As the second week of COP26 comes to a close, there remains much to be resolved. In the words of Alok Sharma (president of COP26): “Progress has been made but there’s still a pretty big mountain to climb … we’re getting to that point when the rubber hits the road and we need to make sure we do our best to get this one over the line.”
One giant leap for climate…
According to Fatih Birol, the executive director of the International Energy Agency (IEA), COP26 week one was "a big step forward" in the fight against climate change. His agency claims that if all the pledges agreed so far are fully implemented; it could keep our temperatures within 1.8C of pre-industrial levels.
On the other hand, independent research group Climate Action Tracker says that the key pledges announced so far will only bring the world 9% closer to achieving the 1.5°C target by 2030. The proposed commitments on methane, coal, transport and deforestation will cut the equivalent of 2.2 gigatons of carbon dioxide, but global emissions are still expected to be “almost twice as high in 2030 as necessary for a 1.5°C compatible pathway.” Nevertheless, scientists say there are reasons to remain optimistic about the events at COP calling the special consideration for nature and forestry a "pivot point."
Always the powerful orator, former US President Obama summed up the talks well with this statement: “Important work was done there, and important work is being done here. That is the good news. Now, for the bad news. We are nowhere near where we need to be.”
Accountability remained a central theme of the conference since prior COP commitments have not been achieved. I emphasized this topic throughout the week at different forums, including in this interview with ESG Investor. Time will tell if the new pledges are implemented, but they are a step in the right direction.
A COP of two tales
After the excitement of the arriving dignitaries and the lofty promises of week one, week two of the climate summit told a different story. The nuts and bolts of the agreements now had to be hashed out through tense negotiations; and it appears these tense discussions will continue until the final bell.
Before week two had even begun, Greta Thurnberg had condemned the climate summit claiming "COP26 is a failure" and a "PR event." Over 100,000 protesters marched the streets of Glasgow dissatisfied with its progress, arguing it isn't enough to avoid catastrophe.
The primary culprit? Greenwash. With COP26 inundated with delegates from the fossil fuel industry, more than any single country, and the corporate sponsors of the events as some of the world's largest polluters, it is little wonder that Thurnberg said it had turned into a "greenwash festival."
The absence of Chinese leader Xi Jinping and Russian leader Vladimir Putin at COP26, the 1st and 4th most carbon-emitting countries respectively, remains disheartening. President Biden criticized their truancy and former President Obama reiterated the criticism calling them out for their "dangerous lack of urgency."
COP26 has also been named the most exclusionary COP to date. Some observers were excluded from negotiating rooms, and other delegates could not travel due to vaccine restrictions, excessive costs, and Britain's closed immigration system.
And to rub salt in the wounds after last week's promising temperature projection estimates, a new projection from the world's top climate analysis coalition puts heating on track for a disastrous 2.4 degree Celsius rise based on short-term goals.
Laurence Tubiana, one of the primary architects of the Paris Agreement and France's top negotiator, feared Glasgow was becoming a "COP of two tales...one of fantastic mobilization and progress, the other – which we see with the protests in the street – is that it's not happening and companies are just cheating." She also highlighted the lack of a system in place to check the progress of the previous week's claims.
It’s too soon to know whether the agreements made in Glasgow are greenwashing, but I recommend we remain positive. These are complex negotiations, and the delegates have produced some tangible results. With additional agreements possible in the final hours, robust accountability measures and adequate funding to help vulnerable nations, these talks will mark solid progress toward decarbonization and adaptation to climate impacts.
Out with the old, in with the mandates
The newly launched International Sustainability Standards Board (ISSB) continued to make news. The body will have a multi-location global presence with the Chair based in Frankfurt additional offices located in Montreal, London, and San Francisco.
