COP26 preparations started in earnest this week, but G7 outlook is uncertain.
Apart from the confirmation of a third Engine No. 1 nominee being appointed to the board of ExxonMobil, attention swung back this week from the corporate and financial world to that of governments and policymakers.
Monday saw the start of three weeks of discussions by UN Climate Change subsidiary bodies, held virtually to allow government officials and other parties to lay the groundwork for COP26, making up for the loss of momentum in 2020 caused by the pandemic.
While Patricia Espinosa, Executive Secretary of UN Climate Change, emphasised the importance of this “critical milestone”, Tosi Mpanu-Mpanu, Chair of the Subsidiary Body for Scientific and Technological Advice, expressed confidence in the new approach, noting participants had already “gained experience on how to use virtual tools and platforms”. At least some technical advice may not be necessary, we can assume.
“We must put in these really hard miles now so we arrive in Glasgow having done our homework,” said COP26 President Alok Sharma, who also found time to encourage pension schemes to prepare early, in this case getting their portfolios in order ahead of the UK’s regulatory timetable for managing and disclosing ESG risks.
As noted in this week’s ESG Interview with Pensions for Purpose CEO Charlotte O’Leary, pension schemes’ sustainability and impact investment strategies are already going beyond compliance – as evidenced by this week’s announcement by the £24 billion Strathclyde Pension Fund – albeit often needing greater support from asset managers and investment consultants.
Preparations for next week’s G7 summit were clouded by new analysis claiming members provided more support to fossil fuel industries during the pandemic than they invested in renewable energy, placing doubt on their commitment to build back better, but fuelling demand for adaption finance and offset schemes.
G7 members have already signed up to a ‘30×30’ initiative to protect 30% of the world’s land and 30% of its oceans by 2030, agreeing to also phase out international fossil fuel funding. This will be welcomed by the newly-launched Taskforce for Nature-related Financial Disclosures, but it’s an open question whether finance ministers will be able to make further progress committing funds and other supporting actions at their summit this weekend, tasked as they are with fixing a broken global corporate tax system.
Chances may also be limited for discussion this weekend of carbon border taxes, despite growing consensus on their inevitability. But one would hope G7 finance ministers don’t entirely miss the opportunity to mark World Environment Day 2021 and its theme of ecosystem restoration. They might even provide leadership to the corporate and financial world by taking a common position on double materiality, as the debate on disclosures to investors shows no sign of abating.