COP26 - moving from rhetoric to reality

Mark Stewart

Mark Stewart

Edinburgh Office Head & Corporate Finance Partner

It has been impossible to miss the fact that Scotland is hosting this year’s COP26, the 26th UN Climate Change Conference of the Parties. World leaders, United Nations representatives and leading figures in the fight against climate change descended upon Glasgow at the end of October for the fortnight-long summit, which aims to achieve global climate action.

It's half-time in the two-week push to galvanise the world’s leaders into keeping the 1.5°C global warming ambition set out in the Paris Agreement alive, with negotiations at COP26 set to continue today following a rest day on Sunday. Boris Johnson stated that we were 5-1 down at the start of the week, I wonder if it's closer to 5-3 at half time, with everything still to play for?

At this halfway mark, thoughts turn to what the actual outcomes will be. For me the answer is simple: COP26 must succeed where other COPs have failed, in slowing down and stopping the increase in carbon in the atmosphere. For the last 30 years, the concentration of carbon has risen by roughly 2 parts per million per year - including last year, despite the coronavirus lockdowns. It cannot continue - full stop.

So, has week one given any indication that there will be lasting change, that finally everyone is in agreement with the IPCC report that action is required now, and not at some point in the future? I think cautiously but optimistically the answer is yes.  Week one saw some key announcements being made (summarised below), which gives you the sense that COP26 could be different - Senator John Kerry certainly alluded to this COP “feeling different” at his keynote address at the CBI COP26 International Business dinner on Thursday 4 November, and he would know - he’s been at the vanguard at many COPs.

It was fantastic to see the United States rejoining the Paris Agreement and claiming centre stage at this year’s COP. However, this positive step forward, has to my mind been somewhat negated by the absence of the leaders of climate offenders such as Russia, Brazil and Saudi Arabia. Xi Jinping, president of China – the world’s biggest carbon emitter - was also conspicuous by his absence, although this was speculated prior to the event due to ongoing concerns over the COVID-19 crisis.

From a UK perspective, given the very conservative Autumn Budget announcements in relation to climate change and net zero, we were expecting COP26 to be the platform where Chancellor Rishi Sunak made some significant UK commitments. Although he did make a number of announcements, he failed to include a carbon tax, which many feel is vital in changing behaviour patterns to address the worst carbon offenders. Perhaps we will see something in week two?

A summary of week one’s key announcements. which give hope that this is indeed the COP of change. is set out below:


The first major declaration on Tuesday was a declaration on ending deforestation by 2030. While there was some serious financial commitment behind the pledge - with governments and the private sector committing $19.2bn - there are doubts over the credibility. Indonesia has already questioned the terms of the agreement, India stayed away altogether, and the UK continues to support biomass. It was very encouraging to see Brazil sign up, as the world’s biggest deforesting nation, but will they stay on track?


On Wednesday, an alliance of over 90 nations was formed in a commitment to reduce methane emissions by at least 30% from 2020 levels, by 2030. The key drivers of methane emissions are gas and oil wells, pipelines, livestock and municipal landfill sites. The alliance covers 70% of the global economy, although unfortunately, China, India and Russia decided to sit out the pledge - again raising the question of credibility.

Read more on how the rural sector can help achieve net zero in our blog here.


Wednesday was also finance day in Glasgow. Rishi Sunak announced the formation of The Glasgow Financial Alliance for Net Zero (GFANZ), with the world’s biggest banks and pension funds pledging $130tn to ensure that all assets managed by the institutions will take a net zero stance by 2050. The Chancellor promised the UK would "go further and become the first net zero aligned financial centre,", meaning it would require financial institutions and UK-listed companies to publish plans on how they will decarbonise and transition to net zero.

Mark Carney, UN Special Envoy for Climate Action and Finance, led the GFANZ session which committed the funding for the transition to Net Zero.

On Thursday a number of countries including the United States and 20 other countries announced that, from 2022, they will no longer finance international fossil fuel projects, instead diverting that finance to clean energy – an estimated figure of $18 billion per year.   


The IFRS Foundation announced a significant development to provide the global financial markets with high-quality disclosures on climate and other sustainability issues. The formation of a new International Sustainability Standards Board (ISSB) to develop - in the public interest - a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs.

Boards of the largest companies should be prepared for the regulations to be set out by Q3 2023. This will address the issue of lack of consistency, transparency and accuracy of climate change related accountability. People want to have a level playing field and investors want to know they are comparing like with like when assessing climate risk.


On Thursday, over 40 countries agreed to move away from coal-fired power, with Ukraine, Canada, South Korea, Vietnam and Indonesia promising to have phased it out between 2030 and 2040. Other nations pledged to cut financing of coal plants overseas by half. Quitting coal is crucial to limiting global warming to 1.5 degrees, but Glasgow will not be the COP where coal is relegated to the past - the US, China, India Australia and India will keep coal alive. The UK recently approved a new coal plant in Cumbria which is under public inquiry.

Building the investible project pipeline

The announcement of the global investment funds available for the transition, coupled with the new international sustainability accounting standards are two very import interrelated announcements. Funding will flow to those businesses who have plans in place to reduce their emissions. The enhanced reporting environment should make it clearer on a level playing field basis who is achieving those ambitions.

Whilst having the funding commitment in place is hugely welcome, what COP26 must deliver for me as someone involved in raising project finance, as a key output, is a roadmap which takes the climate action ambition from global, to national, to local. It needs to become real and tangible to those innovators, developers, pioneers and dreamers at the grass roots levels who are all looking for backing for their projects who find it difficult to get access to funding at the appropriate stage. In the UK, the ambition needs to be distilled down into a pipeline of investable projects which can crowd in both public and private sector funders to come together in a true Public Private Partnership.

As advisers to a diverse range of businesses across the climate change and renewable energy spectrum, our Energy, Infrastructure & Sustainability team is involved daily in advising credible and backable companies who need support from the funding community. We understand how hard it can be to develop new technology and processes from innovative start-ups to some more mainstream social infrastructure and retrofit solutions. Funding is the key and the global ambition needs to be unlocked at a local level. We believe that the adoption of science-based targets, together with a single reporting framework will help make the evaluation of climate risk more standardised, measurable and reportable and we are helping our clients prepare for this new era of accountability together with advising clients on their ESG strategy.

Greta Thunberg famously referred to previous climate change commitments as “blah blah blah”. Let’s hope that COP26 sets a different tone and becomes the COP of action, action, action.

To discuss COP26 or how we can help support your business, please get in touch with me at or another member of our Corporate Finance or Energy, Infrastructure & Sustainability teams.

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