Many pledges were made at COP26, but what do they mean for business?
Here, we reflect on what the macro scale commitments might mean for 3Keel and our clients who work with us on projects that range from facilitating coalitions of leading global businesses — such as the Retail Soy Group and Palm Oil Transparency Coalition — to mapping supply chains and developing net zero carbon strategies. This article provides insight into our key takeaways from the conference.
1. Deforestation and sustainable commodities
The news: COP26 saw the announcement of substantial deforestation-related funding commitments through two agreements. First, the Glasgow Leaders’ Declaration on Forests and Land Use, committed 130 countries to halt and reverse forest loss and land degradation by 2030. Second, the Forest, Agriculture and Commodity Trade (FACT) Dialogue Roadmap promotes sustainable trade in commodities. The Leaders’ Declaration promised $19.2 bn in funding to support sustainable forest management, and the FACT statement provided a roadmap to action that covers 75% of global trade in key commodities.
Our take: While we were pleased to see attention directed towards sustainable commodities, it is important to note that many of these declarations are carefully crafted to allow for continued land conversion. For example, under this declaration, Brazil committed to ending illegal deforestation by 2028; however, the Brazilian government has a history of tackling illegal deforestation by simply declaring it legal. As such, we think that it is important to push for increased transparency and specificity in setting deforestation-related targets. This extends not only to countries but also to the private sector.
2. Net zero roadmaps
The news: At COP26, the UK reaffirmed its commitment to require British financial institutions and listed companies to publish net zero roadmaps by 2023. These roadmaps should set out how organisations plan to decarbonise by 2050. In line with these developments, the Science Based Targets initiative also released new guidance for companies to set net-zero targets just before COP26.
Our take: Although this commitment focused on British firms, we anticipate that its impacts will be global. When this legislation is introduced, any organisation that is looking to attract finance from the UK will need to demonstrate that it is working towards achieving a net zero emissions target. It is likely that emissions reporting will become a more substantial part of company operations. While this announcement is generally a positive step towards reducing emissions in the UK, it remains unclear how or if these roadmaps will actually be audited by a public body. As such, the reporting requirement could still leave significant room for companies to report emissions without implementing roadmaps effectively. We also predict a significant skills and capacity gap in business — and the wider sustainability sector — if these plans are going to be developed at the pace and detail needed to hit 2030 targets.
3. Pressure to increase climate ambition
The news: Pre-COP26 analyses of national targets for 2030 indicated that the world is on track for 2.4℃ of warming above pre-industrial levels. The Glasgow Climate Pact requires governments to set more ambitious targets by 2022 to ‘keep 1.5℃ alive’. After 141 countries submitted new emission reduction commitments, analysis projects that warming trajectories shifted to 1.8 or 1.9℃ scenarios. Actualising this scenario is contingent upon countries achieving not only their NDC targets but also their net zero commitments.
Our take: We anticipate that the growing pressure to set more ambitious targets will affect not only countries but companies too. Organisations across the public and private sector are already under pressure to set targets towards 2030 rather than 2050. We anticipate that this pressure will only increase over time.
4. Loss and Damage for vulnerable countries
The news: COP26 drew a great deal of attention to the issue of ‘Loss and Damage’ payments to low-income countries that are likely to experience the worst impacts of climate change. Despite the emphasis on loss and damage in the negotiations, the final Glasgow Pact did not include any commitment.
Our take: Vulnerable island nations were quick to emphasise that high-income countries failed to fulfil their pledge to provide $100bn in climate finance for developing countries by 2020. This failure, coupled with the lack of genuine engagement on the question of loss and damage payments, indicates that the push for ‘climate justice’ remains largely rhetorical. This particular can was kicked down the road to COP27 next year where we hope that more real progress might be made.
5. Increased recognition of the interrelated nature of the climate crisis and social justice issues
The news: This year’s COP saw increased discussion and acknowledgement of the central role played by Indigenous Peoples and Local Communities (IPLCs) in environmental stewardship. For the first time in the history of the UNFCCC, this year’s COP saw 28 indigenous leaders nominated to engage with governments as vital knowledge holders. However, the structure of these conferences continue to exclude and silence the voices of already marginalized groups — with the usual faces seen leading important discussions.
Our take: It’s vital that greater emphasis is placed on inclusion and climate justice. People are at the heart of our values at 3Keel, and we believe that any effective climate solutions must address the interrelated issues of gender, social, and racial justice. While this year’s COP26 put inclusion on the table, it is difficult to see genuine change occurring unless these issues become central to negotiations and inclusive actions are not limited to side events and plenaries.
6. Nature and Ecosystems
The news: COP26 placed significant emphasis on the important role that nature plays in keeping warming below 1.5℃. The Glasgow Pact noted the need to protect, conserve and restore nature and ecosystems. An early draft of the document included a statement about the need to incorporate nature-based solutions to address climate change. However, this specific wording was weakened during negotiations to its current wording: “… protect, conserve and restore nature and ecosystems.”
Our take: Protecting nature is central to 3Keel’s work across all practice areas. We were pleased to see conversations on the role of nature in addressing climate change highlighted at COP26. However, we believe that there needs to be a greater emphasis on understanding the connection between ecosystems, nature, food systems, and agriculture in the future. Promoting sustainable and resilient agriculture needs to be a more substantial part of the climate conversation. Moreover, it is critical that ‘nature-based solutions’ do not become the focus of private sector climate action; the hard work of delivering rapid decarbonisation of energy and materials production is where the majority of corporate investment and influence needs to be focused.
7. Article 6 and carbon markets
The news: One of the most notable outcomes of COP26 was the completion of Article 6 of the Paris Agreement, which has been in discussion for six years. Article 6 lays the groundwork for the creation of a global carbon market that will allow emissions trading in both private and public sectors.
Our take: The existence of carbon markets does not in itself guarantee emission reductions. This mechanism will only work if a global carbon market is designed to ensure that the price of CO2 is sufficiently high, e.g. by avoiding over-allocation of emissions allowances. The completed Article 6 is likely to lead to stricter regulation regarding the application of carbon credits to ensure that emission reductions are not double-counted.
8. Glasgow Climate Pact and Coal ‘phase-down’
The news: One of the most tense moments of negotiations centered around the language of paragraph 36 of the Glasgow Climate Pact. In the first draft of the agreement, the text called for a ‘phasing out of coal’ and ‘fossil fuel subsidies’. However, in the final moments of discussions, some countries lobbied to change the wording to a ‘phasing down of coal’. Many constituents expressed disappointment that the final wording was watered down in this way.
Our take: Commitments to phase out coal and fossil fuel subsidies are long overdue, so it is an important step forward that an official COP document now requires this shift. While it was disappointing to see the language surrounding coal watered down in the final negotiations, we believe that the current wording still sends a clear signal indicating that the end of coal is in sight.
Like others working in the climate and sustainability sectors, we were pleased to see so many new pledges announced at COP26; however, we were also disappointed that these pledges were not more ambitious and did not reflect the need for greater action in the immediate future. We would like to see governments and companies commit to doing more and with a greater sense of urgency. At 3Keel we are working to support organisations that are looking to set challenging and ambitious goals that pave the way for the kind of systemic change we know needs to happen.