Goals and targets to advance corporate social responsibility (CSR) and sustainability have been widely embraced by the private sector.

KPMG reports that 90 per cent of the world’s largest companies now report on aspects of their sustainable development performance. However, public disclosures show that the types of CSR and sustainability goals and targets used by businesses vary widely, even amongst companies in the same industry. Tailoring goals and targets for specific business contexts is necessary for materiality. However, a common reference point is also needed to promote meaningful comparisons of sustainable development performance. The United Nations Sustainable Development Goals (SDGs) should provide this reference point going forward.

The United Nations held a summit on September 25-27, 2015, to adopt its post-2015 development agenda, of which the SDGs are a core part. The SDGs are intended to build on and extend the Millennium Development Goals (MDGs), which expire at the end of 2015. There are 17 SDGs with over 160 accompanying targets that aim to holistically address sustainable development over the 2016-2030 period. The SDGs are ambitious and will require coordinated action from the public and private sectors if they are to be achieved. Several of the goals, such as those on ensuring sustainable consumption and production patterns, taking urgent action to combat climate change, and promoting sustainable growth, have direct relevance to the private sector. Other SDGs, such as ending poverty or ending hunger, also hinge on private sector contributions.

Several efforts are underway that recognize the importance of the private sector to achieving the SDGs. The Global Reporting Initiative, World Business Council for Sustainable Development, and United Nations Global Compact are currently working on the development of a guide that will “support businesses in assessing their impacts, aligning their strategies with the SDGs and setting company goals.” A number of articles that focus on the logic of incorporating SDGs into business strategy have already been published. Efforts to catalogue the private sector’s contributions to achieving the SDGs are already under way. There are two key reasons why it is important that these initiatives, and others like them, succeed (reasons have been largely overlooked in the discussions to date).

First, linking private sector sustainable development reporting to the SDGs will provide a common reference point in the development of goals and targets. As articulated in the work of Peter Senge, a systems scientist, a shared vision of sustainable development is needed to foster greater commitment to its achievement. The lack of common goals and targets linked to the broader context may encourage a situation where reporting is largely self-referential. The SDGs, which are explicitly intended to be universal, provide a means to link private sector reporting with the broader sustainable development imperative globally, nationally, and locally.

Second, using the SDGs as a basis for sustainable development reporting provides a mechanism for improving linkages between public and private sector reporting. A concept as broad as sustainable development cannot be achieved or accurately reported by either the public or private sector acting alone. Unfortunately, linkages between public and private sector sustainable development reporting are currently weak or non-existent. Private sector entities rarely explicitly report on how they contribute to achieving public sector sustainable development goals and vice versa. The SDGs provide a basis for more standardized reporting around widely accepted goals and targets. This could facilitate greater usage of publicly reported data. For example, a federal government could draw on private sector data in the development of national sustainable development reports. Improved alignment in reporting would help clarify whether organizations, communities, regions, and nations are making meaningful progress on sustainable development. This is currently difficult, given the fragmentation of reporting.

However, there are a number of challenges in using the SDGs as a reference point for private sector sustainable development reporting. It is possible that some of the SDGs could be interpreted differently by different organizations. This could result in different views on what data would be needed to report on goals and targets. Greater alignment in reporting would likely require improved verification mechanisms in both public and private sector entities. Since sustainable development reporting—including setting goals and targets—is largely discretionary, some mandatory reporting requirements may need to be introduced. These challenges mean there is likely to be some confusion, at least initially, in applying the SDGs to private sector reporting.  Increased upfront costs are also likely. However, given that the SDGs are intended to be in place for the next 15 years, these upfront investments may mean less effort is needed on a year-over-year basis once the foundation for reporting is in place. In any case, progress towards sustainable development simply cannot be assessed in the absence of connections to the bigger picture and linkages between the various entities that report.

Fortunately, many companies are already reporting on aspects of the SDGs. This provides a strong foundation on which to build. The charge going forward is to report on goals and targets in a consistent systematic way that provides insight into whether or not meaningful progress on sustainable development is being made.

