Following two weeks of climate talks in Katowice, we reflect on the key points of COP24:
1. Over 400 investors (with US$32 trillion AUM) asked for a Paris Agreement rulebook; we are pleased this has been agreed.
The rulebook will enable implementation of the Paris Agreement and greater transparency, including agreement on how countries will measure and report on emissions. It covers
- a public registry of country pledges;
- market mechanisms;
- climate finance reporting, including a single set of rules around this;
- a global stocktake in 2023;
- loss and damage;
- and monitoring.
Establishing these rules will give investors greater confidence in the Paris Agreement process.
2. Agreement on the Paris Agreement rulebook is an achievement, given the divisions over 1.5oC.
The final rulebook notes “timely completion” of the IPCC special report on 1.5oC and invites countries to draw on this. This follows opposition to “welcoming” the IPCC report from the US, Saudi Arabia, Russia and Kuwait earlier in COP24.
Welcome developments from COP24 include the EU 2050 strategy, Silesia Declaration on a just transition (led by Poland and signed by 45 governments), and the Powering Past Coal Alliance of governments, businesses and organisations (80 members now including Sydney and Melbourne). The PRI had particularly pressed for the inclusion of social issues and the just transition in the negotiations (and 120 investors with US$5.6 trillion AUM have now signed the investor statement, which is still open).
3. Despite this momentum, the outcome from COP24 is insufficient. Investors have clearly asked for more ambition.
Governments are not stepping up to the level of ambition called for by
- the findings of the IPCC report;
- the Talanoa Dialogue Call for Action;
- the UN Secretary-General António Guterres in his dramatic appeal for ambition;
- and Swedish schoolgirl, Greta Thunberg.
We see a likelihood of governments having to apply the emergency brakes on climate policy – what we call The Inevitable Policy Response. Carbon pricing, demand and supply-side policies are needed.
4. Governments need to step up ambition urgently. The UN Secretary General 2019 Climate Summit, two weeks after PRI in Person in Paris in September, is a key moment for this, as countries prepare to submit their second round of NDCs in 2020.
Companies and investors also need to step up in phasing out fossil fuels, incorporating a just transition for workers and communities, and scaling-up low-carbon investment, in collaboration with multi-lateral development banks. BNEF analysis highlights significant clean energy potential due to rapidly falling technology costs; the fall of levelised costs for solar by 14% and wind by 6%, and installation numbers heading into record territory, with over 30GW of new projects planned in the US alone by 2020.
Investors such as New York Common Retirement Fund are already signalling their intention to scale up, with US$3 billion allocated to sustainable investment in the lead up to COP24, while IFM Investors is applying science-based targets to infrastructure investments.
Investors led by New York State and the Church of England are asking ExxonMobil to set targets to cut greenhouse gas emissions, with Shell recently having announced net carbon footprint targets.
In 2019, the PRI will be focusing on The Investor Agenda, ClimateAction100+, just transition, TCFD and The Inevitable Policy Response to support investors in stepping up in climate action.