Commentary

ICYMI, We Really did Have Everything

The COP26 President this week added his voice to those calling for urgent climate action in 2022.

Alok Sharma broke cover this week. Rarely sighted since Glasgow, but never in one place for long, the COP26 President gave a thoughtful if not exactly rousing speech.

Persuasive if ponderous, he deconstructed the argument that domestic politics is necessarily the enemy of international cooperation on climate change. Each political leader’s understanding of the security and economic consequences of inaction for their own countries was the reason they came together in Glasgow, Sharma noted. Agreement was reached because domestic and international priorities were aligned, not because they were opposed.

Nevertheless, he warned, 12 weeks have now passed since COP26 opened. Net zero plans must become actions, damage and loss must be addressed, climate finance must be delivered. “Action must begin now.”

Sharma knows his value as COP26 President is not in high-flown oratory but understated diplomacy. The good angel on the shoulder of world leaders realises the devil has the best tunes. But he borrowed some telling lines from others to make his case, first Thatcher (“Every country will be affected and no one can opt out”), then Mottley (“Two degrees is a death sentence”), and finally DiCaprio (“We really did have everything, didn’t we?”).

Sharma’s urgings were also a tacit acknowledgement of competing priorities and rising tensions in a world beset by multiple crises. The practicalities of tackling climate change is likely to become more political and polarised. Russia’s mounting threats to Ukraine and the implications for the Nordstream pipeline and consumer energy costs means every podcast host and his dog now have a view on the role of gas in the transition to a net zero future.

Against this backdrop of politicisation of climate action, the UN-convened Principles for Responsible Investment this week published two reports focused on lobbying and advocacy. The first offered investors guidance on how to exercise greater oversight of investee firms’ lobbying and political engagement activities; the second – in conjunction with the Organisation for Economic Co-operation and Development – flagged regulatory weaknesses around lobbying in key jurisdictions.

“Key areas of unregulated influence remain vulnerable to exploitation by powerful special interests,” it warns, noting the failure of regulation to keep pace with the “increased use of digital platforms to engage with policy-making processes”.

But if it’s true that regulation lags reality, a number of asset owners and managers continued to point out the direction of travel. Members of the UN-convened Net Zero Asset Owner Alliance, with a collective US$10.4 trillion AUM, committed to at least halve their portfolio emissions by 2030.

The UK’s largest private pension fund, the Universities Superannuation Scheme, announced a tilt away from carbon emitters that would impact £5 billion AUM, whilst also aligning investment with UN Sustainable Development Goals. Aviva Investors and BMO Global Asset Management both said they would toughen engagement efforts, not just on climate, but on biodiversity and social issues. Investors appear to be heeding Sharma’s call to action, but it’s less certain his target audience were paying attention.

 

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