There is a narrow political window this year to enact policies that meaningfully address the climate crisis, and the need for business leadership is urgent.
With broad business support, the Biden Administration set a Nationally Determined Contribution (NDC) under the Paris Agreement to cut greenhouse gas emissions 50-52% below 2005 levels by 2030. To meet this target and put the U.S. on a path to achieve net-zero emissions by 2050 – consistent with global ambition to limit warming to 1.5˚ C above pre-industrial levels – new policies are needed to drive down emissions across the economy.
Companies and investors have a vital role to play in advancing the public policies needed to meet both the U.S. NDC and their own emission reduction goals. Now is the time for every company to make climate a top advocacy priority – on par with tax or trade or any other core business issue – and drive that advocacy from the C-suite.
The following are top climate policy priorities for corporate advocacy in 2021, as agreed by the NGOs that endorse the AAA Framework for Corporate Climate Leadership1:
- Decarbonize electricity
- Decarbonize transportation
- Decarbonize industry
- Limit methane emissions
- Advance nature-based climate solutions
- Enact an economy-wide carbon price
- Mandate climate risk disclosure
In addition to being critical to meet the NDC, all of these policy priorities will drive economic recovery, create well-paid jobs in the United States and boost U.S. competitiveness. They can and must also be designed to promote environmental justice and economic equity, by reducing climate and air pollution in overburdened communities and by ensuring a just transition for fossil fuel workers.
This document provides the rationale for each priority, key policies to support and timeline for business engagement. Policies of particular relevance to certain sectors are noted accordingly; all are relevant to investors seeking to reduce climate risk and improve ESG performance in their portfolio companies.
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1 This list is not exhaustive but reflects the shared priorities and expertise of contributing NGOs.
The budget reconciliation package is a once-in-a decade opportunity to pass climate policy. Now is the time to support strong climate provisions including:
- Tax credits for clean energy, manufacturing, and zero-emission vehicles (ZEVs).
- Greenhouse gas pollution pricing (price on carbon and methane fee).
- A clean electricity payment program that moves the electric power sector to 80% clean electricity by 2030.
- Investments in grid modernization, transmission, and ZEV charging infrastructure.
- Funding for agricultural and forestry programs that sequester carbon.
- Funding for clean energy research, development & demonstration.
- Investments in low-income communities and growth in domestic manufacturing.