Climate change is among the top threats to the planet. It is important that solutions to address the risks and adverse impacts of climate change are designed, formed, and implemented through multi-stakeholder engagement and decision-making processes which benefit from the expertise and the contribution of key stakeholders. The private sector has played and can play a key role in scaling up climate action. It is important to identify avenues for collaborations and effective interventions which could reap the highest benefits and impactful action, which support countries to achieve development goals which are climate-resilient and based on low-carbon and net zero pathways. 

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Private sector engagement

The private sector has often been considered as a key contributor to climate change due to application of carbon-intensive industrial practices in their production cycles as well as over-extraction of natural resources from the planet, which has led to threatening planetary health. However, in recent years, many entities of the private sector have mobilized to become part of the solution in addressing climate action. This includes finding suitable solutions to cut down emissions through low-carbon pathways and just transition in their business practices, as well as playing a key role in contributing to scaling up climate action at local, national, and global level.

Additionally, the United Nations Framework Convention on Climate Change (UNFCCC) process also includes business as a key stakeholder. This includes initiatives such as the Race to Net Zero campaign, which is conducted globally with the aim of enhancing leadership and support from multiple stakeholders to move towards healthy, resilient, and zero-carbon trajectories for climate action with a focus on decent jobs and inclusive and sustainable growth. At present, over 5000 businesses are part of the campaign and form part of an alliance committed to achieving net zero emissions by 2050 at the latest.

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Climate finance mobilization and accessibility

Scaling up climate finance is needed now more than it has ever been before. With the increased need for finance to address the needs of providing support to address climate-induced losses and damages and to taking action to building inclusive and participatory resilience, scaling up climate action with support of the private sector is explored as an option for many vulnerable countries. This includes contributions from the private sector for climate change mitigation and adaptation measures, as well as climate and disaster risk transfer and finance options which would support addressing the losses and damages caused by climate impacts.

Further, private sector entities can also play a pivotal role for climate action by becoming accredited entities to access climate finance through mechanisms such as the Green Climate Fund. As National Implementing Entities (NIEs), private sector accredited entities under different climate finance mechanisms hold the ability to support developing countries to access climate finance and better address climate risks and vulnerabilities.

Additionally, private sector engagement can contribute to sustainable development activities through blended finance options for climate action as well as co-funding provisions to support grants being accessed. However, there is a vital need to better understand finance options for climate action as well as the mechanisms and opportunities available for the private sector to be part of a process and engage with other actors such as government and civil society in developing projects and activities, which could then effectively contribute to holistic, inclusive, and participatory climate action.

Awareness creation and capacity-building

To better engage the private sector in climate action at all levels, it is vital that private sector actors are made aware of key initiatives related to climate change in the country, as well as the opportunities that are available for better engagement at local, national, and international level. This could include cross-learning between government, CSOs and other development sector entities, and the private sector to better understand the entry points for contributions, the gaps and needs pertaining to technical capacity-building, and the planning engagement opportunities which could contribute mutual benefits for achieving climate resilience for businesses as well as countries.

The private sector could also contribute to building stronger enabling environments for effective climate action through provision of technical support, generation and sharing of data and information, and facilitation of support for monitoring and evaluation of climate actions. Key stakeholders working on climate change could interlink with private sector to identify avenues for collaboration, share experiences, and conduct cross-stakeholder capacity-building through targeted initiatives with concrete inputs that can be developed for measuring impacts of climate resilience-building.

Climate risk management and just transition

In addition to the points mentioned above, public-private partnerships can be vital for climate risk management, for example by private sector contributions of risk assessments, risk analytics, and risk management measures, as well as climate risk management mainstreamed and applied to private sector operations and economic sectors at different levels.

For example, climate risk management in the agriculture sector could take the form of initiatives which address the needs of the most vulnerable, such as farmers and communities impacted by climate risks to the agricultural practices on which their livelihoods depend. However, such climate risks do not remain only within the community, but affect people and livelihoods on a larger scale. Climate risks to the generation of agricultural produce would connect with other stakeholders in the supply chain such as micro, small, and medium businesses dependent on agricultural produce, as well as other larger private sector entities which produce, distribute, process, or buy agricultural products. Therefore, it is important to understand the climate risks at a broader level, and to take initiatives which could address the risks with a broader scope. This includes building climate solutions which are innovative and able to engage multiple stakeholders to play a key role in minimizing and averting climate risks leading to inclusive and participatory resilience building efforts.

Additionally, private sector engagement and contributions could play a key role in ensuring that just transition in key economic sectors is possible. From energy sector to tourism sector, the private sector could contribute through measures that are applied through just practices which support generating decent and climate-friendly employment, social protection mechanisms, livelihood empowerment, and low and net zero pathways which do not aggravate the existing vulnerabilities of communities through gender-responsive, inclusive, and participatory processes. 

Finding common ground

To ensure that all parties are able to play a key role in scaling up climate action, partnerships play a key role. This includes the inclusion of multiple stakeholders in decision-making processes; trust-building for sharing of data and information as well as lessons learnt; and pathways to better engage through innovative processes. In order to achieve these, it is important to find common ground. Key stakeholders need to understand the ability for them to play a key role in being part of the solution, while also being aware of the contribution that each stakeholder could make to climate action. 

Better understanding the avenues for private sector contributions to addressing needs and vulnerabilities to build climate resilience and generate multi-actor partnerships which bring together the skills and expertise of different actors would help to implement holistic and concrete actions, with measurable impact with a key role for the private sector to play in climate action: for transforming businesses to be climate-friendly and contributing to initiatives that are driving climate action at all levels.

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Note: This article has been published on The Morning as part of the author’s weekly column.

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