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Sustainable Investment Team

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At COP23 next month, global leaders will continue the process of turning the vision of Paris into a reality. The first global “stocktake” of progress - a so-called "Facilitative Dialogue" - is not until 2018, when the collective commitments countries have made will be stacked against their commitments to limit temperature rises to two degrees over preindustrial levels.

Progress will be evaluated every five years thereafter.  This year’s event may be unlikely to provide too much news, but it’s a useful opportunity to assess the state of play in climate policy. 

We may need to wait until next year for a formal assessment of national climate commitments but we already have a pretty good idea of what the picture will look like.  The NGO Climate Action Tracker monitors the collective implications of national climate goals and estimates that the “intended nationally determined contribution” (INDCs) already submitted will be sufficient to limit temperature rises to around 2.8 degrees.  Our analysis infers this is a generous interpretation. Either way, it’s a long way from the commitment made last year and suggests national policy makers should have spent the last two years ratcheting up their goals.

In fact, very little has happened.  Since the Paris Accord was agreed in December 2015, just nine countries - representing under 3% of global greenhouse gas emissions - have submitted national plans to the UN. 

Number of INDCs submitted each month since 2015 and GHG emissions of submitting countries

 Source: UN INDC database, CAIT, Schroders calculations. MtCO2 is metric tons of CO2 equivalent 

On the one hand, the limited progress is clearly disappointing.  We have always said that the (carefully chosen) words in Paris mean less than the actions at home and it's clear there is far more to do.  On the other hand, 2018 will focus attention on the work that remains and we believe could prompt another leg up in the intensity of policymaking and social change. Over the last few months – apparently galvanised more than hindered by President Trump’s announcement of the US’ withdrawal from the Paris Accord – global leaders have stepped up policy making with renewed statements of intent, commitments to toughen carbon trading schemes and announcements of electric vehicle support.

Much more remains to be done and far bigger changes lie ahead of the global economy, industries and financial markets.  We believe those changes will be forthcoming, albeit in fits and starts.