While the two-week gathering was never going to meet the expectations of many individuals and groups who are rightly incensed about the lack of progress towards net zero, it deserves to be acknowledged for breaking new ground and creating a catalyst for positive change.
COP26 featured two key moments: the deal announced between the US and China to work together on climate change, and the coming together of 197 nations which signed the Glasgow Climate Pact, keeping the focus on limiting global temperature rises to a maximum of 1.5 degrees.
The Glasgow Climate Pact also includes the commitment to phase down coal-fired power generation as part of the global energy transition. While harder measures to accelerate this process were opposed by India, China and South Africa, this marked the first time that we heard a direct reference to phasing out fossil fuels, an important step forward. This comes as further momentum is also being made across the oil and gas sector as part of the global energy transition.
While the COP26 agreements came with compromises and caveats, they marked real progress and should be seen in context alongside the increased level of engagement we’re seeing across all aspects of society.
Many people are beginning to make choices in their daily lives that support the drive towards net zero, including making changes to their diet, their source of heating energy, or the type of car they drive. The business community is also showing real ingenuity and innovation in finding solutions, from the growing use of green hydrogen and other fossil fuel alternatives, to the development of new technologies that will help promote greater sustainability.
Like many other players in the corporate environment, CMS is part of this sea change, committed to a programme of reducing and offsetting carbon emissions across our entire portfolio to net zero by 2025.
Equity markets and banks are also heavily engaged, increasingly demanding companies have a strong commitment to ESG before they will provide investment. It’s not surprising that investment in ESG funds went up 88 per cent to over $152bn in the fourth quarter of 2020. As a result, we’re seeing increased levels of capital being driven towards emerging start-ups which are focused on finding innovative solutions to address environmental challenges.
Additionally, during COP26 we saw the formation of the Glasgow Financial Alliance for Net Zero (GFANZ), a new body which is underpinned by the race to net zero. GFANZ has been set up to help governments design policy to facilitate the creation of new green assets for investment. The UN has also indicated it will increase scrutiny of private sector commitments to net zero via the UN Principles on Responsible Investment (UNPRI) reporting framework, a move that will further incentivise financial institutions to stand behind ESG claims with real world data and robust evidence.
As significant as these all developments could prove to be, perhaps the most impactful legacy of COP26 will be the inspiration it provided to so many young people.
We saw unprecedented levels of engagement in Glasgow with the mass mobilisation of individuals, civil society, and a range of other organisations all pushing for change. This collaboration further advanced public understanding of how climate challenges are impacting on people in different parts of the globe, and will undoubtedly put additional pressure on governments to adhere to and, in some cases, exceed their commitments towards net zero.
While there were some notable disappointments in Glasgow, COP26 should be seen as a success where key agreements were made and vital partnerships were forged between nations.
Far from being a ‘Cop Out,’ the 2021 UN climate change conference broke new ground and has created a strong platform to move forward. We hope to see a ripple effect from this momentum which will add extra impetus in delivering a positive future for our planet and all its people.
Alan Nelson is a Partner with CMS