So What Did COP26 Really Get Done?

The United Nations Climate Change Conference in Glasgow, Scotland (commonly called COP26) came and went in November. For two weeks, tens of thousands of politicians, civil servants, business leaders, environmentalists, researchers and others discussed how the world can tackle climate change.

So what was achieved? Where is more progress needed? To find out, we spoke with a conference delegate who understands business and climate finance. Ryan Riordan is the Distinguished Professor of Finance at Smith School of Business and director of research for the Institute for Sustainable Finance. He attended the conference as head of the institute’s delegation.

Here, we explore four questions with Riordan. He explains the wins and losses at COP26, why they matter and what’s next.

Did COP26 accomplish anything?

Yes, there were several positive developments. Among them, says Riordan, were global agreements to curb methane emissions and to stop deforestation.

On the former, more than 100 countries representing 70 per cent of the world’s economy agreed to cut their methane emissions by 30 per cent by 2030. Riordan says the agreement is a crucial step in the fight against climate change. Methane has a larger and more immediate impact on global warming than carbon dioxide (CO2). Curbing methane emissions by 30 per cent will reduce global warming by at least 0.2 degrees Celsius by 2050, according to the European Union.

Preserving the world’s forests is another critical part of the fight against climate change since trees can absorb massive quantities of CO2. In Glasgow, more than 100 countries, representing 85 per cent of the world’s forests, pledged to end and reverse deforestation by 2030. “Going into the negotiations, it wasn’t clear that a promise to stop deforestation was actually going to happen,” says Riordan. “So this agreement was a big win.”

What didn’t get done?

Unfortunately, COP26 saw its share of missed opportunities. One that stands out to Riordan is the lack of a funding commitment to help developing nations tackle climate change. At COP15 in 2009, developed countries promised to spend US$100 billion a year by 2020 to support less prosperous countries’ efforts. That goal hasn’t been met and it’s not clear it will. “I’m still hoping we can reach that goal though,” Riordan says. Developing nations, he says, are hardest hit by climate change despite having contributed far less to its causes than wealthier countries.

There was also no quick consensus on what to do about coal, the world’s largest contributor to CO2 emissions. At COP26, more than 40 countries committed to either stop burning coal or to stop investments in new coal-fired power plants at home and abroad. But China and India, which burn two-thirds of the world’s coal, only agreed to “phase down” coal rather than “phase out” its use. Still, Riordan says, the small progress made on coal at COP is a step in the right direction. “We almost didn’t get any agreement.”

Was there progress made on financing sustainable economies?

It’s impossible to create green economies and prevent the worst effects of climate change without money for businesses and infrastructure. No wonder that sustainable finance was in the spotlight at COP26.

On the plus side, former Bank of Canada governor Mark Carney led the launch of the Glasgow Financial Alliance for Net Zero. GFANZ is a consortium of 450 firms around the world, including banks, asset management firms and insurance companies, that pledged to align their lending and investment decisions with net-zero goals. Carney, who is now the UN special envoy for climate action and finance, said that the consortium will be able to deliver around US$100 trillion over the next 30 years to help tackle climate change.

The biggest miss on sustainable finance at COP26, however, was the lack of progress on establishing rules for a global carbon market. In 2015, countries agreed to set up such a market as part of Article 6 of the Paris Climate Agreement. But the fine print of how such markets will operate has yet to be worked out. Many hoped the details would get defined in Glasgow. That didn’t happen.

Riordan says it’s essential to develop a global carbon market that allows firms to trade carbon credits on common platforms. “So if I’m an emitter in one country and I over-emit carbon, I can buy emissions credits from another country. And if I under-emit, I can sell those credits,” Riordan explains. “A global carbon market allows the market to determine where it’s easiest and cheapest to do carbon abatement, so capital allocation can happen efficiently.” Given that some carbon markets already exist in parts of the world (Quebec and California, for instance), he’s optimistic a worldwide market is within reach. 

What should business leaders take away from COP26? 

It’s easy to be cynical when countries get together to discuss climate change. After all, many nations are way behind on earlier commitments made at the 2015 Paris Agreement.

Riordan, however, detects a shift in expectations coming out of COP26. “People are looking for definite actions now, not just promises to act in the future. They want to see that firms are changing their behaviour with regards to climate change and that governments are changing their behaviour, which will make it easier for individuals to change their behaviour, too.”

Riordan says he was especially struck by the environmental commitment of young people as he walked the halls during the conference. Obviously, attendees have a keener interest in the environment than most. But Riordan believes younger consumers overall “are less forgiving now” with corporations and governments on climate issues.

“I noticed it when I talked to people at the conference,” he says. “People under the age of 40 were much sharper in their criticism of companies and countries.” Which makes sense. Climate change is no longer an eventuality; it’s here. “While we’re all feeling the effects of climate change already,” Riordan says, “someone who is now 20 is looking ahead to when they’re 60. And they know that they will really feel the effects then. So they’re not interested in platitudes about the future. They want action now.”

Photo: Jeff J Mitchell/Getty Images