Commentary

ICYMI, Not Everyone’s Joining the Party

China’s delegation to COP26 unlikely to deviate from well-established script.

So, it seems Xi isn’t coming to the Conference of the Parties after all. After months of prevarication, the Chinese leader has apparently decided he has nothing to wear, or at least nothing new to say on the subject of carbon neutrality. With no hotel rooms left in Glasgow and the prospect of no trains in the rest of Scotland, one has some sympathy.

President Xi Jinping made his position clear in a speech to the COP15 Biodiversity Convention in Kunming, which also saw the Global Biodiversity Framework adopted. Xi committed to further measures to support China’s existing ‘30-60’ net zero emissions goals, but is now expected to resist finalising the country’s nationally determined contribution to the Paris Agreement until after inter-governmental talks in the first half of November.

Earlier, COP26 President-Designate Alok Sharma gave the invitation one last push, but US Climate Envoy John Kerry tempered expectations, perhaps remembering his experience from the negotiations that led to the Paris Agreement, which were far messier, fractious and uncertain than most remember.

Although largely virtual, events in Kunming were significant. The Kunming Declaration not only commits signatories to biodiversity recovery by 2050, but includes means of implementation, including mechanisms for monitoring, reporting and review, bolstered by the work of the Task Force on Nature-related Financial Disclosures to identify risks and support investment.

Additional actions included UN-backed financial and technical support to governments, a US$230 million Kunming Biodiversity Fund launched by China to finance biodiversity protection in developing countries, as well as complementary initiatives from Japan, the EU and UK. The biodiversity and climate challenges facing the COP26 host were underlined this week by the Green Finance Institute, one its most famous museums and its Environment Agency.

For those determined to experience autumn on the Clyde (now including Australian PM Scott Morrison), resolve was further stiffened by the latest Climate Transparency Report on G20 emissions and the International Energy Agency’s World Energy Outlook 2021, which said resurgent coal and oil use is setting the course for the second-largest annual emissions increase in history, warning that energy pressures “are not going to relent in the coming decades”.

The week also saw calls from the Glasgow Financial Alliance for Net Zero for the G20 to build a net zero global economy and financial system and a breakdown of climate finance contributions by developed nations to support low-carbon transition by emerging markets, as well as a Net Zero Readiness Index from KPMG, suggesting all countries have much to do.

Asset owners are getting to grips with realities, while encouraging further policy action, as noted in this week’s ‘Countdown to COP26’ video interviews with Eva Cairns, Head of Climate Change Strategy, abrdn, and Günther Thallinger, Allianz Board Member and Chair of the UN-convened Net-Zero Asset Owner Alliance.

While large pension schemes are ramping up engagement to decarbonise the existing assets in their portfolios, progress is far from universal, with the charitable sector further behind, in part due to less forceful regulatory pressure.

While a WEF report highlighted the need for investment in nascent technologies, research elsewhere suggested many listed firms still have some way to go on their transition paths, meaning they and their investors may benefit from the forward-looking guidance issued yesterday by the Task Force on Climate-related Financial Disclosure. Gradually, we’re all becoming experts in spotting greenwashing, but some examples are easier than others.

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