On Monday, 7th December 2015, the International Institute for Sustainable Development organized an event on Fossil Fuel Subsidies and Climate Change to put a spotlight on the scale and nature of subsidies to fossil fuels, national and international efforts to reform subsidies and the growing momentum behind the International Communiqué to phase out fossil fuel subsidies.

This video was produced by Dorothy Wanja Nyingi PhD and filmed/edited by Robin Smith. You can find our written report and photographs from this event here.

In every country concerned, there must have been a moment during the anti-tobacco campaign at which the balance of advantage shifted—subtly, perhaps tentatively, but changing things fundamentally and forever. 

At that point, the right to live life without being subjected to cigarette smoke became the new norm. Not long after, the notion that it was okay to smoke in trains, in cinemas and even in pubs was regarded as a retrograde curiosity. Indeed, we look back at the days of smoke-filled rooms the way we might at memories of using the telex, or booking an overseas call at the post office. Campaigners can take much solace from tipping point theory. Getting to the tipping point can be long, discouraging and full of set-backs, but once past it, the entire game changes.

Two events I attended last week on behalf of the United Nations Environment Porgramme Inquiry into the Design of a Sustainable Financial System (UNEP Inquiry) made me think that, when it comes to greening finance, we may be approaching a critical tipping point, beyond which green finance sector reform becomes the norm rather than the exception. The first was the Novethic Annual Event on Environmental, Social and Governance (ESG) Strategies for Responsible Investors in Paris, which gathered largely French institutional investors, but with solid participation from other European countries. The fact that Paris is currently hosting the 21st Conference of the Parties (COP 21) may explain the high level of interest in factoring climate considerations into investment strategy, but the movement is developing at a speed that suggests it is more than a bubble. Over 90 per cent of the 181 institutional investors surveyed for the annual Novethic report implement one of three responsible investment strategies: exclusion of certain types of investment (typically in carbon-based assets), adoption and implementation of an ESG strategy, or shareholder action. Over 40 per cent combine all three. Furthermore, 78 per cent have formalized strategies for responsible investment, and the rate of disclosure and reporting against these policies has risen by 7 per cent in the past year alone. Together, those polled account for over €7 billion in assets managed. 

With such participation rates, it is hard to see how the movement can do otherwise than expand towards full coverage. Added to similar trends in North America and in other parts of the world, we could at a minimum be witnessing the start of a flight of investment capital from fossil fuels and other carbon-intensive industries and, beyond that, perhaps a generalization of institutional investment policies that give priority to socially and environmentally favourable development.

Later in the week, I attended a meeting hosted by the Netherlands' central bank with the Dutch Sustainable Finance Lab, an innovative think tank chaired by the experienced and capable Herman Wijffels. This meeting, chaired by the Netherlands Bank President Klaas Knot gathered a high-level group of bankers, investment fund managers, insurance and pension fund leaders, and government officials from around the country to hear and discuss the findings of the UNEP Inquiry and to consider their implications for the Netherlands. If it is well known that the senior managers in the financial sector are a conservative lot, then maybe those in the Netherlands are the exception. The sense of excitement around the emerging green finance agenda was palpable. The Netherlands Bank Executive Director Frank Elderson declared green finance to be highly relevant and offered to play a convening role in bringing the other finance sector players together to work out a roadmap. There were even calls to make the Netherlands into the global centre of green finance. The shift from seeing green finance as a business opportunity for the mainstream, rather than a niche for a small segment of the market, is a profound change.

This spectacle of finance sector leaders scrambling to board the green finance bandwagon is, of course, highly gratifying to UNEP and a tribute to the Inquiry team’s tour de force in producing an analysis that remains strongly rooted in the field of sustainable development, yet speaks to the financial community in their language and cleaves to their sense of what is doable. It is a source of pride for IISD that we supported and contributed to the UNEP Inquiry from the start.

Do these two examples mean that, henceforth, funding for carbon-based energy and environmentally damaging development will quickly dry up? Sadly not, but in keeping with tipping point theory, we may be approaching a stage where the link between the finance and development outcomes we want and need will be much more closely scrutinized and the less acceptable investments phased out, replaced by investments that generate economic benefits in the real economy while boosting social inclusion and respecting environmental limits. If the two meetings mentioned above are anything to go by, that tipping point may be reached sooner that we currently expect.

