COP26: Pressure growing for step change in climate policy

In November, global leaders will meet in Glasgow for the COP26[1] climate conference that could prove a make-or-break moment for global climate diplomacy. Leaders meet every year to assess progress toward tackling the climate challenge and agree new commitments. The focus is usually on incremental steps or agreements, which attract limited attention. Some provide focal points for political commitments to deliver step changes in the pace and intensity of action. 

However, pressure is growing on the UK government (which is hosting the event) to ensure a step change in climate policy at this year’s meeting. 

The Paris Accord, agreed in 2015, cemented a global commitment to limit long run temperatures to “well below two degrees”. The policies of individual governments fell far short of that global commitment, and continue to do so. This year’s conference is meant to provide a staging post at which national leaders return to the forum with tougher commitments, closing the gap between that shared ambition and their individual actions. 

A tightrope act

Success is not assured. Past conferences have raised hopes only to see them dashed amid squabbling between national negotiating teams. COP15 in Copenhagen was set to deliver an outcome similar to that finally delivered in Paris six years later, but fell flat. 

Today, a similar delay would make a smooth climate transition almost impossible. The International Panel on Climate Change has warned that meeting the more ambitious end of the commitment made in Paris will require global greenhouse gas emissions to roughly halve by 2030. To achieve the two degree target requires a less drastic fall but still demands a determined reversal in the decades-long growth of annual emissions. History has taught us that the political manoeuvrings needed to deliver agreement on the global stage take years to play out.

This year’s climate conference will be the focus for political commitments, corporate targets and social pressure. That backdrop will likely maintain financial markets’ focus on climate change as an investment driver, and potentially push attention beyond the conventional clean technology areas on which many investors have typically focused.

Conviction that political leaders will take the steps to drive decarbonisation in more challenging areas – such as heavy industry or air travel where adaption will prove costly – could reshape the market’s perspective of climate change, the risks it poses and the opportunities it will create. 

[1] The 2020 United Nations Climate Change Conference