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COP26: world leaders set the standards for a greener future

COP26: world leaders set the standards for a greener future

For the first time since the Paris Agreement in 2015, world leaders convened in Glasgow to discuss their progress and next steps in the fight against climate change. The goal of the COP26 summit was to establish a trajectory that would bring global warming closer to the 1.5C target. Nations proposed their long-term strategies to help reach this, with the overall mission being to halve total carbon emissions by 2030 and achieve net-zero by 2050. 

From fossil fuel use and reversing deforestation to a greater focus on clean technology, representatives addressed the infrastructure of the business, finance, and energy industries, and how they contribute to global warming. So, what are the key takeaways from the first week of COP26?

Treasury sets green goals for major UK firms and financial institutions

Within the next two years, UK firms will need to publicly disclose their plans to support a low-carbon future. Although individual businesses will have the authority to determine their own strategies, an expert panel will verify their true impact on the environment. The endeavour is designed to ensure accountability and clear, genuine change. Altogether, 450 firms have signed up to mitigate global warming and keep it within the 1.5C target.

In response to COP26, the Glasgow Financial Alliance for Net Zero (GFANZ) has scaled its initiative to reshape the economy, for instance by directing bank loans and funding that would have supported the oil and coal industries into clean energy instead. A recent announcement from GFANZ stated that over $130 trillion is now dedicated to realising a net-zero global economy. This transition includes building net-zero strategies for industries that depend heavily on carbon and investing capital in emerging markets to support their decarbonisation. 

Corporate responsibility has now reached an all-time high, with the Treasury’s new rules intending to initiate transformative conversations between UK financiers and customers looking for investment in fossil fuel businesses. 

World leaders commit £14bn to end deforestation

Alongside funding clean energy, the UK is now one of 100 nations that has pledged to reverse deforestation within the next decade. Kicking off the major deals of COP26, the investment of £14 billion will be used to restore land, protect against wildfires, and help indigenous communities. Overall, the countries backing the deal are home to 85% of the world’s forests. 

The impact of deforestation includes the planet’s reduced ability to absorb carbon dioxide, which is largely responsible for the greenhouse effect that accelerates global warming. By reintroducing trees and vegetation to affected areas, this commitment will bring the world closer to its 1.5C target. 

A prime factor behind deforestation is the agriculture industry, as it repurposes the land for growing livestock and crops, such as palm oil, which has faced ongoing scrutiny in recent years. The combined efforts of major organisations and governments alike are critical for delivering change. Unilever, the parent company of Hellmann’s, Dove, and Ben & Jerry’s, among many others, plans to eradicate deforestation from its supply chains by 2023, due in part to growing consumer demand for sustainable products. With geo-location solutions and technologies powered by artificial intelligence, Unilever intends to ensure transparency in its sustainable supply chains.

Powering up cleantech

Clean technology will be a fundamental part of transforming not only the agriculture industry, but also the steel, road transport, hydrogen, and electricity sectors. These five industries were identified as high-carbon areas and more than 40 world leaders have agreed to establish global cleantech standards and policies that combat their environmental impact. 

Dubbed the Glasgow Breakthroughs, this multilateral initiative is set to boost private investment in clean technologies, which will be central to reducing carbon emissions. Alongside the UK, delegates from China, India, the EU, and the US have all signed up to the agreement. By also standardising regulations across the globe, the Glasgow Breakthroughs hopes to encourage the collective uptake of cleantech. From 2022, the countries involved will convene to report on their progress in the five key sectors. 

Cleantech’s importance wasn’t confined to one agreement, either. The UK and India also launched the Green Grids Initiative, now backed by over 80 countries, to connect the world’s power grids. Through enabling regions with access to clean energy to send power to those with deficits, the plan aims to accelerate the global adoption of renewables. 

Putting a price on carbon

The push for worldwide alignment around sustainability was a presiding message at the COP26 summit. The International Chamber of Commerce (ICC) urged governments to utilise carbon pricing as a way to advance progress to a net-zero economy. 

The objective of carbon pricing instruments is to quantify the cost of carbon emissions that fall on the public, including crop damage, healthcare expenditure, and property loss due to the effects of climate change. Through attributing the cost to the source of carbon emissions, these instruments place responsibility on the actors that cause them and that can take steps to mitigate their impact. 

To date, there are 60 individual carbon pricing systems. The current lack of harmonisation, however, is proving to be a barrier for winning private investment that supports net-zero targets. The ICC recently released a report sharing 10 core principles of carbon pricing instruments, outlining how frameworks must be transparent to businesses and how they must not clash with other energy, trade, and taxation policies. According to ICC Secretary General, John W.H. Denton AO, “international consistency is the absolute key to unlock the full environmental and economic benefits of market-based policies.” 

COP26 was a pivotal moment for the global community. The first week of the summit witnessed a collective effort to define measurable actions and bring countries closer to the critical 1.5C target. With continued collaboration and accountability, world leaders will be able to mobilise change that minimises the environmental impact of major industries, transforms the economy, and leads to technological innovation.

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