Catherine McKenna, minister for the Environment and Climate Change asked us what we think needs to be done to curb climate change. For us, getting rid of Fossil Fuel Subsidies would be a massive first step. Take a look at our short video in English and French to learn more.

Catherine McKenna, ministre de l’environnement et du changement climatique, nous a demandé ce qui, d’après nous, devrait être fait pour mettre un frein aux changements climatiques. À notre avis, l’élimination des subventions pour les combustibles fossiles serait une remarquable première étape, tout comme ce serait le cas du financement des pratiques d’adaptation face aux changements climatiques, particulièrement dans les pays en développement. Visionnez notre brève vidéo en anglais et en français pour en apprendre davantage.

Public procurement has an essential role to play in facilitating states’ fulfillment of their duties to protect, respect and fulfill human rights.

As ‘mega-consumers,’ governments have the purchasing power to set standards for production, such as acceptable minimum wages, safe workplaces and the provision of protective gear, and non-discrimination on the basis of gender, race or disability.

Yet governments, like other buyers, ultimately purchase goods, services and infrastructure from companies with global supply chains—complex supply chains with multiple tiers, many unknown to the final customer. Many supply chains function and flourish on the back of human rights abuses, including the use of child labour, forced labour, or the suppression of freedom of association.

Early Signs of Best Practice

Earlier this month, government procurers and experts met for the first workshop of the International Learning Lab and Human Rights to share best practice. This includes:

• Use compliance with the International Labour Organization’s Core Conventions as selection criteria in the evaluation of bids, and then as contract clauses (e.g. Norway);
• Select “high risk” sectors that are susceptible to human rights abuses and focus on those sectors (e.g. Sweden and Norway);
• Require that procuring agencies buying from “high risk” sectors certify that their procurement is taking reasonable efforts to prevent labour abuses (e.g. United States);
• Use award criteria to give additional points to suppliers who report on their due diligence (e.g. Sweden rewards suppliers reporting on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High Risk Areas);
• Develop model contracts with human rights provisions (e.g. Switzerland);
• Use contractual penalty clauses that apply to contractors and all subcontractors (e.g. Switzerland);
• Require that contractors disclose any past violations of human rights for the procuring agency to take into consideration (e.g. United States); and
• Hire senior advisors on labour and human rights to advise contracting officers on assessing bids (e.g. United States)

Going Beyond “Tick Box” Exercises

The big question, however, is how to enforce and verify compliance. While it is admirable, moreover essential, that governments include ILO Core Convention compliance in public sector contracts, how can this become more than a “tick box” exercise? How can public procurement provide support to those vulnerable workers at the bottom of global supply chains?

Here there are no easy answers. At present there are essentially no incentives or penalties in any country for public procurers to enforce human rights compliance, and certainly not beyond the so-called “tier 1” suppliers. We could look to the private sector, which has arguably made greater strides than the public sector in this space, particularly following dramatic events such as the collapse of the Rana Plaza in Bangladesh. Yet many stakeholders feel that private sector impact has been negligible, and that the public sector should do better when it comes to enforcing human rights.

Some sector-specific initiatives, such as Electronics Watch, are making ground. Emerging lessons point to the value of partnerships with such labour rights monitoring organizations, and forming ‘intelligence networks’ to feed information back to procuring agencies. Indeed any approaches that encourage sharing the costs of monitoring across a number of agencies will also be important. Efforts that enable workers to enforce their own rights are perhaps the gold standard, such as the establishment of complaints-based monitoring systems through which workers can file complaints and seek timely remedies.

Ultimately there is a need for “radical transparency,” as one stakeholder put it, if we are to make meaningful progress on procurement and human rights. This could manifest as an obligation for companies working with the government to disclose all of the subcontractors and suppliers in their supply chain. We should not underestimate the effort such an initiative would require, but such radical transparency might be a vital step to shedding light on dark, hidden and uncomfortable realities.

These are big times for China. With the conclusion of the G20 meeting in Antalya, Turkey, China takes up the mantle as host of the next G20 summit. 

