The annual U.N. Climate Change Conference, or COP26, was held in Glasgow, Scotland from October 31st to November 12th, 2021. This 26th edition culminated with The “Glasgow Climate Pact” which galvanized global efforts behind 1.5°C, namely a 45% reduction in global greenhouse gas (GHG) emissions by 2030, as a response to the existential threat of climate change. Notwithstanding widespread scepticism from climate advocates about the Glasgow deal’s ability to keep the 1.5°C temperature goal of the Paris Agreement within reach, for others the Pact kept the prospect of achieving the goal alive.
Governments and non-state actors stepped up on key challenges together, including a breakthrough commitment to end deforestation. 133 world leaders responsible for around 90% of the world’s forests, accompanied by 33 financial institutions with $8.7 trillion in assets under management, promised to reverse deforestation by 2030.
Where the SDGs & COP26 can create value for business
It is important to note that the 2030 Agenda for Sustainable Development and the Paris Agreement are intrinsically linked. Sustainable development and climate action must be pursued in a coherent way to ensure that progress towards these objectives is effective, equitable, and supports the best outcomes for all, including developing countries.
The SDGs represent a major opportunity for businesses to shape, steer, communicate, and report their strategies, goals, and activities, allowing them to capitalize on a range of benefits. According to the Business and Sustainable Development Commission, achieving the SDGs opens up some USD 12 trillion of market opportunities. Thus, there is a clear business case for the private sector to invest in SDG implementation. Indeed, Glasgow created an unprecedented convergence between investors, businesses, cities, and subnational regions that can drive real economic transformation.
According to explorer and clean technology pioneer Bertrand Piccard, founder of the Solar Impulse Foundation, “the first good news is that the COP26 roadmap goal remains achievable. The second is that the measures will not only be good for the environment and the quality of life of citizens, but also for the economy. They offer tremendous opportunities for the development of new revenue streams and in building profitable infrastructure to decarbonise the world.”
A new age of climate finance
Climate finance is fundamental to the Glasgow Climate Pact. Rich nations now admit they won’t meet the timeline for raising $100 billion of investment per year for developing countries through the Green Climate Fund. As disappointing as that is, the amount represents only a small share of total resources needed for sustainable development. Countries’ domestic resources and private sector finance have the potential to be far more substantial contributors.
For example, private climate finance announcements at COP26 included, a new:
In addition, nearly 500 global financial service providers committed to align their $130 trillion in private capital with the Paris Agreement with the goal of “transforming the economy for net-zero.”
The initiatives also received their share of critiques. Adva Saldinger writes in Devex Invested that there are questions over whether some of the new vehicles will scale and how seriously financial companies will act on their commitments. Encourage Capital’s Adam Wolfensohn and Daniel Firger emphasized in a guest post on ImpactAlpha that “this investment capital must be […] focusing on the precise geographies and markets that matter most to shifting the future trajectory of global emissions”.
A sampling of other initiatives and innovations at and after COP26
- The Global Energy Alliance for People and Planet was launched by IKEA Foundation, Bezos Earth Fund, Government of Italy, and dozens of nations, multilateral institutions, and international organizations
- The Solar Impulse Foundation launched Solutions Explorer, the result of five years of searching, analysing, and promoting more than 1300 products, processes, and services that protect the environment in a profitable way. It offers a one-of-a-kind search engine that showcases climate solutions from all over the world
- BNP Paribas’ Solar Impulse Venture Fund will accelerate the development of high potential start-ups committed to the ecological transition and help them scale up
- Innovative solutions OXÏ-ZEN and AxessImpact’s Sustainable Capital Allocation
Glasgow helped to bring the non-state actor and government agendas closer together. To achieve the SDGs and COP26 objectives, it is important to prioritise support for technologies focused on accelerating progress towards net zero systems. As Bertrand Piccard asserts, “raising ambitions does not represent an unmanageable risk but rather an economic opportunity to be taken with audacity. The good news is that the technologies exist, and they are just waiting to be implemented”. Clearly climate action is the new business frontier.