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ICYMI, There’s a COP26 Delivery Gap

We all know the devil’s in the detail … don’t we?

To meet a target, you need a plan. To reach a destination, you need a map. To keep a commitment, you need to make hard decisions. This week, the Climate Change Committee (CCC), the body charged with advising on UK climate policy, came to the unsurprising conclusion that the UK government is set to fail to meet its headline-grabbing commitment to cut greenhouse emissions by 78% by 2035 by a “huge margin”, largely due to the lack of a plan.

This is bad news not only for the UK, but also for the world. CCC Chairman Lord Deben made clear the implications. “Get it right and UK action will echo widely. Continue to be slow and the opportunity will slip from our hands. Between now and COP26 the world will look for delivery, not promises,” he said, warning the whole process could be placed “into jeopardy”.

What to fix first? Among 200 policy recommendations, the CCC called for a net zero test to be applied to every area of government policy for compatibility with climate ambitions, a home heating transition strategy, more rapid transition of the power sector and new plans for transport, food and hydrogen use. Its recommendations for better public communications may well be bolstered by recent UK government research on popular perceptions.

A UK Net Zero Strategy is planned for the autumn. But it’s not only the CCC suggesting the lag between ambitions and details is a gamble, leaving observers to ponder headlines about new North Sea oil fields, amid genuine UK progress elsewhere, such as climate reporting.

The UK government is far from alone in struggling to deliver on its climate ambitions. But its travails add an extra edge to COP26 preparations, especially in light of a leaked draft report from the UN’s Intergovernmental Panel on Climate Change. The 4,000-page report, due for release next February, updates assessments of climate change’s consequences, warning that severe impacts are closer at hand than expected.

It also lends uncertainty to hopes for progress in Glasgow on some pretty fundamental elements of the response to climate change, such as clarity on carbon pricing or agreement on base-level climate reporting requirements, as noted in this week’s ESG Interview by JP Morgan Asset Management’s Jennifer Wu.

As we await more guidance and leadership from governments, there are signs that some in the private sector are closing the delivery gap between ambition and action. Informed by a growing understanding of its own impact, the finance sector is getting to grips with the reality of matching policies to targets, notably in relation to emissions reductions and UN Sustainable Development Goals.

Progress is uneven, with some industries slow to face up to daunting challenges. But there is no shortage of practical advice or measurement tools available to asset owners as they refine their sustainable investment strategies. The difference between leaders and laggards could be partly in culture.

According to Mark Chambers of the Institute of Business Ethics, “The resourcefulness and adaptive capacity needed for businesses to address these challenges demands innovation at the very top of the organisation.” The ability to avoid groupthink and inertia applies equally in the public sphere.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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