Central to its offering is a newly-formed G20 Study Group on Green Finance, a first for that top-level forum. The several multilateral vehicles that China hosts or has initiated—the New Development Bank (formerly the BRICS Bank), the Asia Infrastructure Investment Bank, the Silk Road Fund, and the South-South Cooperation Fund—are all grinding into motion, further extending China’s reach as a key source of investment capital for development.

The framework for the 13^th Five-Year Plan, recently released by the Communist Party of China, contains a strong chapter on green finance—another first—and inaugurates a range of green finance incentives aimed at accelerating the transition to cleaner forms of development. Though the Plan will only formally be adopted early next year, the direction it is taking is clear and is unlikely to change significantly. Indeed, in anticipation an Integrated Reform Plan for Promoting Ecological Progress has been issued. It demonstrates a growing reliance on innovative green finance vehicles and incentives—including green credit, a green stock index, development of a green bond market, a green development fund, environmental disclosure requirements for listed companies, a green credit rating system, and much more.

The green finance movement is growing by leaps and bounds, and China has carved out a leading position.

It is still early days to judge whether these developments signal a genuine change in direction or simply a response to the growing public demand for greater attention to the environmental consequences of development. It is well known that genuine policy change follows from the alignment of incentives and disincentives and, in this respect, it will be very interesting to watch what happens in China.Taking incentives first, I remember the manager of one of China’s export processing zones waxing lyrical about the introduction, in the zone, of new standards for low-carbon production. These he intended to implement with enthusiasm and determination. However, when pressed, he conceded that his own promotion depended centrally on raw economic growth figures. Where the two could be advanced in harmony, this was fine; in case of conflict, there were no prizes to be won for guessing which would be given priority.

This dilemma still characterizes too great a proportion of the financial world. Whereas growing awareness of the social and environmental consequences of present patterns of growth is leading to a search for “greener” alternatives, the incentives and rewards still provide a strong incentive to favour traditional, unsustainable approaches.

China is now in full experimental mode. It is launching new green finance initiatives right, left and centre, and is beginning to address the challenge of policy alignment. The 13^th Five-Year Plan and the Integrated Reform Plan both innovate in the field of incentives and disincentives. For example, a new system of professional advancement is being put into place that rewards progress towards environmental objectives over the traditional prize for GDP growth. This alone could have a revolutionary effect on governance at the provincial, municipal and zone level. If senior officials and zone administrators move up the ladder on the basis of their contribution to the green transition, this will transform priority-setting and could overcome the natural inertia that slows all innovation. Further, only days ago, the General Office of State Council (China’s cabinet) announced a pilot under which five cities will introduce a natural capital balance sheet—a further serious move towards laying an objective basis for measuring the performance of local officials in respect of environmental conservation goals.

Rewards are not the only form of incentive, however. China is also seeking to shift the traditional risk calculus that consistently undervalues and “externalizes” the environmental damage caused by development. One innovation is the introduction of compulsory environmental pollution liability insurance for investments that threaten the environment. Pioneered in other countries such as Brazil, the requirement to pay for risk coverage has the consequence that such risk is taken more seriously and factored into the cost of doing business. The result is that investors seek to reduce these costs by reducing the risk, with net benefits for the environment. 

These are simply brief illustrations of the many steps China is taking to harness the financial sector, and financial instruments, to the strategic goal of accelerating the green transition. In its level of ambition, its willingness to experiment and to learn from experience, and in its determination to turn the corner on traditional, dirty development, China is unique. We should follow what happens there closely.

The refugee crisis unfolding across Europe’s borders is a long-term challenge without easy fixes.

Crisis management is certainly top priority, but it does not replace the need to tackle the problem at its core. This includes recognizing the stresses that a changing climate are placing on poor and fragile states—and supporting communities to adapt.

While not a direct driver of the conflict in places like Syria, climate change does threaten to act as what UN Secretary-General refers to as a “threat multiplier,” exacerbating existing tensions and potentially triggering new conflicts as it interacts with the country—and region’s—existing conflict drivers: terrorism, political instability, inequality, poverty, weak governance and ethnicity.

