Why is the outcome of COP26 important?

The annual climate negotiations (known as Conference of Parties (COPs) continue to get larger attendances and broader participation each year. They are no longer just the domain of environment ministers negotiating a climate agreement but an event that sets the pace for global transformation to a decarbonised world.

Whilst there is little disagreement about the outcomes we all desire for the planet, the interconnected global nature of climate change means COPs are essential as they determine what outcomes are achievable and the global pace of change. This in turn drives how big the transformation will be, how smooth, how we will get there, the level of co-operation across countries and organisations, the cost, and the ultimate potential outcomes for the planet, people, and economies of the world.

There has been overwhelming consensus that the greater the transformation, the better the outcomes will be for the planet and people for many years. There is also an overwhelming consensus from governments and investors that a large and fast transformation will deliver the best outcome for economies, investments, and businesses. This explains why COP26 has had more business CEOs in attendance than all previous COPs as well as the increasing calls for climate action from investors and civil society. The challenge is that everyone wants to transform for the least cost and most benefit while maintaining or improving their lifestyles, assets and relative competitiveness as a country, society, organisation, industry or business.

As with all negotiations, there is give and take to achieve a way forward.

COP26 has been successful in:

  • increasing the collective ambition to reduce emissions and narrowly keeping the ambition of 1.5°C alive,
  • completing the last remaining part of the Paris Agreement (being Article 6 on the international trading of carbon units), and
  • progressing many elements that will facilitate the global economic transformation such as accounting frameworks, transparency mechanisms, rules over carbon trading, new finance and alliances as well as many industry and business led initiatives.

These successes will set the business agenda for the next decade. The opportunities for business to enable and facilitate this global economic transformation are enormous. The risks for business of ignoring this agenda are dire.

So what’s next?

Whilst the agenda to decarbonise has been updated from COP21 in Paris, the pledges, commitments, and promises must now be delivered.

The mechanisms established in Glasgow will increase transparency, and hence the accountability, for these commitments. And not only will governments be held to account for their promises, but so will all sub-national governments, industries and businesses who have the power, capabilities, and supply chain influence to implement the required changes. Equally those organisations that act slower than technologies permit, scorecards show and society expects, are likely to be penalised by voters, customers, employees, providers of capital and even suppliers.

COP26 has moved us forwards, but we are still not on a safe trajectory. There remains work to collectively raise our overall ambition at least one more time to achieve the Paris goals. Other work also needs to be done in accelerating the timeframes for many of these ambitions, for the laggards (including Australia) to catch up with their ambitions sooner rather than later, finding the additional adaptation funding needed to support the most impacted countries as well as the required funding needed for the new investment required to deliver all the promises made.

Most importantly for me and many others, there are plans to be developed and implemented. These are not just Gantt charts but plans that incorporate intergenerational equity and principles for a just transition. The transformation activities also allow us to improve many of our current challenges across nature, biodiversity, gender, human rights, hunger, and poverty.

One of the wonderful elements of every COP is that it is a platform to profile a smorgasbord of solutions and pathways required to decarbonise the world. It is clear that most of the technology needed to implement this transformation already exists. Of course, there are still many unknowns and innovations required, however each COP significantly fills in these gaps by sharing new technologies, new ways of thinking, and new ways of working.

Overall, COP has shown how the Paris Agreement can and needs to work. It has filled in some of the unknowns, and it has built out many of the new implementation and funding mechanisms that will facilitate the many commitments made in the lead up and during the event.

COP26 has kept 1.5°C alive, just.

The size of the transformation that needs to happen, and is already happening in many areas, is enormous, and so are the opportunities for business.

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