ESG News THE GLASGOW AGREEMENT: NOT MUCH COP


Last-minute changes to the COP26 agreement render it worthless, argues Andrew Holt, but there is room for optimism.


Looking back at all those briefings involving global leaders in Glasgow, one was left with a big question: what did COP26 achieve? It saw 30,000 delegates from 200 countries spend two weeks in November discussing how they should tackle the most important green issues of the day. The consensus on the final agreed deal was that it amounted to a watered-down affair, with the failure to forbid the use of coal and fossil fuel subsidies particular sore points. This led Jennifer Morgan, head of Greenpeace, to describe the outcome as “meek” and “weak”. The outcome will lead inevitably to a green slanging match between nation states, as China and India were the countries dragging their feet on the key issue of coal and other fossil fuels. As a result, the COP26 Glasgow Agree- ment ended up being completely gar- bled. Take this key section as an exam- ple, where the agreement calls for “accelerating efforts towards the phase down of unabated coal power and ineffi- cient fossil fuel subsidies, recognising the need for support towards a just transition”.


A green transition fuelled by coal


What this means in the transition to a green global economy, if anything at all, is open to debate.


This primarily emanates from the semantic shift in the agree- ment changing “phase out” to “phase down” due to last-minute interventions – in this particular case from India – rendering the agreement close to meaningless. US climate envoy John Kerry had the unenviable task of defending the change. “You have to phase down coal before you can end coal,” is how he justified it to a baffled audience. He sounded like a man who did not believe his own words. The reality is that gobbledygook like this cannot be a central and effective part of any policy – particularly on such an impor- tant and debated issue as climate change.


Investor perspective So, what should institutional investors make of it? The Impact Investing Institute (III) revealed to portfolio institu-


24 | portfolio institutional | December-January 2022 | issue 109


tional a direction out of the COP26 maze that will be of use to institutional investors – especially in using the momentum to do more.


“COP26’s emphasis on the power of private capital to effect change should be recognised as a call to action for institutional investors,” said Joe Dharampal-Hornby, III’s public affairs and media relations manager. He cited the announcement of the expansion of the Glasgow Financial Alliance for Net Zero (GFANZ), demonstrating the opportunities for private capital.


GFANZ’s big showpiece at COP26 was uniting more than $130trn (£98trn) of private capital to transforming the global economy towards net zero.


The commitments come from more than 450 firms across 45 countries aiming to deliver the estimated $100trn (£75trn) needed over the next three decades to achieve net zero. Analysis commissioned by the UN High Level Climate Action Champions found the private sector could deliver 70% of investment needed to meet net zero goals. “But this should also act as a warning to those who have not yet considered their environmental impact that they run the risk of being left behind,” Dharampal-Hornby said.


Stepping up He then called on institutional investors to do more. “We urge investors and busi- nesses to step up to the challenge of delivering positive environmental and social benefit


alongside a financial return, integrating this approach into


their investment strategies.” Dharampal-Hornby added that he would like to see institutional investors changing their portfolios to become more ESG focused following COP26. “We hope COP26 will be a catalyst for increased focus on ESG among institutional investors as the necessity of change, and the opportunities it presents, were clearly demonstrated,” he said. “Adopting an environmental focus is not just good for the planet – it is also a sound investment decision.” Assessing the good and bad of the event, from an investor’s perspective, Dharampal-Hornby noted: “COP26 produced sev- eral welcome governmental and private sector announce- ments, from the expansion of GFANZ to the chancellor’s pledge to make the UK the first net-zero financial centre. “But,” he added, “there is much more to do. Without a truly global just transition that takes people and communities into account, there will not be the public backing needed for the huge changes it requires across the world.”


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52