As almost 200 countries sign to agree with a 1.5°C warming, COP26 comes to an end with mixed emotions from climate activists, public and scholars. The conference was regarded a large step to combatting the climate crisis by providing additional guidance, along with a roadmap for the next annual meeting.
But what changes has COP26 really made?
The four main outcomes from COP26 include…
- Adaptation. The launch of the two-year Glasgow-Sharm el Sheikh Work Programme which produces seven objectives for the Parties to reduce vulnerability, strengthen resilience and increase the capacity of people and the planet to adapt to the impacts of climate change.
- Mitigation. A host of outcomes that collectively accelerates each Parties efforts in reducing emissions to keep the 1.5°C warming. This includes phasing-down coal, revisiting emission reduction targets, newly nationally determined contribution (NDC’s) and inclusion of nature in climate strategies.
- Finance. The Climate Finance delivery plan of $100billion was extended to 2025 to aid developing states and countries to adapt to climate change impacts.
- Carbon Markets. The Enhanced Transparency Framework was finalised regarding issues raised from the Article 6 of the Paris Agreement. It includes agreements regarding the use of the Clean Development Mechanisms, adaptation finance and how to avoid double counting carbon reductions.
So how will this effect corporate business in the future?
Parties need to align their NDC’s with the 1.5°C warming within 5-year timeframes which means the next NDC discloser will be for 2030. COP26 has established that from 2024, all parties will have to report against a common reporting standard for their NDC’s and greenhouse gas reporting to minimise any dishonesty and highlight deviations. Governments would have set or will be setting their own emission targets resulting in businesses aligning their targets to meet their government targets. Therefore, businesses may have to set or rethink their existing targets to be more ambitious, in addition to reporting to government standards such as TCFD, which will become mandatory for some large business. If businesses do not set targets, their reputation with investors and consumers will be tarnished potentially affecting their revenue.
Reducing sector emissions.
One takeaway from COP26 was the 2030 Breakthrough for three sectors (finance, real economy, oil & gas), which provides areas where different actors can aid sector emission reductions to meet the 1.5°C warming. This creates a starting point for business in all sectors and actor groupings to focus their attention and create inclusive pathways to reducing their emissions. Business emission targets for each sector are required to be set, therefore by using the 2030 Breakthrough guide it will create a collaborated effort to keep with the 1.5°C target.
Finance and technology were a large focus of COP26’s agenda, highlighting the potential involvement and investment for corporate businesses in climate resilience and risk strategies, natural offsetting, green infrastructure and climate technology to maximise their capital and adapt to the future impacts. The transition to the net zero in the UK will require private and governmental capital to be repositioned, as well as corporate financial structures and models to include climate change. The private sector is expected to shift to more of a climate inclusive way of operating and investing into a green future will become increasingly popular and competitive.