FLOP26 or COP26? What we learned in Glasgow

After a substantial week of events in Glasgow, the Sust Global team took some time to reflect on all that we had seen and heard.

With some calling it “FLOP26” or a “COP-out,” public sentiment about the outcome of the conference is clear. However, while government commitments proved insufficient, there were still important signs of progress. These are our major takeaways:

Unsurprising shortfall - the flop

Drafts of the final decision document started flying around the internet early on Thursday, 11th November, but it was far from the final product. New drafts and revisions were in play until well into the Saturday and what was finally delivered fell short of what many hoped. Unfortunately, that shortfall was unsurprising to most.

With no commitment to support smaller countries and significant walkbacks on cutting out fossil fuels, leading carbon emitters didn’t make the commitments needed to create significant progress. To continue making progress, countries will now need to increase their commitments yearly in a new process of annually ‘ratcheting up.’

ISSB: New global reporting standards

The IFRS Foundation, which exists to develop and uphold disclosure standards in line with public interest, launched the International Sustainability Standards Board (ISSB).This is huge news and has been years in the making.

The launch of the ISSB means that A) we will have one robust reporting standard and B) that standard is backed by the global accounting profession. This will likely increase overall transparency, adoption and budgets.

The ISSB moves sustainability reporting firmly to the CFO and will underpin sustainable capital allocation across the global economy. In conjunction with existing reporting standards like TCFD, climate risk reporting is going to continue to be highly influential in both business planning and investment planning for the foreseeable future.

Corporates and finance are leading the green charge

What the less-than-promising government commitments left room for was corporations to take up the mantle of climate leaders. Businesses like Hitachi, Walmart and Nestle highlighted the work they are doing to green both supply chains and your shopping basket.

While we should always be careful of corporate ‘greenwashing’, there appeared to be significant buy-in from many of these organizations, with innovative initiatives for protecting the Amazon, greening supply chains and transitioning to renewable energy sources.

You may have seen the Glasgow Finance Alliance for Net Zero (GFANZ) commitment by 450 financial institutions to ensure their $130 trillion of assets are net zero by 2050. While that's a long way off and the headline number may not stand up to scrutiny, we hope progress will be tracked carefully, and it will turn up the heat on the finance sector, and increase demand for climate data.

In turn, data will need to become increasingly sophisticated which is a huge opportunity for climate risk data providers. At Sust Global, this means further developing our own next generation emissions monitoring product and enhancing our physical risk product using satellite-derived data, deep learning techniques and API-first data integrations.

Circularity showcased time and time again

Increasingly, experts are highlighting the correlation between climate change and overconsumption. To create plans that are more sustainable both environmentally and financially, businesses have started re-imagining the way that capitalism could look. Instead of a purely consumption based model, businesses are looking at how to incorporate low-waste, return, repair and upcycling into their business models.

Some more climate-conscious retailers already include these aspects in the way the business runs, but these principles will become more and more common outside of niche purchases. Already, select stores of major UK grocery chain Tesco include zero-waste options and return policies for certain containers. This looks to be only the beginning of circular possibilities.

Nature-based solutions get their time to shine

Aside from economic circularity, there was also a distinct theme of the interconnectedness of climate and other environmental systems. Although deeply connected, environmental conservation and climate change have long been considered separate topics by the mainstream and treated in isolation. However, the interaction between the two has started to be more widely discussed.

In fact, many types of environmental conservation could be vital to reaching a 1.5°C world. Oceans, mangrove forests, peat bogs and tundras have all been heralded as exceptional carbon sinks that need to be protected. Beyond carbon sinks, studies have proven that boosting the plant life in our cities can increase air quality while decreasing heat.

As plans to combat climate change move forward though, these nature-based solutions will need more meaningful support and governance to become a substantial part of tackling climate change. One method for enabling this is by using satellite observations to measure progress towards commitments. This could also create a pathway toward payments for ecosystem services for those countries investing in the protection of their natural resources.

Adaptation needs to enter the spotlight

Up to this point, climate change mitigation has taken the center stage of discussion. However, as climate events continue to increase in both scale and frequency, it has become clear that we are already experiencing the effects of our changing climate. These events will continue to impact daily life and building climate-resilient communities will be key to ensuring that we, as a people, survive long enough to see mitigation take effect.

The Future is in our hands

One thing that was made exceedingly clear over the conference, in the absence of sufficient global commitments to cut emissions, physical risk analysis is likely to continue its rise in relative importance, as the risk of extreme climate events will accelerate. From investment assets to supply chains, understanding your true physical climate risk exposure will be essential.

But it’s not all doom and gloom. While COP26 may not have lived up to everyone’s hopes, there were still steps made toward a greener, more climate-resilient future!

At Sust Global, we transform the complexity of climate data into credible, accessible data. Our high cadence, granular and validated climate data can be integrated into financial workflows and business-ready analytics.

Interested in hearing more? Get in touch!

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