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ou’re going to hear a lot about COP26 this year, but what is it? COP stands for Conference of Parties, which is a conference where the world’s countries come together to set out actions against climate change. The 26th COP will be held in Glasgow in November, having been postponed from 2020. COP21, held in Paris in 2015, was pivotal. In an almost unprecedented display of global unity, 197 countries signed the Paris Agreement. The agreement aims to hold the increase in global temperature relative to pre-industrial times to well below 2°C – thought to be the maximum temperature change that our global society might be able to adapt to. The increase so far has been 1°C, so there’s not much room left for manoeuvre. As global warming is driven by emissions of greenhouse gases (GHGs), emission levels must be drastically reduced if we are to have a reasonable chance of achieving this objective. In essence, we have a global carbon budget; if we go over budget, we’ll almost certainly have more climate change than we can manage. As part of the process, each country agrees to a nationally determined contribution (NDC), which expresses its commitment to decarbonisation. The NDCs recognise that the pace of decarbonisation will vary between countries, but that total worldwide GHG emissions must remain within a global carbon budget for the collective effort to be
“We need to recognise that we wield great power through the decisions we oversee in the global financial system” effective. The first round of NDCs were not enough – it is estimated that they will result in 3.7°C of warming, well over double the implied Paris goal of 1.5°C (the usual interpretation of “well below 2°C”). Countries will be updating their NDCs at COP26, which is why it’s so important – it’s a chance to get things right. Much has changed since COP21. Public concern around sustainability and climate change are at high levels as the physical impacts of climate change become more visible. Globally, politicians are committing to net-zero policy objectives to mitigate climate-related physical risks and to accelerate the global energy transition. In the US, the Biden administration is clearly pursuing quite a different climate policy to the Trump administration. There is significant hope that politicians will collectively agree to more NDCs that are ambitious enough to meet the goals of the Paris Agreement.
In the lead-up to COP26, Louise Pryor and Sandy Trust set out the pivotal role actuaries have to play on the journey to sustainability
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