2023 Global Stocktake: How can governments ensure it delivers on its mandate?

To see meaningful impact, this year’s Global Stocktake must build a bridge between the actions of government and non-state entities

The Global Stocktake (GST) is a global collective assessment that determines where we stand in meeting the Paris Agreement goals. It will happen every five years and aims to increase ambition of countries Nationally Determined Contributions (NDCs). Currently, the GST process is focused mostly on government commitments. Yet, to see meaningful change, this GST – set to conclude at COP28 – must also incorporate the perspective of non-state actors. This include companies, financial institutions and subnational stakeholders such as cities, regions and states. Non-state actors represent a sizeable share of emissions and those listed in Race to Zero campaign represent 25% of CO2 emissions globally. These actors are on the frontline to tackle climate change and are vital in ensuring that the GST acts as an accountability mechanism. 

As the latest Intergovernmental Panel on Climate Change (IPCC) report reminds us, the clock is ticking. The upcoming years will be critical for keeping the 1.5°C target alive. In their joint submission to the GST, Climate Chance and the World Benchmarking Alliance (WBA) highlight a number of ways that governments can ensure that the GST delivers on its mandate. These include, amongst others:  

1. That governments improve reporting and track data on climate action by non-state actors

Access to reliable, comparable and harmonised climate data for non-state actors is essential for us to determine their alignment with the Paris Agreement goals. While there has been a boom in ESG-related rating and investments, many methodologies remain opaque and have gaps. This includes not accounting for scope 3 emissions which represent the majority of emissions for a company. Similar challenges exist at the subnational level. Barriers include, under-reporting, responsibility of emissions and lag time between reporting and updating emission reduction targets.

Efforts are underway at the international level to address these challenges, such as the Net-Zero Data Public Utility launched by French President Macron and Bloomberg. However, it remains to be seen how such efforts will play out in the long run. WBA’s Climate and Energy Benchmarks, which currently cover 320 companies, also show that companies are currently off track in aligning with the Paris Agreement goal of limiting global warming to 1.5°C. Efforts to improve the accountability of non-state actors should therefore move from assuming a logic of transparency and disclosure to implementing credible transition plans.  

2. That governments lead in shaping company incentives

The impacts of the Inflation Reduction Act (IRA), with USD 369 billion in incentives for clean energy innovation, manufacturing and use cannot be overstated. With such a high level of government support, the act may threaten up to two thirds of lithium-ion battery production in the European Union (EU) as companies consider relocating their production to the USA. It is no coincidence that as a result the EU adopted its own Green Industrial Plan. Yet, there is still a long road ahead for governments to constrain and incentivise non-state actors to develop more ambitious climate policies.

The International Energy Agency (IEA) estimated that fossil fuel subsidies in 2022 reached an all-time high of USD one trillion. This estimate only includes consumption, leaving out production subsidies and lacking data from many countries. This leaves the total value even higher when further data will be available. Similarly, governments should link company transition plans with their own sectoral decarbonisation pathways and NDCs. They should additionally push for mandatory and global climate disclosures and standards. These measures are essential to guide investments and ensure a level playing field between non-state actors.  

3. Ensure that the GST focuses not only on mitigation but also equity, a just transition and nature

Equity should be centre stage at this year’s GST as lower income countries are the least responsible for climate change yet will bear the brunt of its impacts. Similarly, there can be no transition away from fossil fuels without considering the impact it will have on fossil fuel workers and communities. So far, more than 19 countries globally have established national transition commissions or task forces. While the depth of commitments varies, an even bigger gap remains in terms of how these pledges are implemented at the company level.

Evidence from WBA’s 2022 Just Transition Assessment of 90 keystone transport companies shows that none have transition plans in place that include time-bound targets to mitigate the social impacts on workers, affected communities, and business relationships. In the same way, the climate crisis cannot be addressed without considering the impacts on nature. While the adoption of the Global Biodiversity Framework marks a historic step forward, evidence from WBA’s 2022 Nature Benchmark shows a large gap in how companies are considering their impacts on nature as part of their strategies.  

What’s next?

With the political phase of the GST settling in and the Climate Ambition Summit and COP28 on the horizon, WBA will continue working with its allies such as Climate Chance to ensure non-state actors remain accountable for their actions. As a next step, in September 2023, WBA, Climate Chance and the Climate Action Network will release a report which aims to advance this agenda by assessing the progress made in the Race to Zero Campaign and proposing a new format to evaluate non-state actor’s climate action.  

Written by: Joachim Roth (WBA) & Antoine Gillod (Climate Chance)

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