For more than one year, climate activists, sustainability professionals, and policymakers around the world have anticipated the arrival of COP26 — the United Nations’ annual climate conference which was pushed back one year due to the pandemic. Over the past two weeks, global business, government, and nonprofit leaders convened in Glasgow, Scotland to ideate new strategies for limiting global warming to 1.5 degrees Celsius. Billed as our “last, best chance” to tackle the climate crisis, a sense of urgency, gravitas, and even optimism imbues this COP.

Some key outcomes include over 100 world leaders committing to end deforestation by 2030; a coalition of 450 banks, investors, and other financial actors pledging to invest $130 trillion in climate solutions by 2050; and, if realized, the collective goals announced on Day 3 of the conference could help limit global warming to below 2 degrees Celsius. We are heartened to witness a growing global momentum around climate goals. To have a fighting chance at turning those goals into reality, we need all hands on deck. From two weeks of climate negotiations, here are four key takeaways for corporate participation in the climate movement. 

1. Carbon markets are coming soon

Putting a price on carbon is critical for decarbonizing our economy. Discussions at COP26 suggest we might expect a global carbon market to emerge soon. Companies that begin measuring, reducing, and offsetting their emissions will be well-positioned to avoid carbon costs down the road — and enjoy first-mover advantage benefits in adopting clean energy technologies.  

2. Tailor climate strategies to meet geographic and industry differences

While many climate pledges at COP26 have drawn global support, most climate solutions must remain considerate of cultural and geographic contexts. This means that different countries, states, and cities will, to some degree, embrace different climate goals and roadmaps. For U.S.-based companies, prospective climate policies largely center around incentivizing investments in clean energy, from subsidizing solar panels to increasing tax credits for electric vehicles. To predict how to adapt to various courses of climate action, businesses ought to tune in to the political landscape of the communities in which they operate.

COP26 will also affect disparate sectors differently. Divesting from fossil fuels hurts the oil and gas industry, while the same policy bolsters the growing clean energy sector. For high-carbon sectors — steel, cement, power and utilities, shipping — remaining stagnant poses a growing financial risk. Fortunately, technology exists to help those sectors become more sustainable — Nautilus Labs, for example, partners with ocean shipping companies to decarbonize their fleets.

3. Business resilience means moving from negative to positive

While in recent years, sustainability professionals have evolved their thinking from “being less bad” to “doing more good,” it wasn’t until this year’s COP that policymakers caught on. This week, nearly 100 companies pledged to become ‘nature positive,’ meaning they will work to halt and reverse the decline of nature, by 2030. Twenty-six countries, including Brazil, Germany, and the U.K., have laid out commitments to sustainable and regenerative agriculture, and to invest in the science needed to climate-proof our food system. The demands of this decade require us to move beyond mitigation of costs towards the active creation of benefits. By hopping on the train towards positive, businesses are empowered as agents of change to help reconstitute our world. 

4. ESG is a risk mitigator

Simply put: investors are demanding increased climate disclosure from corporations. The Securities and Exchange Commission is iterating what these regulations might look like, with plans to implement them next year. The U.S. government has committed to achieving net zero by 2050, and to get there, different policy mechanisms — including electric vehicle subsidies and investments in renewable energy — have been proposed in Biden’s Build Back Better Plan, which will be signed into law in the coming days.

Incoming regulations and climate policies from COP26 mean that companies ought to embrace ESG immediately in order to avoid incoming political risk. The tide is turning towards clean energy, climate solutions, and a regenerative future. Companies leading the charge will reap the benefits of helping to shape our future, while companies who lag run the risk of significant political and financial backlash.

Business action is critical to ensuring the climate commitments of COP26 succeed. To achieve meaningful action, companies must develop and deliver solid ESG strategies. Conducting a thorough materiality assessment is the first step in this process. Once a solid foundation is in place, regularly reporting on ESG and communicating progress to key stakeholders helps leverage corporate sustainability initiatives to inspire investors, customers, and employees around your company’s ESG story. And when it comes to communicating corporate action on climate, embracing vulnerability and leading with impact are key.