Climate change risk and liability report 2021
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The COP26 climate summit underway this week is the most significant meeting of world leaders and policymakers to date. It’s critically important because, six years on from the Paris Agreement, ambitions around tackling climate change now need to be ratcheted up.
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The world is watching to see whether leading global economies and major emitters will commit to even more aggressive decarbonisation goals than they have already announced.
There will also be scrutiny over when promises to help developing countries will be fully honoured. The $100 billion of annual funding agreed by rich nations to support poorer nations to cut carbon emissions, mitigate climate change impacts, and adjust economically to the transition, has yet to be fully mobilised. Developing nations argue that this makes it extremely difficult to adapt to the physical threats they face, much less invest in their own decarbonisation efforts.
Nigel Brook, Partner at Clyde & Co, says, “Up until now, the overriding emphasis has been on reducing emissions, and that’s a global problem that requires global solutions. But it’s also imperative to build resilience to climate change impacts on a local level to support at-risk communities, which are disproportionately in the “Global South”. That requires coordinated support.
“COP26 is about accelerating the race to net zero, but it’s also about a just transition, and developing strategies for the new, less stable climate.”
Finance is set to be a very strong strand of debate at COP26, and one important element is how private finance can best be channelled alongside public investment, to create a truly green and resilient economy. While the role of pension funds and other institutional investors, as well as banks, is clearly vital, Brook hopes policymakers will appreciate the essential contribution that the insurance sector can make.
For example, insurance could have a pivotal part to play in de-risking new technologies, so that much-needed climate tech innovations, such as carbon capture, green hydrogen, low carbon steel and cement, and green shipping/aviation, can be scaled up at pace. COP is also an ideal platform for measures aimed at encouraging R&D and investment to be announced.
Land use and the role of nature are high on the agenda as well. Reversing the destruction and degradation of forests is vital, as part of wider changes to the way we use land so that it becomes a net absorber of CO2, rather than a net emitter. Again, these are issues that require a global strategy.
There have been huge steps forward since Paris, notably in terms of the adoption of wind and solar power, driven by rapidly falling costs, although it now looks unlikely that COP26 will mark the end for new coal-fired power stations.
Geopolitical tensions and the global pandemic have made this COP uniquely challenging. We will be keeping our finger on the pulse with a series of posts following key developments at the summit and beyond.
Follow our hashtag #ClydeCOP26 to stay up to date with regular updates on key COP26 developments.