For West and North African migrants attempting the Mediterranean crossing, the economic and political factors pushing them toward Europe are often intimately linked to a changing climate and environment. Without greater support to help these individuals and their families cope with and adapt to environmental change, their numbers are likely to continue to swell.

The region has long had a history of severe weather. Droughts defined public perception of the West African Sahel for much of the 1970s and 1980s, and today these periods of dryness, as well as intense flooding, are increasingly common. Temperatures continue to rise, as does the rate at which surface water is evaporating. These climate patterns are already impacting the region, through decreased agricultural yields, the loss of pastures and the drying up of lakes and rivers. And the impacts are expected to worsen in the coming decades.

By changing where and when rain falls, and how much of it falls, climate change will continue to challenge livelihoods across North and West Africa, livelihoods that are often inexorably tied to water. Farmers and herders from the region will be more and more constrained as they try to make ends meet, and their governments—already under-resourced and weakened by conflict and corruption—will not be in a position to help them. Under these circumstances, it is entirely conceivable that the region’s growing, young populations, pushed by dwindling economic opportunities, overstretched governments, failing livelihoods and scarcities of water and land, will increasingly look outside of the borders for an answer.

The decision to migrate is, of course, never taken lightly. For most African migrants, the preference would be to remain at home, surrounded by family and friends, rather than to risk their lives in the boats heading northward across the Mediterranean. If they make the crossing—which we have seen is by no means a certainty—Europe offers the promise of economic advancement. But it also brings with it considerable dangers once land is reached: risks of harassment, arrest and deportation; the threat of xenophobia; and the mental strain and isolation brought on by being hundreds of miles from home. But the dangers of staying at home can be greater still: the threat of violence and death in Syria, the threat of joblessness and severe poverty in West Africa.

Europe’s leaders and the international community more broadly are grappling with responses to the immediate crises, and more is needed to meet the needs of both refugees fleeing conflict and migrants fleeing poverty. In their response, the international community should not neglect to address the root causes of both crises, root causes that include climate change. By helping those most vulnerable adapt to and cope with the increasingly dire impacts of a changing climate, the international community will help to ensure that the decision to migrate is a choice, and not a necessity. 

At the tail end of November, Canada’s newly-elected Prime Minister, Justin Trudeau, will attend the United Nations Framework Convention on Climate Change Conference of the Parties (COP 21) in Paris.

Domestic and international eyes will be watching as the new leader, and his ministers, have promised a more cooperative and engaged stance on climate change policy than the previous Conservative Government.

One of the early indications that Canada has evolved in its climate change policy is Trudeau’s promise to bring provincial premiers to the Paris summit and meet with them prior to the event to discuss the nation’s plans for moving forward. The prime minister has indicated his preference for a national greenhouse gas mitigation goal or standard, but favours allowing the provinces to decide the best way to reach it, be it regulation, carbon pricing, or some other approach.

Trudeau, along with many others, has recognized that over the last decade Canada's provinces have taken the lead in developing a range of solutions to address climate change. These include a carbon tax in British Columbia; a cap-and-trade system in Quebec; coal phase out, renewable energy strategies, and a soon-to-be implemented carbon pricing system in Ontario; and a hybrid system of tax and trading for large emitters in Alberta that will be evolving into a more traditional carbon tax approach in the future. In fact, in the absence of federal carbon pricing policies, Canada has evolved as a series of provincial policy labs for a wide arrange of pricing and regulatory strategies to address GHG mitigation.

With renewed engagement from Ottawa on climate change, the question emerges: what role should provinces play in Canada’s climate change policy moving forward?

Provinces should be viewed as “first-movers” whose efforts have set the stage for future action and their historical role should be entrenched through flexible federal policy. Provinces have pushed Canada’s climate change agenda forward by marshalling political capital, organizing government and bureaucratic resources and experimenting with a range of innovative policy solutions. There is much that can be learned from provincial experience on climate change and their involvement in national policy should be as an equal partner as opposed to a subordinate.

