Q&A: what is COP27?
The upcoming climate conference COP27 is taking place this November in Egypt. We explain why it matters.
The United Nations’ annual climate change conference will take place in Egypt in less than four months’ time. It may seem as though we have only just had last year’s Glasgow summit – the first to go ahead after Covid-19 interruptions – but that’s in part due to the increased media, political and public interest in these annual summits. The global event is designed to help solve one of the world's most urgent problems: climate change.
What is COP27?
COP stands for "Conference of the Parties", and is the decision-making body for the United Nations Framework Convention on Climate Change (UNFCC). It is attended by people who signed the United Nations Framework (formed in 1994) and this is the 27th meeting.
It is a gathering of people from all over the world who join with the aim of agreeing actions to tackle the climate crisis.
In 2022 the conference will be hosted in Sharm El-Sheikh, Egypt, from 6 to 18 November.
What was the outcome of COP26?
COP26 received a mixed reception. Andy Howard, Schroders’ Global Head of Sustainable Investment, said: “It’s certainly fair to say that what came out of COP26 was a mixed bag.”
As he summarised after the conference, while it was intended to be something of a milestone conference, it could be argued that the overarching goal of COP26 was not met. He explained: “The plan was that individual countries would come back with more ambitious targets and goals themselves as binding commitments. There were a number of individual areas – for example around deforestation and around carbon markets – which moved forward. But in some ways the headline ambition of COP, which was to really ratchet up the levels of ambition of individual countries, has been somewhat deferred to COP27 in Egypt.”
However there were causes for optimism. Schroders’ Group Chief Executive Peter Harrison said at the time: “A quiet revolution in environmental investment is underway. It will make a difference."
He shared his perspective on developments in natural capital and carbon markets during COP26 and why they gave him hope. Read on for Schroders’ own commitments in this area.
In short, COP26 in Glasgow finished with a new range of agreed ambitions called “The Glasgow Climate Pact”, covered in more detail below.
What is the Glasgow Climate Pact?
A new global agreement was formed at last year’s conference, the Glasgow Climate Pact. The pact covers a range of ambitions including
- Strengthened efforts to build resilience to climate change, to curb greenhouse gas emissions and to provide necessary finance for both
- Reaffirmed commitments to fulfil the pledge of providing 100 billion dollars annually from developed to developing countries
- Agreement to work to reduce the gap between existing emission reduction plans and what is required for the rise in the global average temperature to be limited to 1.5 degrees Celsius
- Phase down of unabated coal power and inefficient subsidies for fossil fuel
The agenda for COP27 is not out yet, but the next steps after the Glasgow Climate Pact from COP26 will certainly be up for discussion at COP27.
What are the current UK COP Presidency goals?
The UK holds the Presidency until COP27 and must deliver on the Glasgow Climate Pact. The duty of the presidency is to speed up climate action and deliver on their goals.
The Presidency holds four main goals:
- Mitigation – reducing emissions to limit global warming to 1.5 degrees
- Collaboration – countries working together to deliver on climate action
- Finance – commit to climate finance goal of $100 billion
- Adaption – helping climate-vulnerable countries
It’s the UK’s responsibility, along with Egypt as it takes on the next presidency, to work with governments and organisations to fulfil the goals of the Glasgow Climate Pact.
What do COP summits have to do with investing?
Investors are increasingly engaged in climate-related issues and are likely to follow COP27 with interest. While announcements could impact on their portfolios, investment decisions can also play a role in the transition.
Last year Schroders became a signatory to the Science-Based Targets initiative (SBTi). It was also a founding member of the Net Zero Asset Manager Initiative, which launched in late 2020.
In February this year, Schroders’ greenhouse gas emission reduction goals were formally validated by the SBTi.
Andy Howard, Global Head of Sustainable Investment, says: “Schroders believes that in order for businesses to survive and thrive they need to adopt long-term sustainable business models. Setting ambitious targets now will catalyse change to protect and enhance business value in the long term.
“Our dedication to achieving our reduction goals is paramount to our business strategy. We believe that in tomorrow’s investment world, profits and planet are interlinked.”
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