PRI Key takeaways and calls, perspectives and analysis
COP26 and the Glasgow Climate Pact has made progress, creating new hooks for accelerating policy in the early 2020s, yet is not a breakthrough in efforts to limit climate change to 1.5C or well below 2C.
It is now more vital than ever that nations come back to the negotiating table next year on issues such as NDCs. As it stands, this is a partial victory and will remain so until we have a path to 1.5C.
Every year matters. A key achievement of the summit is to bring forward the timetable to the end of 2022, by which countries will need to resubmit their NDCs to align with the goals of the Paris Agreement.
We also need to see more near-term investor action with science-based targets ideally for 2025 or 2030 at the latest matched with strong stewardship and policy engagement to ensure impacts in the real economy.
Fiona Reynolds, CEO at the Principles for Responsible Investment, comments:
“COP26 has made progress in tackling climate change, but as it stands this is an incomplete victory. Annual emissions continue to rise and the pledges made are far from sufficient to limit warming to 1.5C – rather, current predictions put us on track for more than 2C of warming, according to analysis by Climate Action Tracker. New commitments announced at the conference also need enhanced accountability and rigorous enforcement.
“Time is running out in the fight against the climate crisis, and we urgently need to see nations return to the negotiating table next year to agree in reduce emissions further and set us on a pathway to 1.5C. With that said, a key achievement of COP26 has been the creation of new hooks for accelerating climate policy action in the early the early part of this decade. We’ve seen commitment to policy action on countries’ NDCs, reversing deforestation, transitioning away from fossil fuels, curbing methane emissions as well as the financing of increased resilience and clean energy solutions. It’s now vital that we see these commitments lead to decisive action.”
Sagarika Chatterjee, Director of Climate at the Principles for Responsible Investment:
“The Glasgow Financial Alliance for Net Zero represents a milestone for the sector. Now, organisations at every single stage of the investment process have access to an initiative designed to help them reach net zero. The structure that GFANZ provides is the most effective way of getting firms to act together to reach net zero.
Likewise, the PRI is conscious of the need to ensure that signatories to GFANZ’s net zero initiatives need to push their net zero ambitions further, and that the initiatives need to be transparent and accountable on their progress.
The work GFANZ is doing has resulted in some strong results. The Net Zero Asset Owners Alliance, for example, has seen with 27 asset owners publish targets with specific emissions reduction ranges, as well as a join thermal coal phase out position. It’s not “job done” for the initiative, but work like this is a potential blueprint for elsewhere in the sector.
The work done by the IFRS and the establishment of the International Sustainability Standards Board is a win to ensure consistency of climate data, a long-standing sticking point for investors.
As financial regulators, including the Financial Stability Board, start to address the issue of net zero, alongside TCFD and transition risk, the private finance sector and investors must act swiftly to prepare for greater scrutiny and overcome hurdles to developing and publishing credible and rigorous net zero transition plans.”
More information on Net Zero.
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