US President Donald Trump's decision to start the withdrawal process from the Paris Agreement could come at a high price for the developing world, setting back years of progress not only on climate change but also on poverty eradication, experts warn.
Industry insiders anticipate that the pullout may weaken the competitive advantage enjoyed by US businesses in the fast-growing Global South because most countries will operate and invest within the Paris deal framework.
The "America first" approach signalled by Trump, which may involve seeking bilateral trade deals as an alternative to the pact, could leave vulnerable countries prone to resource plundering, deeper poverty, and conflict over water and land, warned a leading social development and climate consultant, who preferred to remain anonymous.
Within the Paris Agreement "you have rules, a process for evaluating progress,” the consultant said. “It's a lot easier and more regularised. Why would you choose to work with a rogue country with its own agenda which you can't trust politically?"
The source explained that while companies may feel a responsibility towards protecting the environment and the rights of local communities, they are not directly accountable under the Paris Agreement.
“Each company has its own ethical code of conduct and must respect human rights and the environment,” said the consultant. “But ultimately, when it comes to reducing emissions and adapting to the impacts of climate change, it's the country that is trading with a particular company that has to report progress to the UN.”
Therefore, the responsibility to oversee whether businesses respect the Paris mission falls on the country that hosts their operations. But if countries are highly vulnerable, they might not be able to turn down a 'dirty' business offer.
Out of the deal and "without proper oversight, companies could potentially fall back on exploitative 'business as usual' practices, exacerbating conflicts over scarce resources and failing to support the host country in its climate adaptation efforts," the consultant said.
Neil de Beer, former secretary general of the Organisation for African Business Development consultancy, told IRIN that resource plundering is already happening, particularly in the mining and agricultural sectors. He believes the US withdrawal from the Paris Agreement will only make things worse.
"You do get businesses that want to reduce their emissions and gain carbon credits," he conceded. “But, for what we know, an American company may now come and say 'my president left the Paris Agreement, we don't want to reduce our emissions, but if you don't do business with us you lose our money'.
“That's not right,” he added, concluding that poor African countries that still rely on the United States to bring in financial investments and export their local resources and products to American customers will be “kept hostage”.
However, American businesses such as Apple, Goldman Sachs, and Disney, just to name a few, have been very critical of the Trump administration's move and have vowed to act independently from the federal government.
Take the We Mean Business coalition, which calls on the private sector to lead on climate action. Born after the Paris Agreement, the group counts 568 members with a combined revenue of $8.1 trillion, and $20.7 trillion of assets.
"They are talking in terms of shared risks now," said Clare Shakya, climate change group director at the International Institute for Environment and Development. "Businesses recognise that within the countries that represent their source of goods they are subject to climate impacts too. In order to keep running, they need to be part of the solution and reduce the impact on the supply chain and on their workforce." Not only [do] local workers run factories and mines, but they also are consumers that businesses increasingly want to cater to.”
"Climate leadership makes business sense for American companies and remains in sync with the approach of other countries," said David Wei, climate director at the non-profit Business for Social Responsibility.
He pointed out that individual big companies are already taking practical commitments to reduce emissions in their global supply chain. "Walmart’s Project Gigaton aims to eliminate one billion tonnes of carbon equivalent from their supply chain by 2030 – equivalent to the annual emissions of Germany," he said. "Similarly, Hewlett Packard's recent commitment to remove 100 million tonnes from its supply chain is equivalent to the annual emissions of Greece."
However, despite the determination and defiance of private investors and other countries of the UNFCCC, leaving the Paris Agreement is set to damage US businesses and the most vulnerable regions they operate in. "As a global externality, climate change requires a truly international agreement," said Wei. "A set of bilateral agreements, for example on carbon tariffs, would leave all countries worse off."
And, as Jonah Busch, a senior fellow at the Center for Global Development, pointed out, withdrawing from the Paris Agreement is only one of several counterproductive things the Trump administration is doing on the issue.
"They are zeroing out budgets left and right for climate,” Busch said. “The president is using executive orders to roll back climate regulations, and the pattern indicates that the climate will be not a high priority in bilateral negotiations either."
While many countries will remain reliant on the United States because of its sheer weight on the global marketplace, experts agree that other big economies that have reasserted their climate commitments will become increasingly more attractive.
After the United States pulled out of the Kyoto Protocol in 2001, other major polluters used the move as an excuse to do less, Busch noted. "But what we are seeing now is with the US walking away from Paris other countries are rallying around leadership from China and the EU to do more."
"If you're a country in the Pacific that's in danger of going under water, or a country in sub-Saharan Africa looking at hotter temperatures making it even more difficult to grow food, then you're gonna be less likely to deal amicably with the US over this decision,” said Busch. And that, he believes, "could well extend from government to businesses."
(TOP PHOTO: Abdon Choque Flores looks out over what remains of Lake Poopó. Bolivia's second largest lake has dried up as the result of a prolonged drought. CREDIT: Amy Booth/IRIN)