As COP17 draws to a close International sustainability recruitment Consultants, Allen & York takes a look at how the uncertainty of a decision can affect businesses worldwide.

The conclusion of COP17 leaves businesses with more questions than answers

The most pressing issue at COP17 was the question of what will happen after the end of the Kyoto protocol in 2012.

A document outlining the combination of suggestions for an international agreement on climate change was given to delegates for their consideration over this past weekend. It was intended to provide a basis for negotiations during the second week of the conference.

Outlined in The Guardian, it was suggested that the G77 group and China raised concerns that the amalgamation outlined in the document did not reflect the discussions that had taken place in Durban whilst India has said an agreement on a second commitment period of Kyoto is unlikely; Canada’s environment minister announced that it would not commit to a second phase of Kyoto starting in 2013. However, Australia and the EU have been more upbeat and there are signs that China would support a new agreement, with a key Chinese official stating, “every country shall undertake obligations and responsibilities according to their capacity”. This is an encouraging sentiment, however the same old tensions will no doubt emerge between developed and developing nations when it comes to agreeing on the definition of “capacity”.

So where does all this uncertainty leave business? Firstly, it must be said that regardless of whether a new international agreement can be struck in Durban, at national level most countries are already committed to greening their economies. Inevitably, business will be the protagonist in terms of providing investment and practical implementation through goods and services to deliver this, continuing the work in which many companies are already engaged.

But business should also be paying attention to the development of the Green Climate Fund (GCF) according to The Guardian. The UN will need to build the institutional capacity of the GCF so it can disburse up to $100bn (£64bn) effectively. In the short term, this means there may be a role for NGOs and, possibly, businesses in seconding staff to the relevant national body.

With limited public funds available globally, business could have another important role to play here in mobilising private capital to support investment in low-carbon growth. But what type of finance could be used? Nick Robins of HSBC has already asserted that listed equity and bank capital are a no-go. Debt capital markets could offer a feasible route, but lending is expensive and short-term.

So what other opportunities will the fund offer businesses? Trevor Manual, chair of the transitional committee for the GCF and South Africa’s planning minister has indicated that the focus of the GCF is likely to be on climate change adaptation, as the recipients of funding would be developing countries with low GHG emissions. Allen & York are witnessing an increase in the number of roles in this area. Clearly, this offers businesses the chance to export skills and expertise – consultancies will be needed to advise on adaptation strategies, design and engineering businesses to help manage coastal areas, specialists to assist with issues of water security – the list of possibilities is endless.

In terms of other aspects of the negotiations that may affect businesses, progress has been limited. We’ve heard little, thus far, about the proposed implementation of a financial transaction tax in line with recent EU proposals of 0.01% for derivatives and 0.1% for shares and loan products (which would raise revenue of up to €55bn (£47bn) a year in Europe). Likewise, nothing concrete has yet been agreed on aviation and shipping taxation in line with the polluter pays principle. All three taxes are possible funding mechanisms for the GCF. One proposal outlined how the shipping tax could work, and has received the broad support of the shipping industry provided it is applied globally, however no agreement has yet been reached.