PRI reflections on COP23: now is the time for investors to work together to tackle climate change and meet the terms of the Paris Agreement
Following COP23 in Bonn, it is apparent that though we have come far in agreeing a framework for addressing climate change, there is still much to be done if we are to succeed in meeting the terms of the Paris Agreement; success is not assured without increased ambition.
It was reported during the conference that despite the Paris Agreement, global carbon emissions from fossil fuels and industry have risen for the first time in three years. If we are to keep the world under two degrees, more ambitious action on climate action is required from both governments and non-state actors with an increased sense of urgency – time is not on our side. As investors, we have a key role to play in addressing climate change as it relates to investment, both in assessing risks and opportunities. In particular, investors can play a role in addressing emission reductions across their portfolios.
Steps forward on climate action
On a positive note, despite the US deciding to withdraw from the Paris Agreement, it was heartening to see so many US states, cities, municipalities, companies and investors out in force in Bonn. Many have announced their intention to keep moving forward on climate policies, despite the lack of support at the federal level.
China is continuing to fly the flag for climate initiatives and the UK, Canada and the Marshall Islands launched the Powering Past Coal alliance, which aims to phase out coal production by 2030 whilst being respectful of workers and communities affected by the low-carbon transition. The strong message from COP23 however, is that these initiatives alone are not enough.
One of the biggest concerns expressed was the need for increased ambition by governments across the globe in their Nationally Determined Contributions (NDCs). The NDCs outline the contributions that each individual country will take to address their commitments under the Paris Agreement. They are required to be "ambitious", "represent a progression over time" and be set "with the view to achieving the purpose of this Agreement".