Ben Wilson, Director of Corporate Affairs and Climate Change, blogs here on his reflections of the COP26 climate summit and the next steps required to fully unlock the potential of our sector in support of collective efforts to reach Net Zero.
Seasoned observers of COPs will always tell you that the outcome is never a binary success or failure metric. Glasgow is no different.
There has been progress, but almost certainly not enough.
One cause for optimism was visibility of business in the debate – commentators agreeing that they driven the agenda in a way not seen before.
But it doesn’t matter which political, diplomatic, regulatory or economic actor you are, we all know ‘blah, blah, blah’ must become ‘do, do, do’.
Finance was a big part of the discussion when the landmark Paris agreement was signed six years ago. But it was public finance.
That was very different at COP26, and I am proud to be part of a sector where its leading CEOs and senior leaders were so visible in leading the conversation, and setting out how they are already putting billions of private capital to work in the pursuit of the transition to net zero.
The ABI took part or hosted seven events in three days. And what was clear from our leading CEOs and senior leaders is they want to do even more – but we need help from those who structure the markets – regulators and Governments – to fully unlock the potential of our sector.
It is fair to say, Mark Carney’s announcement of $130trillion through the GFANZ alliance was met with some scepticism. That is not unsurprising, when alongside that number, Governments could still not find £100billion to protect developing countries from the impact of climate change – a number the WWF contrasted as ‘chump change’.
However, any residual scepticism of the intentions of our sector is unfair. The ABI and its members are strong supporters of the tougher requirements to publish transition plans and net zero targets allied to better systems of disclosure with common standards and metrics. These were a big focus of the statements by the UK’ Government and regulators.
As institutional investors, we are as keen as anyone to root out greenwashing and ensure our patient capital is going where it is needed most – not least to ensure our investments are truly sustainable.
So progress was made. Outside of the formal binding text, there were important agreements to reduce methane, tackle deforestation, improve carbon markets and end coal financing – all genuine advances.
As part of the formal text, there was an essential agreement to come back next year and ‘rachet’ up action through more ambitious ‘nationally determined contributions (NDCs)’– rather than waiting five years. ‘Phasing out’ coal being toned down to ‘phasing down’ may have caused tears from Alok Sharma, but it is still an historic reference. It will only amplify the message to the finance community about future risks of stranded assets, and their role in steering the economy in a more sustainable direction.
The deal was always going to be imperfect. And if you make the assessment by the NDCs alone, we are still at a pretty bleak 2.4 degrees of warming (less if the side deals are taken into account).
That is a death sentence for the vulnerable island nations, whose stories animated COP26.
We can just about hold onto the dream of global warming of only 1.5 degrees - if only by our fingertips.
But it doesn’t matter which political, diplomatic, regulatory or economic actor you are, we all know ‘blah, blah, blah’ must become ‘do, do, do’.