COP26: More of the same or a step in the right direction?
As the dust settles on COP26, we are presented with just how much of an uphill battle world leaders are facing in fulfilling the main objectives of the United Nations Climate Change Conference. Just moments before the conference’s agreement was due be announced, China and India both revised the language of the agreement to phase out coal. In what was supposed to be the landmark decision made at this year’s COP, China and India agreed instead to ‘phasing down’ coal, as opposed to the phasing out of the fossil fuel. This demonstrates the challenges world leaders face in ensuring the 1.5°C is in reach. The planet needs more to avoid climate catastrophe and the agreements that have come out of COP26 have not gone far enough. COP26 President Alok Sharma’s visible distress and open apology to the delegation as he gave his closing speech highlight that this the agreement has missed the mark. However, we should recognise the agreement for what it is: a collaboration between the two largest coal producers/CO2 in the world are heading in the right direction.
Following the closing of the conference, Boris Johnson and Alok Sharma participated in a joint press conference to give the UK’s review of the deal. The tone had changed at this point; while both referenced their disappointment over China and India’s action, they lauded the agreement as a ‘historic’ and ‘game changing’ deal. The agreement to finally deliver the $100bn annually to developing nations, the commitments to lowering global methane levels by 30% by 2030, the pledge to end and reverse deforestation by 2030 made by 100+ countries and the historic US-China agreement are all substantial achievements of the COP26 deal. In addition, the ambition to deal to keep the global average temperature rise to 1.5°C remains the goal and this was widely praised by conferences delegates, but word from the scientific community throughout COP26 was that this target has been and gone and in fact if we do achieve EVERYTHING set out at COP26 we are on track for 1.8°C.
Agreement done… what’s next?
Prior to the start of the conference, pressure was on governments to come together to create the tax, legal and regulatory regimes – as well as fund the scientific research – that will transform all nations into zero carbon economies. While the COP26 agreement has pushed nations to consider their fossil fuel consumption in more detail, it is now up to governments to set out clearly how they plan to achieve this. These agreements are always self-policed and very few nations make them legally binding, making it all the harder to enforce.
Time is of the essence. Governments need to galvanise not only the general population, but the pools of private capital at their disposal. They must put in place incentivisation models that include benefits and penalties that will drive sectors and businesses to push on with their own carbon zero goals, accelerate the move towards the targets set out in the COP26 agreement and enforce accountability.
This has already begun to take some shape in the UK. In April 2022, businesses in the UK will be forced to disclose standards on climate-related risks. The government stated, in October, that 1,300 of the UK’s largest registered companies will be required to apply the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. These recommendations
specifically set out to tackle greenwashing but also enable investors and businesses to align their long-term strategies with the UK’s net zero commitments. However, the big question is who is policing this and whether there is accountability for companies that are not meeting the climate goals.
In addition, at COP26 the London Stock Exchange, along with the Singapore Exchange and four other bourses, signed up to the Net Zero Financial Service Providers Alliance, an alliance committed to the goal of global net zero greenhouse gas emissions by 2050 or sooner.
Ultimately, the global private sector will be the engine of positive change and help us achieve a transition to a climate-resilient future. Government legislation should not only encourage the push to net-zero, but also penalise companies who do not meet the climate goals within the required deadlines this would increase the speed with which these targets will be reached.
The COP26 draft agreement is set to be ratified at the end of this year, which means there is still time to hopefully amend and strengthen some areas. The longer the clock ticks on without substantive action, the more extreme the action down the road will need to be. COP27, hosted in Sharm-el-Sheik in Egypt, will be here before we know it (7-18 November 2022) and if it is more of the same rhetoric that we saw at COP26, we will be once again saying we need to go further.
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