Organization (WTO) Ngozi Okonjo-Iweala and the Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) welcoming business ideas. Important intergovernmental meetings will be held under the two organizations during the last quarter of this year.
Businesses can take steps to encourage alignment of trade rules with climate action. The Forum is today launching a two-year work program – titled Climate Trade Zero – to support public and private exchanges on these issues as part of building a more sustainable trading system.
Many companies have also recognized that the transition is happening at different speeds and levels of intensity across countries and sectors. Interviewees stressed the importance of providing support and incentives to developing countries, and supply chain partners in developing countries, to undertake the necessary investments to reduce their emissions.
All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.