COP26 in review – what did Glasgow achieve?

COP26 in Glasgow was billed as the key moment to put a stop to climate change. Never has a climate summit received so much attention... or so much pressure. So what happened? There was a lot of announcements and a lot of press. But was Glasgow a success?

Well... it depends.

It depends on what the goal was. If the goal was to "keep 1.5°C alive", then yes, it's still alive, but barely. But if the goal was to stop climate change, then no, not by a long shot.

The goal - 1.5°C

Previously, global governments agreed in the Paris Accord that goal is "to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels". In order to do that, scientists agree we need to nearly halve our global greenhouse gas emissions by the end of this decade - 45% by 2030 - and reduce them to zero by 2050. (see our explainer on those goals and global climate summits here)

Countries were required to come to this COP with their "nationally declared contributions" (NDCs), or planned emissions reductions to support that goal. But they fell far short - the remaining emissions will still put us on track for approximately 2.4°C warming. Of course, this is an improvement on the well over 3°C that would have resulted from our previous emissions trajectory, but it's nowhere close to where we need to be a for a safe climate.

For that reason, many are viewing COP26 as a failure, our best opportunity to take real action on climate change that governments stubbornly missed. But it has one redemption - it has held the door open to achieving our goal in the near future.

Sorry, try again

In the original Paris Accord, governments were required to update their targets every 5 years. But as our climate models improve, it has become clear we don't have another 5 years to wait. So rather than accept failure, the COP agreed that governments would have to come back again next year with stronger commitments.

Those stronger commitments will also need to include interim targets, that is, steep reductions in the next decade, rather than focusing on the far off goal of zero by 2050.

And if they don't accomplish that next year either, they'll have to come back again, annually, until they reach the goal.

Importantly, the COP acknowledged their job isn't done yet, and they aren't giving up until it's done. But to many, they have simply kicked the can down the road.

So what did get accomplished?

It may not seem like it, especially compared to the action that is needed, but this was the most radical COP declaration we've ever seen. This process has been happening since 1992, and has moved at the pace of a "pre-industrial glacier" (to quote Fiona Harvey).

Here's a summary of the key outcomes of this COP.

• World leaders did increase their ambitions - 49 countries (including the EU) increased their reduction ambitions. This included two of the most critical emitters and previous holdouts, China and India, who have come to the net zero party, with China committing to 2060 and India to 2070. Australia did not increase its ambitions, but formalised them.
• Alignment on a single goal and focusing on the solutions to get there - at this COP, there was less room for debate on what needed to be done, and more focus on how. While the Paris Agreement included 1.5°C almost as a footnote, the consensus at COP26 was that 2°C truly isn't good enough, and that the real goal now is to halve our emissions this decade.
• Specific language about moving away from coal - though it has long been clear that cutting fossil fuel use is critical to avoiding climate change (and we already mostly have the solutions to do so), no COP declaration has made direct reference to that since the Kyoto protocol was signed in 1997. This declaration specifically called it out, and though India demanded in a last minute amendment to "phase down" instead of "phase out" coal, it still shows a strong sentiment shift against fossil fuels. The declaration also committed to the phasing-out of "inefficient" subsidies for fossil fuels and there were also multiple pledges signed by some countries and banks to end financing and exploration of new fossil fuels and new generation plants.
• Climate financing commitments - a massive sticking point in previous COPs has been the issue that the countries facing the highest price from climate change are those who have done the least to contribute, and are the least able to pay. Developed countries have so far fallen short on the previous pledge of $100bn per year from 2020, and have now promised to make up the gap over the next 5 years, and doubling the proportion of that finance going to adaptation rather than otherwise viable emissions reductions projects. Also, nearly 500 global financial services firms have pledged to align $130 trillion – around 40% of the world’s financial assets - with net zero emissions investments. 
• Deforestation Pledge - more than 100 countries pledged to reverse deforestation by 2030 at the latest, including Australia, as well as critical countries Brazil and Indonesia. $20bn of public and private money was also committed. This shows a strong recognition that protecting nature is an important component of stopping climate change, not just transitioning to new energy technologies.
• Methane Pledge - more than 100 countries pledged to curb methane emissions by 30 per cent by 2030. Methane is a significantly more potent greenhouse gas than carbon dioxide, so is viewed as a critical area to address by stopping fugitive emissions from oil and gas and emissions from agriculture. Several major oil and gas producing countries joined the pledge, and China also committed separately to methane reductions, but Australia did not join.
• Electric Vehicle Pledge - 30 countries and 11 major manufacturers pledged to end the sale of petrol and diesel cars by 2040 or sooner, including Ford, GM, Jaguar Land Rover, Mercedes-Benz and Volvo. Even manufacturers who didn't sign have significant internal targets, including VW and Toyota. A number of major car markets, including the three largest in the US, Germany and China, did not sign, but this agreement will accelerate the existing shift in the industry.
• Article 6 on carbon markets - while it's not as sexy as some of the pledges and big announcements, article 6 establishes a central UN mechanism to trade credits generated from emissions reduction projects. This is for some the biggest win from the COP, a foundation for transparency, reliability and liquidity of voluntary carbon markets, which are critical for achieving and financing net zero goals.

The overall view

So was Glasgow a failure? We actually don't know yet. That final judgement will be made in hindsight, depending on whether emissions begin to fall from this point in history or continue to rise. And whether we see world powers come back next year with the interim targets needed.

Objectively, COP26 achieved very little except some symbolic, 'in principal' agreements. But those agreements create a strong signal for the way the world is moving, and the massive shifts starting to occur in major industries including fossil fuels, electric vehicles, finance and more.

It was also clear that governments are not the ones leading the transition, but business. Multinational businesses were there, in the room, signing the major pledges alongside countries. And they are the ones that will fill all the gaps from policy to action, developing the actual technologies and critically the bulk of the finance required.

And it is in their best interest, as there's trillions of dollars to be made in delivering these global commitments. Environmentalists may decry capitalism, but it is a force far more powerful than any government, and now, it is increasingly on our side.

So what does this all mean for SMEs?

It means pressure will continue to increase. The economy is shifting away from greenhouse gas emissions, away from carbon-heavy industries and toward businesses that can show they are part of the solution. Expectations of consumers and employees are shifting, and aligning with businesses that show they are playing their part. And formal assessment by governments, corporate buyers and banks will continue to increase for access to loans, supply contracts, permits and approvals.

SMEs cannot afford to wait and be on the back foot in front of these pressures. The next year will be critical to get 'net zero carbon' off the to do list and get it done. Check out our recent series of articles on the Net Zero Transition and your Business - including articles on carbon reduction and measuring and offsetting your carbon footprint - to get started.