Commentary

ICYMI, It’s a Good COP, Bad COP Situation

The final week before climate negotiations begin in earnest gave reasons for hope and despair.

Greta Thunberg might consider most COPs a waste of time, but it’s hard to imagine history will bestow that assessment on COP26 once the dust has settled in Glasgow.

The pace of climate-related announcements has been frenetic. This week has seen the release of a new (well, not all new) climate plan from China, US President Joe Biden’s Build Back Better framework (still subject to a vote), and the continued flow of initiatives from the UK.

Following last week’s Net Zero Strategy and Roadmap to Sustainable Investing, the host country’s financial regulators issued their climate change adaption reports, while its Business Department delivered final proposals on mandatory TCFD-aligned disclosures for public and large private companies, including a qualitative scenario analysis requirement. Chancellor Rishi Sunak may not have read the memo.

With Australia and Saudi Arabia having made new, if imperfect, net zero commitments, India’s Narendra Modi is perhaps the most conspicuous for inaction among the G20 leaders arriving in Rome for this weekend’s summit.

A draft communique says the G20 – which accounts for 80% of global greenhouse gas emissions – will agree that “immediate action must be taken to keep 1.5°C within reach”, but progress may be hampered by the physical absence of at least five premiers.

The tone was set for under-delivery on Monday by the German-Canadian plan for rich countries to meet their US$100 billion climate pledge to developing nations by 2023 and by the release of the final UN Climate Change assessment of the 165 latest available nationally determined contributions, consistent with a temperature rise of about 2.7°C by the end of the century.

The overall message that we are collectively “way off track” was reinforced by the greenhouse gas bulletin from the World Meteorological Organisation, reporting CO2 concentrations in 2020 at 149% above the pre-industrial levels. The UN Environment Programme’s Emissions Gap Report said the world “needs to halve annual greenhouse gas emissions in the next eight years”, noting the potential contributions of methane emissions reductions and carbon markets.

In some respects, the week before COP26 has been an exercise in mutual finger-pointing, with governments, financial institutions, investors and corporates all being told that they’re not doing nearly enough to support a rapid transition to a low-carbon economy and keep the goals of the Paris Agreement in reach.

As asset owners brush up on their engagement skills and form new coalitions, the hope must be for the public and private sectors to inspire each other to greater ambition on climate action, as noted by Eric Usher, Head of the UN Environment Programme Finance Initiative, in a video interview with ESG Investor.

For certain, policymakers and negotiators heading toward Glasgow know the eyes of the world are on them, which might be the biggest incentive of all.

Even the Pope has made his feelings known this week, although it’s unclear whether the bout of extreme weather being suffered due south of Glasgow is the result of climate change or divine intervention.

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