Cutting through the COP – 3 November 2021
With the COP26 summit now underway, we will be providing regular updates on the Conference. For more information on how Instinctif Partners helps companies develop and communicate impactful climate and environment strategies, please email James.Nason@instinctif.com.
What’s been agreed?
- Following on from last weekend’s underwhelming G20 summit, the opening two days in Glasgow saw country leaders engaged in dialogue, leading to a number of agreements. As leaders jet away, the remainder of COP26 will see more detailed negotiations on how it will all happen.
- More than 100 leaders, spanning 85% of the world’s forests and including Brazil, Colombia, Indonesia and the Democratic Republic of the Congo, committed to halting and reversing forest loss and land degradation by 2030. Croatia, the Czech Republic and Hungary did not sign the pact, even though all 24 other EU states and the EU Commission, “on behalf of the EU”, did.
- £8.75bn of public finances will support the deforestation pledge. Linked to this, over 30 financial institutions with over $8.7 trillion of global assets – including Aviva, Schroders and Axa – also committed to ending investment in activities linked to deforestation.
- The US and EU led a 100 plus country pledge to lower global emissions of methane by 30% below 2020 levels by 2030.
- Over 40 world leaders have signed up to the new Breakthrough Agenda. This will see countries and businesses coordinate to dramatically scale and speed up the development and deployment of clean technologies and drive down costs by 2030. Boris Johnson set out the first 5 goals:
- Clean power to be the most affordable and reliable option for all countries to meet their power needs efficiently by 2030.
- Zero emission vehicles to be the “new normal”; accessible, affordable, and sustainable in all regions by 2030.
- Near-zero emission steel production to be established and growing in every region by 2030.
- Affordable renewable and low carbon hydrogen to be globally available by 2030.
- Climate-resilient, sustainable agriculture to become the most attractive and widely adopted option for farmers everywhere by 2030.
- The US, UK, France, Germany and the EU agreed to fund South Africa to finance a quicker transition from coal, which it is hoped will provide a model for other countries. South Africa said the money will help it to accelerate investment in renewable energy and ensure it has funds to re-purpose ageing coal-fired power stations.
- A group of countries, featuring the US and led by Denmark, have backed a goal to reduce emissions by the global maritime sector to zero by 2050. The detail will be agreed through the International Maritime Organization by 2023.
- Earlier today, UK Chancellor Rishi Sunak announced that 450 firms controlling around 40% of global assets would align themselves to limiting global warming to 1.5C, which could enable up to $130 trillion of private money to fund decarbonisation.
- Bloomberg Philanthropies announced a campaign to close a quarter of the world’s near 2,500 coal plants, targeted at 25 countries where coal power is projected to grow. In another philanthropic news, Jeff Bezos announced his own $2 billion pledge to tackle climate change.
Something important that you may have missed
- Announced last Friday, the UK’s confirmed it will be the first G20 country to introduce mandatory disclosure of climate-related risks and opportunities for the UK’s listed and largest businesses (over 500 employees and £500m turnover) from April 2022. This is in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.
- The testing year of 2022 for TCFD disclosures will prepare UK’s capital markets for this critical milestone.
- There is a broader industry effort afoot to formalise corporate sustainability disclosures, led by the IFRS Foundation. This has just led to the formation of the new International Sustainability Standards Board to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ needs.
- Connected to this, Chancellor Rishi Sunak earlier today announced plans for the UK to introduce a new regulatory requirement, starting from 2023, whereby all financial institutions and UK-listed companies must publish plans on how they will transition to Net Zero.
Who has gone Net Zero now?
- Hot on the heels of the commitments made last month from Saudi Arabia, China, Russia (all 2060) and Turkey (2053) was India with its 2070 pledge. This was derided by some, but Prime Minister Modi pointed out that India represented 17% of the world’s population, but only produced 5% of emissions. Narendra Modi’s plan to triple India’s renewable electricity supply by 2030 to 500GW was better received.
South African President Cyril Ramaphosa
“I’m pleased to join US President @JoeBiden and other leaders at #COP26 in announcing a historic partnership to support a just transition to a low carbon economy and a climate resilient society in South Africa”.
Czech Prime Minister Andrej Babiš using COP26 to attack what he called the EU’s “dangerous” climate proposals, stating that “this is not a deal but an ideology”.
On the fringe
- The first official fringe event of COP26 Catalysing our Net Zero Future: working with people to take action on climate change, discussed the tension between personal and systemic climate change action. One suggestion put forward was the introduction of personal annual carbon emission budgets of 2.2 tonnes. It was noted that this will require dramatic reductions of carbon emissions by high-earning populations and individuals but would permit moderate increases in emissions from developing communities. Of course such a policy would be a radical departure from traditional climate policy and is unlikely to be adopted by governments worldwide any time soon.
- Tuesday’s Water UK-sponsored event entitled Unlocking the Nature/Net Zero Balance saw the industry publish a plan for Net Zero by 2030. With a strong focus on nature-based solutions, this should include restoration and recovery of peat bogs and wetlands, flood and water flow management, and the restoration of river flood plains and salt marshes. The challenge with such solutions is achieving scale, for which engagement with private and public landowners is needed, as is policy change.
This morning’s Insure our Future campaign looked at how insurers can stop supporting fossil fuels and accelerate the clean energy transition. The event included the launch of a Scorecard that rates 30 leading primary insurers and reinsurers, assessing and scoring their policies on insuring and investing in coal, oil, gas, and other aspects of climate (in)action. Most of the leading insurers ranking highly come from Europe. AXA and Alliance are strong on not underwriting coal and divestment and Aviva is leading the way on climate leadership. While 19 insurers have made some divestment from coal, not all have divested from coal developers. While there has been progress on coal, there is less movement on oil and gas. There was criticism at the event that insurers should do more than simply engage with those they are insuring and investing in; rather they should divest.
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