What is more, many provincial policies have proven durable through changing political and economic circumstances. BC, Alberta and Quebec’s pricing systems have all survived elections and varying economic conditions during their development or operation phases, and in some cases have emerged even stronger. After the historic election of the New Democratic Party in Alberta, the province has committed to a carbon tax approach that will cover roughly 80-90 percent of emissions, while also committing to phase out coal energy generation. In the lead up to COP 21 both Ontario and Quebec announced deeper GHG mitigation targets for 2030, while Manitoba indicated it may be the latest jurisdiction to move towards carbon pricing, with details expected in early December.  

The resiliency of provincial carbon pricing initiatives suggests that they are here to stay, they will not easily be replaced, and that it will be up to the federal government to match their ambition, as opposed to the federal government setting ambition for these provinces.How can Ottawa bring better coordination to the various provincial approaches to climate change across the country? The answer, once again, lies in the provinces themselves. Several provinces have attempted to overcome regional differences and work together on climate change through voluntary collaborative arrangements, with each other and US states. Organizations like the Western Climate Initiative (WCI) and New England Governors and Eastern Canadian Premiers sought to establish regional GHG targets and/or a joint carbon markets which would allow for inter-jurisdictional trading of emission credits.

Many foundational policies, institutions and relationships have been established which can facilitate further collaboration and policy development, bringing more jurisdictions into the fold. This is mostly clearly seen in Ontario’s decision to participate in regional carbon trading.A federal government that is looking to bring coordination and cohesiveness to disparate policies across the country should build upon voluntary provincial collaboration. Even Alberta, which did not participate in WCI, cooperated around foundational policies such as regulations for measuring and tracking emission reductions. This suggests that there may be more common ground between provincial governments on climate change than is often recognized; a starting point for national cooperation.

While scientific evidence calls for immediate climate action, political and regulatory realities necessitate patience and a long-term approach, and the Canadian Government has committed to follow up with provinces and territories within 90 days of COP 21 to set the path forward. Success depends both on national coordination and continued motivation to build on the incremental progress we are seeing in the lead up to Paris. This mantra will serve the new prime minister well as he seeks to move climate policy forward in a country that has an appetite for international leadership, yet faces distinct regional realities that complicate and challenge national strategies. 

Authors: Philip Gass is a senior researcher with IISD's Energy Program. Brendan Boyd is a recent Ph.D graduate from the School of Public Administration at the University of Victoria. This commentary draws on Dr. Boyd's Ph.D dissertation, available here. 

The stakes are incredibly high as representatives of 196 countries meet in Paris to forge a new international climate change agreement at COP 21 (November 30 to December 11).

With 2015 likely to be the warmest year on record, and alarming signs of a changing climate around the world, this is a critical moment for international climate governance.

A quick recap of what’s taken us to this point. A negotiating text was developed in Geneva in February, providing the basis for the subsequent negotiating sessions. These have aimed at streamlining the 80+ page-long draft text and identifying areas of convergence. But progress has been slow, including at the last major negotiating session held in October in Bonn. The incoming COP 21 presidency (France) has organized a series of informal ministerial consultations and a ‘pre-COP’ aimed at building consensus. Yet much remains to be agreed in the final text.

Here are six of the major issues that need to be resolved.

Agreeing to legal forms and time frames

In December 2011, countries agreed that they would develop “a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties” to be adopted in Paris in 2015. But governments have not yet determined the specific legal form the Paris agreement will take. For example, the European Union, Small Island Developing States and many developing countries prefer a legally binding agreement. The United States, however, may not be able to ratify such an agreement.

On timeframes, it is expected that the agreement will enter into force in 2020. However, no decision has been made with regards to the implementation and compliance mechanisms of the agreement and the length of commitment period(s). Countries have agreed generally to review and take stock every five years, although disagreement remains between 2025 and 2030 as the first commitment period end dates.

Raising the ambition of national contributions

In the lead-up to Paris countries have submitted national plans to take action under the new agreement; these are known as Intended Nationally Determined Contributions (INDCs). As of November 11, 2015, 160 countries representing nearly 90 per cent of global GHG emissions have submitted their INDCs.

