What is COP26 and why is it important?
This year’s meeting has a particular significance. To understand why, we need to look back to another critical COP meeting – COP21 in Paris, in 2015. This was the meeting where for the first time, governments agreed on a common objective to limit global warming to well below 2 degrees, and aim for 1.5 degrees – known as the Paris Agreement. Countries committed to bring forward national plans (Nationally Determined Contributions, or NDCs), setting out their plans to cut emissions – and agreed a five-year review cycle to update these plans, with the upcoming COP26 meeting the deadline for these to take place.
What are the objectives for the meeting?
The COP26 meeting has four formal objectives:
- Secure global net zero by mid-century and keep 1.5 degrees within reach
- Adapt to protect communities and natural habitats
- Mobilise finance
- Work together to deliver
In his speech to the United Nations General Assembly last month, UK Prime Minister Boris Johnson gave more details on the UK’s priorities as President. He reinforced the overriding ambition of limiting the temperature rise to 1.5 degrees, and set out four key areas for action at COP26: coal, cars, cash and trees.
Aside from the objectives for governments, the COP26 meeting – more than any other before it – aims to catalyse action by non-state actors, including cities, regions, business and investors. The ‘Race to Zero’ collaboration is working to bring these commitments together.
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Cars – All new cars to be zero-emissions by 2040
The International Energy Agency’s report on achieving a 1.5 degree temperature limit shows that 60% of all new car sales would need to be electric by 2030 to keep on track, and the UK Prime Minister’s speech calls for this to rise to 100% by 2040. But analysis by the 2° Investing Initiative earlier this year suggested that on the basis of the current strategies of automotive companies, only around 4% of global car sales in 2025 will be electric, with a further 8% in hybrids3 .
Stronger regulations are needed to force the pace of change, such as the UK’s policy to phase out the sale of new petrol and diesel cars by 2030, as well as rapid investment in charging infrastructure.
With a fleet of electric vehicles ready to transport world leaders around at the COP26 summit, this will be a highly visible issue, but one where it is hard to see space for harmonised global commitments.
Prediction: Potential for steps by individual governments, but not much chance of international consensus
Trees – Halt and reverse the loss of trees and biodiversity by 2030
If tropical deforestation were a country, it would rank third in the world for greenhouse gas emissions4 . Forests also serve a range of other essential needs for nature and the planet, as home to most of the Earth’s terrestrial biodiversity.
According to the UN’s Food and Agriculture Organisation6, the rate of global deforestation has slowed over the past three decades – but we are still losing around 10 million hectares of forest a year, down from 16 million in the 1990s, with conversion to agricultural use the main driver. The rate of improvement needs to accelerate dramatically to meet the goal of entirely ending deforestation by 2030. Furthermore, many pathways to 1.5 degrees imply significant ‘negative emissions’ (removing greenhouse gases from the atmosphere), with reforestation being one mechanism to achieve this. Next year’s COP15 – the biodiversity equivalent of the climate COP – will also emphasise the importance of avoiding unintended negative impacts on biodiversity when taking steps to cut greenhouse gas emissions.
Prediction: Good prospects for a high-level commitment, but questions likely to remain about implementation
‘Race to zero’ – Accelerated action by cities, regions, business and investors
However, the formal negotiations progress, action by governments alone is not enough. As reflected in the COP26 objective of ‘working together to deliver’, action across all parts of society and the economy will be needed to achieve the transformation to a low-carbon world.
Businesses, investors and civil society are expected to be in Glasgow in force, to place pressure on governments to achieve an ambitious outcome. And we can already say that COP26 has achieved success in catalysing action from the private sector. According to the UN’s Race to Zero campaign, over 3000 businesses and over 170 investors have now made net zero carbon emissions by 2050 at the latest. BMO Global Asset Management is one of these institutions, as a founder signatory to the Net Zero Asset Managers Initiative, which now has signatories with $43 trillion in assets under management, representing around half of all AUM in the asset management industry.
We can expect more announcements at and around COP26, which we hope will amplify the efforts of the public sector.
Prediction: Significant private sector commitments will help to put pressure on governments
Whilst it is easy to be pessimistic about COP26 given the scale of the emissions gap, the meeting has already proven a catalyst for increased levels of ambition from both individual governments and from companies. Making further progress will depend on the ability of the negotiating teams to find the right levers to persuade governments to take further steps, not just in setting far-off targets, but in implementing measures at home, including on the key issue of providing climate finance.
The COP26 outcome won’t be a single ‘piece of paper’, rather a collection of commitments – so success or failure will be judged on how compelling these look in aggregate. Whether COP26 is judged as a success will also depend on the mood around the meeting, where factors such as media coverage and civil society protests will play a role.
We will be attending the COP26 meeting and keeping track of progress on the objectives, and will report back both during and after the meeting on whether it delivers on its promise.
We are grateful for input to this work from Dr Ben Caldecott (member of the BMO Responsible Investment Advisory Council, and founding Director of the Oxford Sustainable Finance Programme).
Use our handy glossary to look up any technical terms you are unfamiliar with.