Drinks industry focuses on road ahead after Trump's Paris climate agreement decision – Sustainability Spotlight

Last month, US president Donald Trump followed through on his campaign pledge to pull the country out of the Paris climate accord. Ben Cooper looks at how the drinks sector has responded and what US withdrawal means, both for global efforts to address climate change and for multinational beverage corporations.

Reactions from the business world to Donald Trump's decision a month ago to withdraw from the Paris climate deal clearly show it almost entirely at one with the many campaigners, scientists and politicians who have condemned the move. However, while some business leaders have been forthright in their criticism, drinks firms have chosen their words carefully.

While PepsiCo said it was "disappointed with the announcement", others didn't actually mention the decision at all. The Coca-Cola Co alluded only to its earlier signing of a letter, with 29 other CEOs, urging President Trump not to withdraw. Unilever was the only other beverage manufacturer to sign that letter and CEO Paul Polman was also one of the more openly critical business leaders following the announcement, implying in a tweet that the President had lost touch with humanity and truth.

Some seem to have lost both for moment but world now even more committed to implement #parisagreement US needs help pic.twitter.com/ZsXej16Gvq

— Paul Polman (@PaulPolman) June 2, 2017

Elsewhere, Anheuser-Busch InBev CEO Carlos Brito addressed his remarks to all political leaders, saying: "We hope that political and business leaders around the world will continue in their efforts to cooperatively reduce emissions."

Carlsberg chief Cees t' Hart euphemised the decision as "recent developments in the climate discussions", while Molson Coors' reaction also made no explicit reference to Donald Trump's announcement.

What the various statements do all emphasise, however, is an affirmation that the companies will continue their respective efforts to drive down emissions and support the global push to address climate change.

Brito alluded to A-B InBev's recent commitment to purchase 100% of its electricity from renewable sources by 2025, "regardless of the regulatory environment". Sustainability also features prominently in Anheuser-Busch's US$2bn investment plan for the US. Investment to increase either energy or water efficiency is included in plans for its Cartersville, Jacksonville, Los Angeles and Columbus sites.

PepsiCo said its "longstanding commitment to addressing climate change will not change", emphasising its goal to reduce greenhouse gas emissions across its value chain by at least 20% by 2030. Coca-Cola said it remained "focused on our efforts to achieve our goal to reduce the carbon footprint of the drink in your hand by 25% by 2020". Molson Coors said it was "prepared to move ahead with our goal to accelerate greenhouse gas reductions" across its value chain, "as part of the international pledge on climate action".

The emphasis on continued action and looking ahead sees drinks corporations completely in tune with the consensus, uniting political leaders, business and academe, in response to last month's announcement.

It is not surprising to see this worldview encapsulated by Barack Obama, who had not only taken the US into the Paris deal but had been a powerful advocate in persuading other nations to do likewise. Significantly, Obama emphasised the momentum already behind the green economy and the role the private sector has played.

"The private sector already chose a low-carbon future," he said, while the COP 21 deal "opened the floodgates for businesses, scientists and engineers to unleash high-tech, low-carbon investment and innovation on an unprecedented scale".

This is far truer in developed countries, though, than in the developing world. Investment in greener energy has increased substantially in major emerging markets like China, Brazil and India but building the same sort of momentum around the green economy in the developing world will be costly. Moreover, these are the regions that will see the most damaging environmental, economic and social impacts of climate change itself.

Under the Paris deal, the developing world is supposed to receive US$100bn a year in funding for green energy and other climate initiatives by 2020, through the Green Climate Fund (GCF). In withdrawing from the COP 21 accord, President Trump has also deprived the GCF, for now at least, of funding from the world's largest economy. The US had made the largest pledge so far, of $3bn, and had already handed over $1bn of that – the largest cash contribution to date – before Trump took office.

The decision last week does more than simply deprive the fund of a previously pledged $2bn. The GCF was already struggling with some teething troubles, with suggestions that it is under-resourced and too bureaucratic. There have also been concerns that it is not reaching out sufficiently to the private sector, while NGOs are advocating developing countries be given more say in how funds are allocated.

Added to these concerns is the simply-daunting level of investment the GCF has to mobilise. Apart from the US, only four other nations have so far pledged $1bn or more; Japan ($1.5bn), the UK ($1.2bn), France ($1bn) and Germany ($1bn).

Any undermining of the GCF's ability to raise funds for greener energy, low-emission agriculture and climate change adaptation potentially hampers the long-term plans of global drinks corporations, who not only source agricultural raw materials from the developing world but also see these countries as important future markets.

Public-private partnerships and joint initiatives with NGOs and government development agencies are not only an effective means of addressing climate change in developing countries, but also share the financial burden. The onus on companies to provide more finance to address climate change issues will naturally increase if the support from wealthier countries enshrined in the COP 21 agreement is constrained.

The unified response from so many Paris signatories and a broad range of stakeholders has, in one way at least, provided a fillip for the Paris process. True, they are united in responding to a significant setback, but the togetherness shown suggests this may not be the devastating blow some had been predicting since Donald Trump's surprise election victory. The collective mood contrasts with the palpable spirit of optimism a year-and-a-half ago but steely resolve is more in evidence than outright despair.

The US absence from international efforts on climate change will be temporary. Presidential administrations come and go. Whether the country will re-join the process under the current administration, the President did speak of the US beginning negotiations "to see if we can make a deal that's fair". PepsiCo referred to this prospect directly in its reaction: "We hope there is a way for the accord to move forward with the US at the table," the company said.

Interestingly, while Tesla chief Elon Musk and Disney CEO Bob Iger pointedly stepped down from White House advisory committees, PepsiCo boss Indra Nooyi has remained on the President's Strategic & Policy Forum, indicating she believes there is more to be gained from engagement than castigation.

The responses to last month's announcement suggest drinks firms see no value in going to war with Donald Trump, even though his decision has made the stern challenge they face from climate change that much harder. Former-President Obama said he was confident that "in the absence of American leadership", businesses, along with cities and states, "will step up and do even more to lead the way".

Heartening as those words might be, it is support from the current leader of the free world that they really need.

---