COP26 - An Imperative for Action

Two Weeks in Glasgow: Post COP26 Reflections - a Month Later

The success of COP26 and the Glasgow Climate Pact will reveal itself over time but most agree that the outcome was better than expected but not as good as it needs to be. If, as Lord Stern suggested before the COP, there is more momentum coming out of it than going into it, COP 26 would be a success and there’s evidence that’s the case. History could judge Glasgow as the point when serious, collective climate action started across all sectors and all countries.

Glasgow was different from other COPs not just because of COVID but because the private sector and finance were present as an active participant. Finance was the first thematic day and CEOs of banks, asset managers and fund managers turned up like never before.

Other sectors were also well represented on thematic days and it was good to see high profile for food and agriculture as it becomes more integrated into climate action – we can’t solve climate change without solving our food systems and making land use and land use change more climate smart. Oil & gas, as noted by the press, were well represented both on their own account and as parts of national delegations which is both encouraging and worrying.

Civil society was well represented and increased public engagement is an opportunity to motivate and inform customers and colleagues. 100,000 activists walked the streets of Glasgow and climate is now more of a mainstream talking point and galvanised the nation. The voice of youth, in particular, is being amplified.

NatWest Group made a significant impact through our role in GFANZ, the promotion of enterprise as a solution to the challenge of climate change (particularly through the portion of the Springboard for Sustainable Recovery report which focused on opportunities for SMEs) and interactions with the media and politicians.

The scale of the challenge is now very apparent, generally agreed and consistent with a near universal ambition to keep warming to 1.5 degrees. However, as Climate Action Tracker notes, halving today’s annual 52 GT CO2e by half to 26 GT by 2030 is an extraordinary challenge given that NDCs coming into Glasgow accounted for just 4GT and other Glasgow commitments, including-deforestation, methane and coal plus other NDC commitments are, at most, 10 GT.

That leaves 16 GT of annual reductions to be identified and implemented by 2030 – a monumental task. Our current economic, social and political systems are not viable for delivering such enormous change over such a short period of time – this is true at the multi-lateral, national and local level, so massive systemic change is required.

There is some realisation from politicians and society that systemic change is necessary and that we need to address the tragedy of the commons – the president of Costa Rica describes this as "smart selfish" or "stupid selfish" – the stupid selfish will perish together and only by being smart selfish can we mutually thrive.

The good news is that the finance is available – the $130 trillion of GFANZ money (although containing some double counting) from asset owners, fund managers and banks can provide the financial resources for the transition if the financial system can be rewired consistent with Net Zero ambitions.

However, we need to find ways to make this finance available to developing as well as developed countries. Concessional finance in the form of philanthropy, multilateral institutions and bilateral donors needs to scale up its efforts to mitigate risk, build strong institutions in countries and focus in the areas of greatest need with the objective of enabling private fiance to flow.

The inclusion of adaptation finance, loss and damage and the expectation of increasing climate finance are important aspects of the Glasgow Climate Pact – the trust eroded by failing to deliver the $100 billion promised in Copenhagen must be rebuilt through implementation of the Glasgow Climate Pact.

The private sector is starting to act together and at scale. There’s evidence that businesses are, first, putting their own houses in order by reducing scope one and two emissions. Second, they are starting to end the most harmful activity by moving away from the scope 3 emissions from fossil fuels, deforestation and biodiversity loss. Third, they are focusing on the opportunities that arise in giving customers what they want and need as part of the transition to net zero.

All of the above suggests that there will be great demand for green finance and that NatWest Group's ￡100 billion target of climate and sustainable finance and funding should be a strong signal that we are the partner of choice.

Data will support us making good decisions around the transition. We all need access to data to understand risks and rewards of climate action. Understanding carbon footprints from the largest businesses to the smallest SMEs and for all citizens is central to building understanding and consistency.

Three other really significant points come out of Glasgow. First, the fossil fuel era is nearing its end. Second, nature is now to the forefront and can be our secret weapon in combating climate change. Third, completing the rule book for Article 6 on carbon markets is an important signal to show that high quality carbon credits with environmental integrity are part of the solution (so long as they are not treated as a means to avoid the difficult work of decarbonisation),

The final point is that we can’t live up to our ambitions without working together – we need to collaborate as though our lives – or the lives of the next generation – depend on it (which they do). Together we can turn the rhetoric of Glasgow into the climate action that brings about a socially, economically and environmentally viable future for us all.

COP26 is the platform for further activity, a rallying call for all and a significant of opportunity to embed climate in all our decisions. After all, climate change is the 21st century growth story and the UK has put itself at the heart of the growth story.