COP26 - Week one

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Expectations are running high for the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change, hosted by the UK and now underway in Glasgow. COP26, labelled the "last, best hope", marks a historic moment in the battle against climate change, when targets and pledges must be updated and converted into coordinated action before it is too late. 

The goals of COP26 are to:

  • secure global net zero by 2050 and keep 1.5°C over pre-industrial temperature levels in reach;
  • share plans to adapt and protect communities and natural habitats and mitigate the effects of a warming planet;
  • mobilise finance flows in both the public and private sectors to meet these ambitions; and 
  • accelerate global collaboration and action.

Our insights around the daily Presidency programme

The formal negotiations at COP26 are focussing on finalising the outstanding aspects from Madrid's COP25 and the Paris Agreement, including setting the detailed rules that make it operational, the Paris Rulebook. Running alongside the formal negotiations is the Presidency programme. This enables discussions and events to take place to drive ambition and accelerate global action and is based around a number of different daily themes. For both weeks of the conference, members of our ESG Group are providing insights on topics from those daily themes, exploring how developments in relevant sectors are affecting our clients.

If you would like to discuss any of the issues raised in our insights with us further, please do get in touch with any of the relevant authors, the key contacts for our ESG group below or your usual Stephenson Harwood contact.

Presidency programme week 1

In this first week, immediately following the two days of the World Leaders Summit, the programme includes the themes of Finance, Energy, Youth and public empowerment and Nature.

Finance: Wednesday 3 November

Wednesday's events programme is focussed on climate finance and mobilising public and private finance flows. The UK in its presidency of COP26, has called upon every company, financial firm, bank, insurer and investor to change; highlighting the need for all private and public sector financial decisions to take climate into account. It also calls for companies to be transparent about the risks and opportunities that climate change and the transition to net zero poses to their businesses and for banks, insurers, investors and other financial firms to commit to ensuring their investments and lending are aligned with net zero.

The LMA's ESG-related lending principles

The UK's Loan Market Association has taken a leading role in developing frameworks to assist the UK finance industry in meeting this call for action. Archie Campbell and Charlotte Drake from our London finance practice, consider how further developments in the application of the LMA's green, sustainability-linked and social loan principles could help to drive additional positive changes in the UK lending industry and achieve the aims of COP26. 

The LMA's green sustainable and social loan principles – what more can be done?

 

The philanthropic sector

Our global private wealth teams are seeing a growing demand for impact investing in the philanthropic sector, as wealthy family offices place greater value on sustainable and responsible investing. Kevin Lee and Tze-wei Ng, in our private wealth team in Hong Kong, consider how this sector of private finance can step up to the challenge of investing for climate change and what Hong Kong philanthropists and impact investors are already doing.

Philanthropy and impact investing for climate - Trends in Hong Kong and Asia

Elaine Beh, Suzanne Johnston and Yi Lee from our Stephenson Harwood (Singapore) Alliance private wealth team, highlight the push in Singapore in the impact investment space and the role it can play in the transition to a global net zero economy.

"You reap what you sow": The new philanthropy – impact investing and the rise of Singapore Family Offices

 

Climate-related disclosures

We are seeing the introduction of climate-related disclosure regulation in some jurisdictions but implementation varies and global standardisation discussions are still ongoing. In the Hong Kong investment management sector, Penelope Shen in our Hong Kong funds practice, discusses how the city's Securities and Futures Commission's proposals on the management and disclosure of climate-related risks will impact Hong Kong fund managers and push Hong Kong into the forefront of sustainable finance. 

Hong Kong enters into a climate friendly era for investment funds

The UK has stated its ambition to become the first G20 country to mandate TCFD-aligned climate-related disclosures across its economy. Last Friday, it confirmed its latest step in that strategy, to legislate for the UK's largest companies and financial institutions to disclose on a mandatory basis from April 2022. This follows hot on the heels of the London Stock Exchange, which recently became the first international exchange to publish TCFD-compliant climate reporting guidance for listed issuers. For more information, please read our recent updates by David Dowding, a partner in our London capital markets team on our capital markets hub.

Government announces mandatory TCFD-aligned disclosures for larger companies and LLPs

LSE publishes new climate reporting guidance

Energy: Thursday 4 November

On Thursday, events focus on the theme of energy and accelerating a just and inclusive transition to clean energy. The International Energy Agency in its Net Zero by 2050: A roadmap for the global energy system notes that to have a fighting chance of reaching net zero by 2050 and limit rising temperatures to 1.5°C "requires nothing short of a total transformation of the energy systems that underpin our economies". This will require the rapid acceleration of advancements and investment in clean energy innovation.

Alternative energy sources

The UK government recently published its strategy to deliver on its pledge to hit net zero by 2050, in Net Zero Strategy: Build Back Greener. The development and use of alternative energy sources will be critical to the UK achieving its net zero ambitions. Focusing on this issue in particular, Cathal Leigh-Doyle and Andy Ross in our energy practice and trainee Isabelle Wenger, explore how COP26 could help the UK to develop and regulate its alternative energy sources, particularly with nuclear fusion and direct air capture.

COP26: A perfect launchpad for the UK's alternative energy sources?

 

Carbon pricing

In a further article, Cathal and Isabelle also put the spotlight on carbon pricing, addressing steps taken to date by countries all over the world and ask whether the UK can use COP26 to motivate countries to take further steps to reduce their carbon emissions through the introduction or modification of carbon pricing models.

Can COP26 drive the reduction of carbon emissions through carbon pricing?

Youth and public empowerment: Friday 5 November

Friday focusses on how to elevate the voice of young people and demonstrate the critical role of public empowerment and education in climate action. There has been a growing participation of youth movements in climate activism and policy discussions. From the school strikes of the Fridays for Future movement to the representation of youth organisations as a key civil society community at COP. At the recent Youth4Climate: Driving Ambition Pre-COP26 summit in Milan, young climate leaders negotiated a collective declaration to be taken to Pre-COP and delivered at COP26, to ensure their views and ideas are taken into account in the negotiations.

Elevating the voice of our young and aspiring solicitors

A recent study of 10,000 young people in 10 countries found that climate change is causing distress, anger, fear and anxiety, with 45% of respondents saying their feelings about climate change negatively affected their daily life. We wanted to understand how the climate emergency impacts our young and aspiring solicitors at Stephenson Harwood and asked for their views on a number of climate change questions, including how young people are affected; why unwillingness to address climate change still persists; what they would do first if in Government; what they hope for from COP26; and their tips on things we can all do to help. This video features contributions from solicitor apprentice Martyna Mazur, future trainees Genevieve Dipper and Jonathan Simpson and trainees Amarveer Randhawa and Ray Chan in London and Hong Kong.

 

To find out more about our solicitor apprenticeships click here and our training contracts click here.

Presidency programme week 2

For our further insights around the daily topics of the second week of the conference, being Adaptation, loss and damage; Gender; Science and innovation; Transport; and Cities, regions and built environment click here.