Qwick Takes: COP26 and its chances of success
This week, Talking Biz News Deputy Editor Erica Thompson reached out to Qwoted’s community of experts to inquire about the COP26 climate summit and its chances of success.
Check out some of the top commentary:
The capital needed to actually get to Net Zero will be far greater than $100 billion a year. If the G20 wants to be proactive, this is the area where an announcement could have some meaningful impact ahead of the start of the COP26 meetings in Glasgow. Pledges are nice, but when you see what is happening in places like Europe or China with respect to energy consumption it should be clear that we all have a long way to go in crafting a viable path towards Net Zero. It takes only one country for Net Zero to fall apart.
Europeans have out-pledged the U.S. when it comes to climate change, but even within Europe, there are challenges. Germany is one of the top users of coal from a per capita perspective and now have some of the highest electricity prices in the world and are now at the mercy of countries like Russia for their energy needs.
I believe France will have the last laugh when it comes to seeing which country leads the way towards achieving Net Zero. When others were aggressively abandoning nuclear power, France remained committed to the technology, and now they seem to be perfectly positioned for an affordable path towards Net Zero.
As the investment industry heads towards COP26, we see four areas where resolutions from policymakers and industry groups could help our clients chart a sustainable course for the long term.
Investor collaboration is falling short: The investment industry must continue to find ways to collaborate and work collectively to tackle climate change. The Climate Action 100+ initiative is a successful example of this in action but there are thousands more companies to which a similar level of scrutiny might be applied.
Collaborative efforts could branch out more across asset classes like corporate bonds and structured debt. Annual debt issuance is around 40 times that of equity markets and offers plenty of scope for engagement. All companies have a responsibility to provide relevant climate data; There is no shortage of reliable climate change data for large companies but for the financial system to move forward there needs to be greater and better disclosure from all types of companies, not just the largest. Smaller privately held companies also have a responsibility to disclose, as do non-companies such as sovereigns, where the complexity of climate change is not necessarily reflected in the available data.
Green bond market is under-used: The inclusion of targets within green bond issuance which track against mitigation and adaptation measures would support investors in their engagement and reporting activities. Investors need a common language for green investment activities.
Having global leaders, climate activists and change makers gather to have the conversation is already a step in the right direction – but if we have any chance at restoring our climate, we need to act.
With much of the world already experiencing the harsh realities of global warming, we’re finally seeing a growing sense of urgency around climate change. I’m confident that leaders are prepared to act – the future of our planet depends on it.
That means not only discussing emission reductions (though these are critical), but also having meaningful discussions about how we will build up the global capacity for large-scale carbon dioxide removal. Our current global capacity is around 10,000 tons of CO2 removed per year through technological solutions, so we’re still several orders of magnitude away from what’s needed.
It is our hope that countries step up with ambitious 2030 targets for both emissions reductions AND carbon removal with the help of technologies that are scalable, financeable and permanent.
While there is no way to know at this point whether the summit will result in additional legally binding international agreements, there are several encouraging signs so far from both governments and the private sector. Those encouraging signs are: 1) the Global Methane Pledge to make a significant dent in greenhouse gas emissions, 2) the Glasgow Leaders’ Declaration on Forests and Land Use to help save key carbon sinks and protect essential biodiversity, and 3) the Glasgow Breakthrough Agreement to accelerate clean tech development and deployment.
The private sector also has a significant role to play in accelerating the climate transition, and we see encouraging signs here as well. The Glasgow Financial Alliance for Net Zero (GFANZ) now represents 40% of global financial assets – as these institutions work to decarbonize their portfolios, it could mean significant pressure on companies to transform their businesses as well as some major investment in the clean tech solutions we need to make it all happen. And we welcome the announcement by the IFRS Foundation to create a new Sustainability Standards Board to accelerate convergence on reporting standards and support climate-related disclosures that align with the guidance of the TCFD.
The failure of world governments to set aside political and economic self-interest has put us in this place, which is past the point of no return. The current economic paradigm of growth at all costs must change now – but that’s simply not going to happen. The best we can do is find companies that are contributing the best and most positive solutions to a new, more sustainable economy, knowing that the legacy economy companies will ultimately die off. Unfortunately, that die-off will be too late. And political promises at this point are too little too late.
A perfect example is Boris Johnson’s rhetoric about being in a climate emergency while he jets back to London for dinner – this disconnect is what is bringing us closer to these catastrophic climate effects.