Cutting through the COP – a five minute read on what it means for British business
With over 9 million online mentions of COP26 – that’s the UN Climate Change Conference taking place in Glasgow from 31 October to 12 November – already in circulation, you’d be forgiven for feeling a little lost in the hype. It is nonetheless a critical pivot point for British business – and here we’re bringing you our view on why that is.
The hype is arguably justified. But why?:
- There’s a growing, more mainstream global movement calling for action on climate change, with Government polling showing 4 in 5 UK adults are concerned about the issue.
- A US President who believes in making change, combined with a need to prove progressive global leadership.
- Increasing numbers of countries have committed to achieving Net Zero greenhouse gas emissions, with several thousand companies following suit.
- Greater coverage of extreme weather disasters, which appear to be occurring more regularly.
- Proof from the handling of the Covid-19 pandemic about how the world can collaborate when it is really needed.
Combine this with a host nation that is fully signed up to the decarbonisation agenda and we can be justifiably optimistic that this COP may be different to the damp squibs that might have gone before.
It might seem rather ambitious but as host, the UK Government has made its agenda very clear. It has stipulated it would like to see nations in attendance commit to:
- Net Zero decarbonisation by 2050, with confirmation that countries will put in place (and crucially, deliver on) plans to achieve this.
- A temperature rise of no more than 1.5o
- Phasing out coal.
- Phasing out cars fuelled by petrol or diesel.
- Stopping and reversing deforestation.
- A pledge of $100bn annually from developed nations to help poorer countries decarbonise.
It’s not all positive. That Vladimir Putin, Xi Jinping and Jair Bolsonaro may not attend as leaders of key emitting countries could make reaching unanimous global agreement on some of these issues trickier still. We will know in a few weeks’ time whether the conference achieves these lofty goals.
For many British businesses, strange as it may seem, we would argue that the two weeks preceding COP26 will actually have had more impact than the global conference itself. Why?
The UK Government has now filled in a number of the blanks on spending and policies as to how the country will decarbonise by 2050. This includes the following commitments:
- The UK has a 2050 Net Zero target and has now published a detailed Net Zero Strategy on how we do this
- It has pledged that by 2035, electricity supplied in the UK will be zero carbon
- UK listed companies must now report on climate-related financial disclosures
- British boilers will be phased out from 2035 with subsidies for early heat pump adopters, and new and existing buildings will have to perform to increasingly strict minimum energy standards
- By 2030, new petrol and diesel cars will be phased out, and the Government is considering a similar hard stop for vans and HGVs
- The UK is seeking to protect and grow biodiversity, such as through planning system reform and extending our national park system
- It has also pledged funding for poor nations to help them decarbonise.
On Wednesday, the UK Government pledge to spend £24.5 billion between April 2022 and March 2025 on Net Zero and other ‘green’ initiatives, including biodiversity.
So, while some will say the detail is lacking – and our position on coal with a new Cumbrian mine being deliberated upon appears inconsistent to our global stance on the fuel – we are in an advanced state of planning. As such, it’s difficult to see the UK going further and tougher on domestic climate and energy policy as a direct output of COP26.
As outlined above, 80% of British adults are invested in this issue, so for once, there will be widespread public interest in the outcomes of a high-level, international governmental conference. COP26 takes place at a time of ‘systemic nervousness’; people – shoppers, consumers, citizens – are anxious about a multitude of factors. For the first time in history, there is now a general and deepening concern about climate change and the growing existential insecurity that this will bring. The transition from concept to lived experience – from forest fires, drought and flooding, to the disruption of seasons and the erosion of life-sustaining ecosystems – means that now is probably the most important moment in human history. People want answers and solutions. They want commitments and timelines. Failure to deliver at COP26 will have major consequences for an already anxious and fraught system of people, nations and political foundations.
Even if your business is solely UK focused, COP26 will be of relevance to you. We’re anticipating, and with some clients preparing for, a frenzy of corporate activity in early November in Britain. It’s vitally important that you know and understand your own position.
A third of all companies committing to a 2050 Net Zero target are UK-based or headquartered, no doubt galvanised by the climate action momentum that COP26 has helped forge at a business level. Many more have announced other, nearer-term goals. We’re likely to see more of this during and following COP26.
You may be one of the firms planning to capitalise on newly emerging funding streams or still working out how to pivot away from technologies which will soon become obsolete. Or they could be your clients, in your supply chain, or potential businesses that you’d like to work with. If you haven’t started conversations do so now, the UK Green Revolution is now there for the taking – don’t get left behind.
In many respects, COP26 is focused on the UK and others players including the EU, trying to lever other countries up to (nearer) the levels they are setting, at least on paper.
If your company makes or sells products beyond the UK shores, and indeed outside of Europe, then the outcome of COP26 could have a significant effect. In Glasgow, countries may commit to new targets, which they will then need to implement. This could lead to them changing their energy sources more quickly, to raising energy standards for consumer items, or to protect or set biodiversity enhancement requirements for land that might be used for commercial purposes. In fact, there are a myriad of new policies that countries may have to contemplate and deliver.
Businesses should also keep an eye out for potential unintended negative consequences for emerging markets. For example, if the EU’s consideration to implement a carbon border tax by 2023, as part of its ‘Fit for 55’ European Green Deal package, is implemented, this will see levies being imposed on imports in carbon-intensive sectors, such as steel, from countries with lower environmental standards than itself. This can have far-reaching implications for countries who are not yet ready (nor have the treasury) to make the changes demanded.
COP26 is undoubtedly a seminal moment in our planet’s response to dangerous climate change, but it will affect UK and indeed international businesses in different ways. It’s essential to establish which camp you fall into at the outset of the conference to manage internal expectations and to seize external opportunities following COP26.
Over the next fortnight, Instinctif Partners will be providing updates as the event progresses, and summarising what it has all meant when the curtain on the much-anticipated global gathering comes down. Sign up here to receive our “News from COP26” newsletter. If you’d prefer a digest tailored to your business, please speak to your Instinctif team today.