Two weeks of negotiations are finally over and COP26 has left a crystal-clear message to businesses: it’s time to reassess your business strategies and carbon footprint, if you want to reap monetary rewards. Climate stability is not viable only in political terms. It’s the business world’s turn now to fix climate crisis.
Which of the decisions taken will have a major impact on corporations? Here is a summary of them.
The Glasgow Climate Pact
Almost 200 countries signed up to the deal, despite India and China that changed the language from “phase-out” to “phase-down” of coal. This agreement gave a strong message both to investors and executives that the net-zero imperative has become an organizing principle for business. For the first time, companies receive the signal that the era of coal is ending and net-zero commitments are outpacing the formation of supply chains, market mechanisms or financing models.
Article Six – Rule Book
Article 6 is central because it guides how countries cooperate to generate cheaper greenhouse gas reductions. After years of negotiations, the Paris Agreement Rule Book was decided, covering international cooperation including carbon markets. This ensures common rules and allows parties to scale up their cooperation, mobilize additional finance and private sector engagement.
The Glasgow Financial Alliance for Net Zero
Financial institutions, representing $130 trillion in capital, have signed the Glasgow Financial Alliance for Net Zero, a global alliance of banks, insurers and investors. They have committed to deliver the $100 trillion investment needed to achieve net zero over the next three decades. Companies will need to adjust their business models and develop credible plans for the transition to a low-carbon future.
In addition to this, more than 30 financial institutions with over $8.7 trillion of assets under management, pledged to eliminate investment in activities linked to deforestation, while more than 30 countries and financial institutions signed a statement committing to halting all financing for fossil fuel development overseas and diverting the spending to green energy.
Glasgow Declaration on Zero-Emission Cars and Vans
Transport sector accounts for a fifth of global greenhouse gas emissions. Over 100 national governments, cities, states and major businesses have signed the Declaration to end the sale of internal combustion engines by 2035 in leading markets and 2040 worldwide. At least six major automakers agreed to follow this commitment, including Ford, Mercedes, Volvo, Mercedes-Benz, China’s BYD and Jaguar Land Rover. It’s time for more leading companies in the sector to join.
International Sustainability Standards Board (ISSB)
The IFRS Foundation marks a major step at COP26, with the establishment of a unified and globally consistent sustainability-related corporate disclosure. It will provide the global financial markets with high-quality disclosures on climate and other sustainability issues as long-term thinking is increasingly at the heart of business and investor decision-making.
Companies need to understand that their future is tied to having a stable marketplace. Businesses already stepped up to announce more ambitious climate programs, including net-zero targets. It is more crucial than ever to have the support they need to achieve these goals, with the knowledge and tools to accurately evaluate, report, and implement climate policies.
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