The COP26 Summit produced an 11-page document known as the “Glasgow Climate Pact.” This document acknowledges the consensus from the scientific community: keeping global warming within 1.5 degrees C of pre-industrial levels would require a 45% reduction of 2010-level carbon emissions by the year 2030.
Unfortunately, this same document reveals that, under the emissions reduction pledges in place today, 2030 emissions will be 14% higher than 2010 levels – not 45% lower. Also note, the increase of 14% from 2010 to 2030 is what has been pledged in climate summits like COP26 – not what is in fact happening out in the real world. Real world emissions could increase by significantly more than 14%.
Governments seem to have one foot on the accelerator, one foot on the brake. Reducing coal-fired power generation showed up for the first time in a COP agreement, which is positive; but at the same time, the language was softened from earlier drafts, going from “Phase Out” [coal] to only “Phase Down.”
Pledges were also made to end and reverse deforestation, coming from delegates who together represented over 85% of the world’s remaining forests. However, the how-to remains unclear, and the pledges lack means of enforcement.
COP26 Summit Summary: Agreements made some progress but fell significantly short of what would be required to maintain temperatures within +2 degrees C of the pre-industrial average.
Will Increased and Varied Participation Lead to Elevated Action?
The summit was well-attended, with over 40,000 attendees. This is almost twice as many as the previous COP summit (COP25, with 22,000 attendees in Madrid). This shows strong and increasing interest in the topic, and a growing group of people working hard on the issues.
Though roughly 12,000 attendees represented young people, businesses, researchers, and other non-governmental stakeholders, there were complaints from these attendees that they were not allowed to observe or participate in the key discussions. These individuals and groups called for more inclusion and a louder voice for communities, youth, and NGOs in the real conversations.
Inspirational Leadership from the Private Sector at COP26 Summit
In a familiar pattern, the COP26 Summit saw businesses and investors stepping forward to fill in the gaps left by government delegates. Mark Carney, former head of the Bank of England and Bank of Canada, currently head of Transition Investing with Brookfield Asset Management and U.N. climate envoy, led a group of financial institutions (investors, banks, and insurance companies) in pledging to put addressing climate at the center of their business agendas. These organizations collectively have about $130T in assets under management and represent almost 40% of the world’s capital. They are looking to discover what levers private capital can pull to lead systemic change to reduce carbon emissions.
According to Mark Carney, “The money is here – but that money needs net zero-aligned projects and (then) there’s a way to turn this into a very, very powerful virtuous circle – and that’s the challenge.”
One of the levers that financial institutions have for reducing carbon emissions, and making progress on other environmental and social goals, is the ability to set standards for reporting for companies they invest in. They can also lobby for governments to mandate those standards. One step, long in the making, announced at the COP26 Summit was a big move in the direction of a unified, global standard for climate reporting by companies. Read more about this International Sustainability Standards Board here.
What a Unified System of ESG Standards Means for Business
The consolidation of multiple organizations and their respective standards and frameworks will drive increased transparency and accountability on climate-related disclosures for companies, which in turn will accelerate the transition to net-zero carbon supply chains.
The most immediate effect will be greater alignment from the financial community around what ESG metrics need to be reported, and in what ways. This will cascade down to business leaders, who will have clearer mandates on what data to collect relating to their ESG performance. The unified standards will include carbon footprint, supply chain impacts, and the safety and security of employees and communities. Ultimately, as investors begin to place financial value on these previously uncounted and “intangible” aspects of business operations and assets, businesses will be driven to improve their ESG scores, which translates into material changes: more renewable energy procurement, more efficient, reliable, and resilient operations, more microgrids, and other onsite energy systems. In short, unified standards will accelerate the energy transition that VECKTA was designed to support.
If onsite energy may hold value for your business, learn more here.