The UNFCCC secretariat released a Synthesis Report on the Aggregate Effect of the Intended Nationally Determined Contributions that had been submitted by October 1, 2015. The report estimates that these pledges, if fully implemented, will bring global average emissions per capita down by as much as 8 per cent in 2025 and 9 per cent in by 2030. In addition to the impact on per capita emissions, the report shows that INDCs are expected to slow emission growth and deliver emission reductions of around 4 gigatonnes by 2030 compared to pre-INDC scenarios.

The report did not directly assess long-term implications beyond 2030. However, the UN Environment Programme’s annual emissions gap report concludes that, if fully implemented, the INDCs would set the world on a path towards a 3°C temperature rise. Clearly, more action will be needed from countries. The call for greater ambition in Paris will be tied closely to discussion on finance.  Nearly all developing countries have made their INDCs conditional on elements such as finance, the form of the agreement and developed country action.

The fact that developing country INDCs are viewed as voluntary is also a concern for developed country parties. To a large extent, success in Paris will hinge upon agreement on a robust system to ratchet up ambition in the post-2020 period. Adding an agreement to not “backtrack” on ambition is also under discussion.

Giving equal weight to adaptation and the treatment of loss and damage

For an agreement to be reached in Paris, it is paramount to most developing countries that adaptation be prioritized to the same extent as mitigation.

Some developing countries call for a global goal for adaptation to be integrated into the agreement, and so far ministerial support has been expressed for the inclusion of a qualitative goal. Yet several developing countries go further by seeking the creation of a new compensation mechanism or insurance for loss and damage resulting from the adverse impacts of climate change, as a separate and new pillar of the climate regime. They make a clear distinction between adaptation, which aims to build resilience to the risks of impacts, and compensation or even liability for loss and damage suffered as a consequence of impacts that are beyond adaptation. But some developed countries prefer using the existing mechanism on loss and damage, and argue that it should be treated under the umbrella of adaptation.

Securing finance for developing countries

In 2009, developed countries committed to mobilizing US$ 100 billion per year by 2020 to help developing countries mitigate and adapt to climate change. Since then, and despite several rounds of talks dedicated to long-term financing, it is unclear where the money will come from and how the private sector will be brought on board. Developing countries want to ensure that climate finance is new, predictable, additional to development aid, and available for both mitigation and adaptation. Some developing countries call for the setting of interim financing targets between 2016 and 2020. But various developed countries resist that push.

Seeking a solution to technology transfer

Developing countries also suggest adopting a global goal on technology, calling for a clear signal that clean technologies emerging from publically funded research and development projects fall within the public domain, and are therefore easily accessible. This is opposed by most developed countries, although a proposal by African countries on a framework for enhanced action on technology development and transfer has gained some traction.

Leveraging market mechanisms

It is anticipated that market mechanisms—a term that refers to various financial incentives designed to influence business decision—will be an integral part of the 2020 international climate regime. Nearly 50 per cent of the submitted INDCs refer to economic instruments or market mechanisms as part of the tools needed to meet their commitments. A number of countries have submitted their ideas regarding the format of a New Market Mechanism (NMM) though some countries oppose such a mechanism due to concerns about double counting of emission reductions.

It is unlikely that countries will reach a substantive agreement on this in Paris given the longstanding deadlock on the issue. But it is anticipated that the Paris agreement will not disqualify international transfers and that the subject will be taken up in subsequent UNFCCC sessions.  

 A fit conclusion to 2015?

If this sounds like a lot of ground to cover in two weeks—that’s because it is. Negotiators have been working throughout 2015 and the elements necessary for an ambitious global climate agreement are within reach. But finding the language that all 196 countries can accept and fully implement nationally will be critical to ensure environmental integrity and a truly successful outcome.

When it comes to phasing out subsidies to the production of polluting oil, gas and coal—something G20 leaders have committed to every year since 2009—we’re seeing little progress.

In fact, as fossil fuel prices have fallen, some countries have even increased subsidies in response. Although there has been some progress in reforming consumer subsidies, when it comes to production, progress is much more limited.

So what are the most encouraging stories of reform to fossil fuel production subsidies—and the most frustrating? Which countries are showing leadership, and which are lagging behind?

First, the leaders:

The US and France restrict international public finance for coal

The US’ export credit agency was one of the first to significantly curtail support for coal-fired power plants, and its Overseas Private Investment Corporation has shifted its financing away from fossil fuels and towards renewable energy. Guidelines from the US Treasury also restrict US support for multilateral development bank funding of coal-fired power projects.

