Shippers make case for U.S. to remain in the Paris Agreement

While President Trump and Administration officials have not made their intentions clear in regards to the United States remaining in the Paris Agreement, a large faction of well-known companies have made it very clear they want to remain part of it.

The Paris Agreement by the United Nations Framework Convention on Climate Change (UNFCC) requires each of the 197 participating countries to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. It also aims to strengthen the ability of countries to deal with the impacts of climate change. To reach these ambitious goals, appropriate financial flows, a new technology framework and an enhanced capacity building framework will be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. The nonbinding agreement also provides for enhanced transparency of action and support through a more robust transparency framework.

Various reports have stated that the Administration would like to make a decision about remaining in the Paris Agreement prior to the G-7 and G-20 summits in May. A Wall Street Journal report noted that at these meetings world leaders are likely to pressure President Trump to remain in the agreement, while also noting that EPA Administrator Scott Pruitt is keen on the U.S. withdrawing from it, with other people with close White House ties “urging more tempered steps, such as pairing the U.S. carbon-emission reduction targets.”

What’s more, while on the campaign trail, President Trump called the Paris Agreement “a bad deal for the U.S.,” while saying clean air and crystal clear water are important. 

As for how large United States-based businesses feel about the agreement, it is clear that they want things to remain the same and not see the U.S exit it. 

In a letter sent to President Trump on April 26, 16 companies, including Apple, DuPont, General Mills, Google, Intel, and Walmart, among others, pleaded their case for why the U.S. should remain in the agreement.

“Climate change presents U.S. companies with both business risks and business opportunities,” the letter stated. “U.S. business interests are best served by a stable and practical framework facilitating an effective and balanced response. We believe the Paris Network provides such a framework.”

The companies added that companies based or operating in the U.S. benefit from U.S. participation in the agreement in several ways, including: strengthening competitiveness and reducing the risk of competitive imbalance for U.S. companies; supporting sound investment with the Paris Agreement providing greater clarity on policy direction and enabling better long-term planning and investment; creating jobs, markets and growth; minimizing costs through encouraging market-based implementation that helps companies innovate to achieve environmental objectives at the lowest possible cost; and reducing business risks in regards to future climate damages like physical harm to business facilities and operations, declining agricultural productivity and water supplies, and disruption of global supply chains.

And a May 10 letter to the President from 30 U.S.-based CEOs, including large shippers like Cargill, Johnson & Johnson, Unilver, and Tesla, expressed their support for the U.S. remaining in the agreement.

“As CEOs of large American companies, or with significant operations in the United States, we are concerned about keeping the doors open for the global flow of American manufactured goods and products at this critical time when our Manufacturing sector is starting to grow from our competitive energy advantage,” the letter stated. “Based on our experience doing business all over the world, we believe there is strong potential for negative trade implications if the United States exits from the Paris Agreement. Our business interests are best served by a stable and practical framework facilitating an effective and balanced response to reducing global GHG emissions. The Paris Agreement gives us that flexible framework to manage climate change while providing a smooth transition for business.”

Jason Mathers, Environmental Defense Fund (EDF) Senior Manager, Supply Chain Logistics, told LM his organization sees the agreement as being incredibly important, because it has ambition, is global in scope and provides a very broad framework.

In terms of how the Paris Agreement relates to the supply chain going forward, it is still to be determined. That was made clear by Adrian Gonzalez, president of Boston-based Adelante SCM.

“It’s too soon to know what impact this will have on supply chain in the near term, but considering that the agreement is voluntary and there are no enforcement mechanisms in place, my sense is that very little will change in the short term.”