COP26: Week 1 recap

COP26 is off to a blistering start – here’s a recap of the big announcements from the first five days, as well as other insights coming out of the side events that Linklaters attended in the delegate zone (the “Blue Zone”):

Key announcements

• India committed to achieving net zero emissions by 2070. This is a big move from India's previous position, despite the later timeline, and with strong 2030 commitments.
• The EU and US launched the Global Methane Pledge, an initiative to cut methane emission levels by 30% by 2030 (see here). Over 100 countries have joined the pledge.
• At least 110 countries, representing 85% of the world's forests, have committed to stopping and reversing deforestation by 2030 (see here and here).
• The UK is launching an international plan to deliver clean and affordable technology globally by 2030 (the Glasgow Breakthroughs)  – this has been backed up by over 40 world leaders including those from the US, India, the EU and China (see here).
• A new $8.5bn partnership between the US, the UK, Germany and the EU to help South Africa finance a faster transition from coal (see here).
• More than 40 countries pledged to phase out coal power by the 2040s including Poland, Vietnam and Chile (see here). The pledge does not include sign ups from the US, China, India or Australia.
• Separately, 20 countries including the US, UK and Canada have pledged to end public financing for coal, oil and gas overseas by the end of 2022.
• UK Chancellor Rishi Sunak announced that the UK will be the first ever net zero financial centre and make it mandatory for companies to publish detailed plans on decarbonisation and transition to net zero (see here).
• The Glasgow Financial Alliance for Net Zero (GFANZ) has grown to 450 firm participants with over $130 trillion in assets under management (see here). It will be co-chaired by Mark Carney, UN Special Envoy on Finance, and Michael Bloomberg and will expect every member to produce detailed 5 year transition plans and report on progress annually.
• There is a new International Sustainability Standards Board (ISSB) which will develop a comprehensive global baseline for sustainability disclosures (see here).

For more information on COP26, see our COP26 microsite.

Out of the Blue (zone)

The future of carbon pricing 

• At a panel on carbon pricing, EU Commission president Ursula von der Leyen re-iterated the EU's commitment to imposing a carbon border adjustment mechanism (CBAM) (see here) but noted that she would prefer it if third countries kept money in their own economies by "putting a price on carbon" domestically.
• Kristalina Georgieva (Managing Director of the IMF), Ngozi Okonjo-Iweala (Director General of the WTO) and Mark Carney all called for a global carbon price floor that is forward looking and equitable for struggling companies. In particular, Georgieva said the carbon price needs to be at least US$75 per ton of carbon by the end of 2030. 

Net zero focus at the UK Financial Conduct Authority 

• At a joint panel with the Bank of England, the FCA confirmed that it will be expanding the application of its TCFD-aligned Listing Rule to standard listed companies and introduce similar disclosure requirements for asset managers, life insurers and FCA-regulated pension providers by the end of year.
• Nikhil Rathi, CEO of the FCA, also said the ISSB standards will form "the backbone of corporate reporting in the UK" and the organisation is looking at introducing multi-level requirements for sustainable finance disclosures.
• The FCA has been scaling up internally with a new ESG division and is embedding ESG considerations throughout the organisation.
• For more information on the FCA's ESG plans, see here.

 Decarbonising healthcare 

• Lord Prior, Chair of NHS England, announced a partnership with its biggest suppliers (including GSK and Microsoft) to decrease emissions in the NHS supply chain.
• From 2023 onwards, the NHS plans to stop engaging with suppliers who do not have Paris aligned net zero targets.

Letting private companies off the hook? 

• Larry Fink, Chairman and CEO of BlackRock, expressed his frustrations at the level of attention and scrutiny that public companies receive compared to private companies.
• During a panel with Mark Carney, Jane Fraser (CEO of Citigroup) and Mary Schapiro (previously Chair of the US SEC), Fink noted that governments are not moving fast enough to implement the infrastructure needed for net zero transition and was not focusing enough on private companies and in particular movement of hydrocarbons from public to private companies.

Spotted at COP26…

• Renowned natural history broadcaster Sir David Attenborough told leaders "the world is looking to you" in an emotional speech
• A written opening statement from President Xi of China, who chose not to attend COP26
• Activist Greta Thunberg at various youth protests and rallies across Glasgow, as well as surprising delegates in the Blue Zone by attending (and promptly leaving) a panel event on carbon offsets
• Queues aplenty as a result of the popularity of the summit and security requirements of world leaders and prominent business and sustainability figures

We'll be back next week with more updates.

We will leave you with a picture from the Blue Zone of an art installation based on TS Elliot's The Waste Land (which is a great summary of the mood in Glasgow).