Meanwhile France’s overseas development agency and export credit agency no longer support coal-fired power stations without carbon capture and storage; although the economic viability of this technology remains in question.

Germany on track to end coal subsidies by 2018

In 2007 Germany formally committed to phasing out support to its domestic hard coal industry by 2018. To ease this transition, the government provides support for early retirement schemes for those working in coal production, and shares the costs of closures and inherited liabilities with the industry to manage the impacts of reform.

Canada phases out national subsidies, including to tar sands

Canada is phasing out several subsidies to oil, gas and mining, including ending targeted support to tar sands which are now subject to the same tax regime as other oil, mining and gas development. It is also phasing out the Atlantic Investment Tax Credit, which applies to oil, gas and mining.

At the same time, however, Canada has introduced new subsidies to fossil fuel producers, particularly new tax breaks for natural gas production.

Indonesia appears to have limited subsidies to production, and phased out US$ 15 billion in consumption subsidies

Indonesia’s tax and royalty regime means that the government’s share of oil and gas profits is among the highest in the world. However, it has made encouraging progress on consumption subsidies, completely removing most petrol subsidies and reducing diesel subsidies, saving the public a total of just over $15 billion in 2015.

Despite some missteps in implementation, this still represents a dramatic step forward. And while it doesn’t relate to production subsidies, it does show that Indonesia’s new government is serious about implementing its G20 pledge to rationalise and phase out inefficient fossil fuel subsidies that promote wasteful consumption.

And now we turn to the laggards… 

(Watch out for those countries cancelling out their progress with contradictory actions! Some countries have phased out one subsidy while simultaneously introducing another, or continue to subsidise domestic activity while cutting international public finance, or vice versa.)

Japan, Korea and China continue to finance fossil fuel production abroad

Japan and Korea remain aggressive supporters of fossil fuel production outside their borders, blocking calls for reform in forums such as the OECD. Japan provided an average of US$ 19 billion a year in international public finance for coal, oil and gas production in 2013 and 2014, while Korea provided just over US$ 10 billion per year.

China is also a major provider of international public finance for fossil fuel production, averaging US$ 17 billion per year in 2013 and 2014. However, in contrast to Korea, China recently announced plans to ‘strictly control’ public investment in high-emitting projects both domestically and abroad, and Japan has reached agreement with the US to curb public financing of overseas coal projects.

UK introduces new tax breaks for oil and gas

The UK government is aiming to extract an additional three to four billion barrels of oil and gas in the next 20 years, and has introduced a new set of tax breaks in 2015 that will cost UK taxpayers US$ 2.7 billion between 2015 and 2020.

At the same time, support for renewables and energy efficiency measures has been cut. 

Russia and the US continue to provide huge national subsidies

Continued high national subsidies are particularly frustrating to see in countries that have actually made efforts to reform a sub-set of national subsidies and public finance.

Russia for example, despite recently phasing out certain tax breaks to fossil fuel producers, provides them with almost US$ 23 billion annually in national subsidies. In the US, national subsidies were just under $20 billion in the same time period, from 2013 to 2014.

Turkey and Indonesia support coal power

In Turkey, the pipeline of coal-fired power projects adds up to 65 gigawatts of capacity, and national subsidies (including tax breaks) for new coal-fired power plant construction are enshrined in the 2012 New Investment Incentives Regime.

In May 2015, Indonesia launched a programme to build 35 gigawatts of new power capacity that will predominantly consist of new coal-fired power stations, and which will be supported through public finance, including guarantees.

G20 governments continue to encourage investment in fossil fuel production through subsidies, even though the world already has a large stockpile of unburnable carbon. These investments threaten to lock us in to a path that will see the world exceed its globally-agreed 2ºC climate change limit. It is time for G20 governments to end this support to the fossil fuel industry, once and for all.

Find out more in the new report, ‘Empty Promises: G20 subsidies to oil, gas and coal production,’ by ODI and Oil Change International, building on research by the IISD Global Subsidies Initiative.