Off the back of this important simplification of ESG standards, regulators worldwide are warning companies of their upcoming mandates. For example, the SEC enforcement director warned companies not to mislead investors by omitting material information from their ESG reporting. The SEC also declared open season for shareholder resolutions calling for emissions reductions targets. And, in the UK, the Financial Conduct Authority is proposing a series of minimum standards ESG investment products. And, in a move that could gain momentum elsewhere, the UK government is making it mandatory for companies to publish net zero transition plans overseen by an independent task force.
As new ESG mandates proliferate around the world, the number of directors who see ESG as integral to their business strategy raised from 49% in 2020 to 64% in 2021, and 73% are focused on keeping up with ESG disclosure regulations.
However, a recent PWC report showed that boards still have a ways to go in their ESG performance, with 70% of executives saying that ESG expertise is either poor or fair. The study also found that the primary reason board members cited for the lack of progression on ESG issues was the need to retire some board members, listing long-serving directors as the primary impediment to furthering ESG principles.
People in glass houses
Highlighted in Kate Aronoff's opinion piece in the Guardian, people in glass houses shouldn't throw stones. She points out that the US is responsible for 40% of total emissions ever. And Obama saying, “more should be done” about climate change is quite hypocritical when he oversaw a 750% increase in crude oil exports in his tenure, and even boasted to a gala of Texas oilmen (in 2018) that, "America is the largest oil producer. That was me, people." No one is innocent in this, and finger-pointing and blame-shifting are counterproductive when the only way climate change can be beaten is through global cooperation.
China and the US team up
Surprisingly and thankfully, after all the finger-pointing, it looks like there has been a sea change in Chinese-US relations, and the two countries have agreed to forget their differences to cooperate on the climate. With an agreement from the world's two biggest emitters to increase action in this crucial decade in phasing out coal, reducing deforestation, and cutting methane emissions.
Biden's climate plans finally coming together
Last Friday Biden's bipartisan $1 trillion infrastructure bill was approved by Congress and will be signed into law - a sorely needed win for his social and climate agenda. However, to get the bill through Congress, Biden had to scale back most of his climate priorities and move them to the still unpassed Build Back Better bill. Although criticized by climate activists, the bipartisan infrastructure bill had many climate highlights to unpack, including:
$47 billion to improve climate adaptation infrastructure to protect communities from forest fires, flooding, and droughts
$65 billion to repair the electrical grid for renewable energy transmission, develop nuclear, carbon capture tech, and "green hydrogen"
$66 billion to fix Amtrak, invest in high-speed rail and other rail commuting services
$41.5 billion to build public transportation, EV stations, and improved cycling and pedestrian infrastructure
Even with an estimated $300 billion of the trillion spent on environmental sustainability projects, it was not enough for some more progressive Democrats. Alexandria Ocasio-Cortez, who voted against the bipartisan infrastructure package, claimed that " without a commitment to the Build Back Better bill," she did not trust the legislative process.
Confidence is running high at the White House that they can get the Build Back Better bill through the house and get Biden's social and climate plan over the line, appease progressives within his party, and cement the US's leadership role in the fight against climate change.
As always, please comment, share, and subscribe. Here are a few other headlines that you may have missed:
Echoing Barbados prime minister Mia Mottley's speech about the plight of small islanders against sea level rise, a Tuvalu minister conducted his COP26 speech in knee-high water, highlighting the encroaching waters around his tiny island nation.
around his tiny island nation.
Leading enterprise application software company SAP announced that they are launching a new piece of software to enable companies to design products sustainably using circular economy principles.
to enable companies to design products sustainably using circular economy principles.
Cities around the US are acting on the climate principle of “think global act local” and are drawing up their plans to mitigate and adapt to climate change.
Bad news for the oil and gas industry, good news for the environment. Bloomberg reports that costs of capital have spiked for fossil-fuel producers. 10 years ago capital costs for oil and gas and renewables were the same (at around 10%). Now, oil investments sit at 20%, while renewables sit between 3% and 5%.
Due to technical difficulties, the last three editions of our newsletter did not arrive in your inbox (many apologies!), we believe they are still well worth the read. You can find them linked below: