COP26: Good COP or Bad COP?
What's next? COP27 in 2022 and beyond
COP26: Takeaways for investors
COP26 has highlighted the need for explicit focus on certain areas within the Isio climate framework
- The consideration of social factors in the context of climate change, including the importance of a just transition (the process of moving to a more sustainable economy in a way that’s fair to everyone – including people working in polluting industries)
- Understanding the role of nature-based solutions and biodiversity in tackling climate change, for example allocations to forestry, in the context of decarbonisation and emissions offsetting
- Understanding opportunities in carbon trading, under the Paris Agreement carbon trading architecture, which will be open to investors, and which investors should seek to engage with managers on resulting risks and opportunities
- Ensuring managers are monitoring the risks arising from thermal coal stranding**** and methane emissions, which may require explicit attention following the Glasgow Pact.
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Sources and notes
*Climate Action Tracker
**Unabated coal refers to coal power stations without technologies/measures to reduce end-of-pipe emissions, allowing for the use of coal power under the future promise of carbon capture and storage, which has yet to be deployed at scale.
***Inefficient subsidies is a term coined by the G7 and G20 which has never been clearly defined and argued by stakeholders to provide loopholes for the application of such subsidies.
****The Network for Greening the Financial Sector defines asset stranding as: assets suddenly losing financial value ahead of their anticipated economic lifetime as a result of changes in legislation, market forces, disruptive innovation, agent’s preferences, environmental shocks, or climate policy in particular.