Commentary

ICYMI, the UK has Left it Late

It’s hard to demonstrate climate leadership if you fill in the gaps at the last minute.

When you invite 30,000 people to an event, there’s always a risk you’ll forget something really important, especially if you have a tendency to leave things to the last minute.

The UK government ticked quite a few things off its ‘to-do’ list this week (at last, an agenda!), but it’s no nearer knowing whether COP26 will place Glasgow alongside Paris as a pivotal point in the battle against climate change.

There is only so much a host can do to steer guests in the right direction, especially when they are preoccupied with their own agendas and domestic disputes. Boris Johnson’s cajoling and arm-twisting clearly works better on old friends than adversaries, but even the UK PM’s legendary bonhomie must have been tested by the extent of efforts to dilute the case for urgent, concerted action.

Governments should know that IPCC scientists are impervious to lobbying and that we already have all the evidence we need. The UN Environment Programme’s new Production Gap report found that governments are on track to allow more than twice the amount of fossil fuel production in 2030 consistent with 1.5 degree Celsius warming scenarios, noting no real change of direction since 2019, despite an increase in clean energy investment in G20 countries.

The report coincides with PwC’s latest Net Zero Economy Index, which says decarbonisation needs to accelerate by five times to keep 1.5 degree scenarios in sight, and an analysis backed by the UN Principles for Responsible Investment calling for more and faster policy action, including an immediate end to deforestation and full decommissioning of unabated coal in China by 2035.

This week also saw Tim Gould, Chief Energy Economist at the International Energy Agency, draw stark inferences from its recent 2021 World Energy Outlook. Changing course from today’s “unsustainable recovery” requires all parties to help “bridge the funding gap”, he said, by investing in clean electrification and associated new technologies. Meanwhile Carbon Tracker underlined the case for investors reassessing their exposure to gas-based power generation.

As COP26 host, the UK can lead by example in the hope that others will take note and follow suit. The government’s new Net Zero Strategy was given “two cheers” by Lord Deben, Chair of the independent Committee on Climate Change, for providing at least some of the details needed by investors and industry to transition away from carbon-intensive practices (a third cheer may have been granted had the government’s ambitions extended to the dinner table).

To further inspire and inform investors, the strategy was accompanied by a Roadmap to Sustainable Investing, which commits to comprehensive climate reporting by corporates and financial institutions based on double materiality and a green taxonomy. UK pension funds were further encouraged to assess and limit climate risks by new proposals on portfolio alignment with Paris Agreement goals and related stewardship activities – although you don’t have to be a big institution to buy into the UK government’s green vision.

Major pension funds and other asset owners are already taking significant steps to decarbonise their portfolios, while collectively increasing their focus on the most carbon-intensive sectors and increasing the flow of forward-looking transition information from issuers. There is still misalignment between the values espoused by major corporates and how their pension schemes invest, but also signs of transition in action, with firms as diverse as Ford, Budweiser and Ineos making strategic electric and hydrogen investments.

Greta Thunberg may still be right that there is more talk than action ahead of COP26. But those looking for reasons to believe that the Glasgow negotiations can deliver transformative change could do worse than consider the city’s own track record of reinvention. As a keen student of history, that’s one thing Johnson is unlikely to forget.

 

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