This year’s intergovernmental UN Climate Change Conference of the Parties (COP26) takes place from November 1–12, in Glasgow, and will be the most important global climate summit since the landmark Paris Climate Agreement was finalized in 2015.
COP26 is the first major milestone for efforts by the global community to limit global temperature rise to below 2°C, preferably at 1.5°C — the central goal of the Paris Climate Agreement. As a result, the run up to COP26, and the two-week conference itself, will be a crowded period for policy commitments and stakeholder engagement, presenting challenges to cut through the noise and reach target audiences.
Four major outcomes will determine success at the event, with each being a key test of the effectiveness of the Paris accord:
- COP26 is the first climate conference since governments are to submit more ambitious climate action plans for 2030, known as nationally determined contributions (NDCs). The pledges are the first test of the so-called “ratchet mechanism,” a cornerstone of the Paris Agreement designed to increase climate actions over time. In March, a UN report said all nations must step up efforts to reduce climate-harmful emissions to meet the Paris Agreement’s goals.
- Countries are also expected to provide their long-term decarbonization visions for mid-century by the time of the COP.
- Developed countries had committed to provide $100 billion per year in climate finance to developing countries by 2020. However, COVID-19 and the resulting economic downturn has impacted international climate finance, and the outcome for this funding is uncertain. Developing companies will use COP26 to push for the financial support. There is growing pressure on financial institutions and investment funds to step up their climate investments.
- Setting a timetable to phase out coal-fired power plants worldwide, which climate activists say is essential to reduce global carbon emissions.
Several countries will play a key role in COP26’s success:
- As host of COP26, the United Kingdom will play a special role in organizing the logistics and building global unity around the event in a virtual or hybrid format. The UK is also playing a key role as this year’s chair of the G7. At their recent summit, G7 leaders discussed phasing-out coal-fired power plants but set no deadline for achieving this and did not commit to channeling $100 billion a year in assistance to developing countries. Climate activists were disappointed, raising the stakes for COP26 to deliver on core Paris goals.
- The United States has rejoined the Paris Agreement and President Biden’s administration in putting in place its new NDC, which includes national emissions targets that will impact the U.S. energy, transport and manufacturing sectors. The U.S. is also putting climate diplomacy at the forefront of its international relations. President Biden will face pressure to secure congressional passage of the climate initiatives that are part of his infrastructure package in time for Glasgow.
- The European Union is tabling a series of measures toward driving Europe emissions reductions by at least 55 percent by 2030, and to be a climate-neutral region by 2050.
Its European Green Deal is an ambitious package that will be enshrined in EU law to reduce greenhouse gas emissions, invest in cutting-edge research and innovation, and preserve Europe’s natural environment.
- There is growing diplomatic pressure on other large carbon emitters — including China, India, Russia, and Brazil — to come to Glasgow with accelerated climate commitments.
- Italy, as this year’s G20 chair, is also playing a key role by hosting pre-COP preparatory events and the G20 Summit that will take place on October 30–31 in Rome.
The countdown to COP26 is underway. Climate has never been higher up on the global agenda, and this creates challenges for any business that has significant carbon emissions, but also opportunities for companies to demonstrate leadership and action. What this means for global companies is:
- Increased questions from stakeholders such as investors, employees and regulators about a company’s climate strategy, and what it is doing to align to the Paris Agreement and the net-zero targets that governments around the world are adopting.
- Rising investor activism on climate, with pressure for more transparent reporting and meeting ambitious targets.
- Higher need for business engagement with policymakers, as they continue to develop new legislation and regulations toward achieving net-zero targets.
- Corporations and boards should prepare for new policymaking around more stringent ESG reporting. With greater attention on disclosures, companies should also review their current processes, data and controls around ESG disclosures to ensure these are accurate and reliable.
Edited by Helen McCarthy
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