COP26 Briefing | Post-summit analysis: How successful has COP26 been in stepping up the fight against climate change?
Finance was a hotly anticipated topic at COP26, with action urgently needed to mobilise $billions to decarbonise economies, invest in green technologies and mitigate the impacts of climate change. Here we discuss some of the key developments.
For Clyde & Co Partner Nigel Brook, in Glasgow for COP26, one of the most significant announcements was made by the Glasgow Financial Alliance for Net Zero (GFANZ). It revealed that 450-plus financial institutions with up to $130tn of assets under management are now on board, committed to delivering net zero by 2050.
It is not only the sheer size of this commitment that matters: but the ambition behind it. GFANZ is adopting a science-based approach and has set itself near-term targets as well as longer-term ones. “This is not just some distant aspiration, these are real, substantive goals for the near future,” says Brook. “We’ll have to wait for the detail but if this moves capital away from fossil fuels towards green technologies, it could be a game-changer.”
Such a move could spur other institutional investors to come on board and encourage more companies in energy-intensive sectors to pivot away from fossil fuels, for fear of being starved of investment. It should support much-needed R&D funding in climate tech and bring early-stage innovations such as carbon capture and storage or hydrogen fuel rapidly down the cost-curve, as has already happened with wind and solar.
Despite frustration at the pace of progress, the atmosphere during the first week of COP was one of guarded optimism according to Brook. Several announcements were a “pleasant surprise”, such as India’s near-term commitments to deploy more solar power. He also sees more ambition by business to take climate change seriously and make it a central strategic issue. There’s further cause for hope in the announcement of the new Taskforce on Access to Climate Finance to help poorer nations mitigate and adapt to climate change, with more details expected shortly.
Insurance has a bigger part to play too. On 3 November, an important new paper was launched calling for urgent, paradigm policy shifts to make insurance part of the solution to climate change. The following day, members of the Association of British Insurers (ABI) discussed their desire to green their investments but also the hurdles to doing so posed by Solvency II rules, which create lengthy lead-in times for projects and require technologies to have long track records.
Progress has certainly been made, but is it enough? Follow our hashtag #ClydeCOP26 to stay up to date with regular updates on key COP26 developments.