First week:  summary of key takeaways

The highly anticipated COP26 summit which opened with a call for “immediate action and solidarity to ensure Glasgow delivers on the promise of Paris” saw:

• The US administration commit to cut methane emissions by 30% by 2030, largest emitters China, India and Russia are hoped to join in but haven’t committed currently.
• 105 world leaders (representing 85% of world’s forests) promising to end and reverse deforestation by 2030.
• Japan’s Kishida promising up to $10bn in new climate funds for developing countries.
• Western nations agreeing to provide South Africa with $8.5bn to help end coal dependency.
• Research by the University of Melbourne suggesting that Indian Prime Minister’s plan to cut emissions to net zero by 2070, and China’s Xi Jinping’s promise for carbon neutrality by 2060 could be enough to bring the emissions trajectory below 2°C.
• President Xi Jinping of China, Vladimir Putin of Russia and Jair Bolsonaro of Brazil were notable absences.
  

Big announcements for the financial services sector

The opening days of the summit saw critical announcements which hinted at both challenges and opportunities for the sector:

• Over 30 of the world’s biggest financial companies (including Aviva, Schroders, and AXA) committing to ending investment in activities linked to deforestation. 
• Major investors (who manage around $4.5tn between them) warning the world’s top four audit firms to integrate climate risks. 
• Rishi Sunak, Chancellor of the Exchequer, wanting publicly listed companies in the UK to disclose their climate metrics. It is likely that other countries could follow suit. 
• 90 CEOs (part of the Alliance of CEO Climate Leaders) placing a strong emphasis on the public and private sector joining forces to accelerate the race to net-zero. 

Easier said than done?

So, what does this mean for financial services players? 

• Moving towards “nature-positive” finance will require asset managers to tilt portfolios to align to responsible investing targets and strategies, with possible positive implications for Taskforce on Nature-related Financial Disclosures (TNFD) requirements.
• Financial regulators will have a crucial role in enforcing credible transition plans – the International Sustainability Standards Board (ISSB) will have a big role to play to maintain standards for reporting.
• When attempting to pursue ESG investing, data is a serious problem, as it is often not consistent, reliable, accurate or timely. This makes it difficult to assess the current climate impacts of portfolios and increases hesitancy to make meaningful changes. 
• On a positive note, investors have expressed an active interest towards ESG investing, however, they recognise that they would require data-driven support to kickstart such ESG investment plans. 

As the summit brings further announcements and commitments, stay tuned for our next blog which will focus on the way forward for the financial services.

To learn more about the data-related challenges around ESG, we warmly invite you to join our global webinar Delivering a Greener Future through Better Data on 24 November 2021 - register here.

AUTHORS

Nishikant Gupta, PhD, Consultant
Antonia-Ivana Kljaic, Senior Consultant

CONTACTS

Charles Sincock, ESG Lead UK
+44 7967 631514
charles.sincock@capco.com

Olaf Clemens, Global ESG Lead
+49 69 9760 9076
olaf.clemens@capco.com