By Sagarika Chatterjee, Director of Climate Change, PRI
All eyes will be on Glasgow next week as leaders from many – but not all – countries around the world convene for the much-anticipated hybrid COP26. And a year since the summit was meant to be held in 2020, the sense of urgency behind the need for rapid action on climate change has only grown.
We can see the threat of climate change all around: in the lethal storms, heatwaves and floods in recent weeks and months. Indeed, the danger of climate change is no longer a theoretical future, but an unignorable fact.
So, it is vital that Glasgow is a success – and the world wants it to be. To make this happen, we need to see bold action to move towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. We need to see swift and meaningful steps taken by both governments and investors to commit to halving global emissions from current levels by 2030 to put the world on track for 1.5 degrees.
Overall, we want countries to leverage policies and head towards a direction where they follow science-based evidence to:
- Secure global net zero by mid-century and keep 1.5 degrees on the table and within reach through long-term climate targets, and
- Implement near-term/interim goals and accountabilities to stay on track. Importantly, this necessitates fossil fuel phase-out.
Specifically, we need to see country-level ambition to keep us on track for this. Key countries include:
- In the US, the outcome of the reconciliation budget and its key promises remains in the air. Meanwhile, we still need to see stronger support for putting a price on carbon that is well designed and supported by the right enabling conditions. This should be designed alongside other primary and backstop policy mechanisms, especially in key sectors such as electricity, transport, and industry.
- From China, credible near-term polices around emissions reductions in power, industry, road transport and effective carbon pricing mechanisms, including reforming the emissions trading scheme to tighten some of the benchmarks, remain important. Making profound adjustments to the existing heavy-emitting industrial structure is one of the central government’s work priorities towards carbon neutrality, as shown in the Central Committee of the CCP and the State Council’s recent Opinions paper. On the finance side, a greater focus on tighter corporate climate disclosure and raising the standards of the green taxonomy are required.
- With Japan, their now-approved basic energy plan shows an uptick in renewable energy (36%-38% in overall power output in fiscal 2030), but detailed policy mechanisms to deliver this target; a reliable plan for coal phaseout, and addressing the social concerns of nuclear restart, are still needed.
In addition to this, we must act now to protect the world’s most vulnerable communities in both developed and developing countries – concrete, reliable policies that would provide a just green transition are urgent.
Net zero commitments
In the last sprint towards Glasgow we’ve seen an upsurge in net zero commitments from finance players, driven by the UN Race to Zero campaign: 250 financial institutions and 3,000 corporates who have made credible net zero commitment, including near-term action.
For investors, the time is now for them to step up and act on climate. They can do this is by taking action with regards to their own portfolios and clients by setting net zero targets. While this isn’t easy, there are a number of initiatives in which investors can get involved, including the UN-convened Net Zero Asset Owner Alliance, Net Zero Asset Managers Initiative, Net Zero Investment Consultants Initiative and the Net Zero Service Providers Initiative. Because no matter the kind of PRI signatory or where they are in their net zero journeys, there are things investors can be doing to get us on track for 1.5.
The PRI at COP26
The PRI will be convening government and investors at COP26 and beyond on ambitious, actionable climate targets in line with 1.5-degree warming goals agreed upon in the Paris Agreement. We will be running and partnering on a number of events at the conference, many of which investors can attend virtually.
The world is currently on track for at least a 2.7-degree temperature rise. The world is in a race to zero emissions and we need to run further, faster. As UN Secretary General Antonio Guterres has remarked: “the alarm bells are deafening”. And the message is clear: Act. Now.
This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories.Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Nor do the views and opinions expressed on this blog constitute financial or other professional advice.If you have any questions, please contact us at email@example.com.