What Happened During the First Week of COP26?

COP26 is underway. Positive messages, with lots of fanfare, have been abundant. Doubt and mistrust, however, are also in plentiful supply. We’ve compiled a few interesting developments from the past week’s activities, along with some criticisms. Over the coming weeks, we’ll be watching what unfolds on each of the items below, as well as other activities arising from COP26.

Consolidation of Standards and Frameworks

The IFRS Foundation announced the creation of the International Sustainability Standards Board (ISSB), which will consolidate the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (which has already consolidated the Sustainability Accounting Standards Board (SASB) and the Integrated Reporting Framework). This drive towards global standards and principles, and away from fragmentation and confusion, has been a key theme for a while, but it is unclear to what level the U.S., which doesn’t use IFRS accounting standards, will participate.

Clarity on optimal disclosures is important, but BlackRock’s Larry Fink pointed out that the pressure exerted on public companies and financial institutions also needs to be put on private companies. He called the inconsistency, “the biggest capital markets arbitrage in my lifetime.”¹

Declaration on Forests and Land Use

On Tuesday, 131 countries, including the U.S., signed a pledge that commits them to “working collectively to halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation.”² In addition, “CEOs from more than 30 financial institutions with over $8.7 trillion of global assets – including Aviva, Schroders and Axa – committing to eliminate investment in activities linked to deforestation.”³

National Geographic reports that “skepticism is warranted” given a history of prior unmet international pledges and that within two days, “Indonesia—one of the most heavily forested countries—seemed to walk back its commitment.”⁴ The overarching statements are lofty, but clarity on how specific targets and objectives will be met is currently missing.

Global Methane Pledge

As we reported in our recent blog, “Climate Policy Matters (and Methane Policy Matters a Lot!),” multiple countries have signed up for collective goal of cutting methane emissions by 30%, based upon 2020 levels. Fulfilling this may be “the biggest single thing governments can do to keep alive the goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels.”⁵

However, China, Russia, India, which are presently the top three emitters, have not signed up.

“1.5 is what we need to survive”

The Prime Minister of Barbados, Mia Mottley, called on world leaders to “try harder,” stating that “national solutions to global problems do not work.” She noted that current Nationally Determined Contributions (NDCs) put the world on a pathway to a warming of 2.7°C, with some pledges relying on technology that is not currently operationalized.

She called out the gaps in financing for mitigation and adaptation, noting that the central banks of the world’s richest countries had implemented $25 trillion of QE over last 13 years, $9 trillion of which was related to the pandemic. Had that $25 trillion been allocated to financing the energy transition and improving food systems, we could be on the way to keeping warming within the 1.5°C limit. “Simply put,” she asks,  “when will leaders lead?”

Similarly, the chair of the Least Developed Countries group, Sonam Phuntsho Wangdi, called the progress at COP26, “disappointing and in a way also frightening,”⁶ and also urged for more financing.

What has most resonated with you, or disappointed you, from COP26? – we’d love to hear your viewpoints and weave them into our future updates.