What went well at COP26 (and what wasn't so good)
David Woods from Toitū Tahua: Centre for Sustainable Finance wraps up COP26 and what it means for investors.
Tuesday, November 16th 2021, 7:08AM
COP is done for another year, and the second week felt quite different.
As the slow progress on the government negotiations seemed to settle in, so the private sector events, buoyant in the first week, seemed to tire and become repetitive.
Undoubtedly, this was a successful conference from the private sector’s viewpoint – and it was interesting in the second week how the messages of the first week were repeated frequently. This helped to reinforce key messages but reduced the sense of new ideas.
What are the takeaways?
Carbon pricing was probably the biggest issue.
It’s a necessary precondition to so much else, a point made in many sessions. Transparency, measurement and assessment were right up there too.
The UK took the lead on this by requiring net zero implementation plans, but the overall mood to have oversight and reporting on all the net zero pledges was very evident.
All the issues around natural capital and investing in nature weren’t a major takeaway, but the conference highlighted the need to do something.
The Taskforce on Nature-related Financial Disclosures (TNFD) will start to develop with a lot more attention than the Taskforce on Climate-related Financial Disclosures (TCFD) did a few years ago – especially if the draft framework is published in the next few months. And there were so many hydrogen discussions in Glasgow that one could be forgiven for thinking it was an independent conference topic.
As the editorials started to appear a few days ago, the conclusions were mixed.
The Guardian was possibly the most negative, talking about the delay in planet-wide collective action, how global co-ordination had failed as everyone waits for others to commit, and how the capitalist system was failing.
Others were more positive.
The Atlantic talking about climate justice having been top of mind, all eyes being on methane, and nuclear energy coming back to the fore.
The FT picked up on energy security (an interesting dilemma for us in New Zealand in the wake of the decision a couple of months ago to close Marsden Point), the advance of technology and the pleasant surprise in China US relations towards the end of COP.
McKinsey was predictably more focused on big business – competitive advantage to be gained from net zero pledges, money being available but needing to be channelled, securing green materials and decarbonising assets, and investments in resilience all being opportunities.
With a greater finance sector presence than at any previous COP and private sector optimism to the fore, there was a sense at Glasgow of delegates understanding the issues, and of rigour coming to the process – but at the same time a feeling the private sector can’t carry this alone, and of governments being painfully slow to step up.
Sustainable agriculture and forestry got more airtime as the recognition nature and climate are two sides of the same coin took hold, but oceans seem to remain the great untalked about topic – or at least not talked about enough.
What does all this mean for us in New Zealand? We have another 10 days to comment on the Government’s Emissions Reduction Plan (ERP) document, which will inform our strategy to be published early next year.
Whatever decisions we make, the investments needed are eye-watering – in enhancing electricity production, in transport, infrastructure, and agriculture to name a few.
And let’s not forget the needs in capability building and education, to help people understand what all this is about and why it’s needed (there were abundant examples at COP of how this is being tackled in the UK and European countries).
The challenges for us all are significant, as are the risks and opportunities – while the consequences of failure, for us and many other countries, are daunting for our children and the generations to come.
As a country, we can seize the opportunities with cautious optimism – but we need to be disciplined, and to collaborate in ways we have not before.
David Woods is part of the Toitū Tahua: Centre for Sustainable Finance Leadership Group.
https://www.sustainablefinance.nz/
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