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From talk to action: how can governments, cities and businesses meet COP26 commitments in 2022?
COP26 brought a flurry of new announcements that could see 2021 emerge as a landmark year for global efforts to tackle the climate and ecological emergency.
The Glasgow Climate Pact, along with a host of national and international commitments, mean that governments, cities, and businesses, face a radically different policy landscape in 2022.
But time is running out to turn words into action. The UK is a leader in climate action and has introduced a raft of strategies, including the UK’s Net Zero Strategy and Environment Act, but even here things are falling short. The UK government’s Climate Change Committee warned yesterday that while COP26 marked a step forward in global efforts to address climate change, the UK is 'nowhere near' meeting the targets enshrined at the summit.
At current rates, it said, the world is heading to a dangerous temperature rise of 2.7°C by 2100. As one of the IPCC scientists put it to me 'now we need the policies'. In our work we absolutely know that 'it can be done', but it can’t be left to the market alone. As the Argentinian delegate put it at the Conservative Environment Summit at the COP, 'We need public funding that addresses risk, and policy and regulatory frameworks, compliance and voluntary action. Governments need to work with business and local government if we are going to succeed'.
The CCC noted that the UK government must agree tougher policies to help people live more sustainable lifestyles by reducing the impact of imported goods and tackling embodied emissions from materials such as steel and cement.
The UK CCC also called for a phase-out of fossil fuel subsidies, for the UK to make its 2030 emissions target legally binding, and achieved without offsets, with a limited role for CO2 removal, which can be seen as 'magical thinking'. And it called for sector targets to be included the Net Zero Strategy. Coupled with action by other countries, this could limit temperature rises to just under 2°C.
Recent announcements point the way to how this could be achieved, and will have major implications for cities, the built environment, and businesses as we head into 2022.
Cities and the built environment:
- The built environment is moving up the policy agenda. It was heartening to see 53 countries (including China, India, Japan, and the US) mention building energy efficiency in their Nationally Determined Contributions (NDCs), and 38 specifically reference building energy codes. COP26 also saw a full day dedicated to the built environment, for the first time in its history. Property of all kinds, and those who use it, will be under increased scrutiny in 2022.
- Access to finance will be key to meeting net-zero targets. The UK Cities Climate Investment Commission research estimates that £206bn of investment is needed to achieve net-zero pledges across just London and the UK’s 12 largest cities. That’s £824bn for the whole of the UK. Public financing can’t cover this, so robust business cases and investment models, including blended finance, will need to be created to encourage private sector returns-based investment and innovation in financial structures. This will require local authorities to build skills, capacity, and capability.
- Financial institutions increasingly want a ‘just transition’. The Financing a Just Transition Alliance (members include over 40 banks, investors, financial institutions, universities and trade unions), shared with us at a COP26 event an update on their work to identify how the financial sector can scale up climate action while also delivering positive social impact - one to watch in 2022.
- UK Building Regulations will tighten, but enforcement action is needed. The UK Net Zero Strategy: Build Back Greener, includes grants for heat pumps, and the Future Homes Standard, which demands an 80% reduction in carbon emissions from 2025, will feature heavily in developers’ thoughts in 2022. To prove effective, the government must now start to measure the in-use performance of buildings to ensure they are as energy-efficient as they were designed to be.
- We will see further inspiration internationally. The Urban Transitions Mission, launched at COP26 by the EU and 22 national governments, including the UK, aims to deliver 'at least 50 large-scale, integrated demonstration projects in urban environments around the world, providing a pathway for all cities to adopt net-zero carbon solutions as the default option'. We know that trailblazing cities are already leading the way and provide inspiration to others. Although we are way past the time for more demonstration projects. Now we need delivery everywhere in every sector.
The new business landscape:
- Access to capital and debt will become increasingly tied to an organisation’s decarbonisation plans. The International Financial Reporting Standards Foundation, which governs financial reporting in more than 140 countries, announced the formation of the International Sustainability Standards Board (ISSB) at COP to develop a global baseline of sustainability disclosure. Meanwhile, the UK has announced it intends to become 'the world’s first net zero-aligned financial centre' by mandating listed companies and financial institutions to publish their net zero transition plans. Although limited to listed companies, this added transparency will spur greater action
- Businesses will be judged by their adherence to science-based targets. The Science Based Targets initiative published the world’s first science-based definition of 'net zero' in the run-up to COP26, setting a high bar for any business that wants to claim its sustainability strategy will genuinely help to 'keep 1.5 alive'. Its emphasis on emissions cuts of 90% by 2050, and 50% this decade, all without using offsetting, will radically challenge businesses’ sustainability strategies.
- Carbon trading is coming. Article 6 of the 2015 Paris Agreement, adopted by nearly 200 countries, will expand public and private carbon emissions trading markets. The private sector will increasingly be expected to deliver on climate innovation and technology.
We were heartened by these announcements and by the number of positive conversations we had in Glasgow. We believe that with the right political will, and with city leaders and businesses playing their part, there is still time to avert catastrophic global heating and regenerate nature. At Bioregional, we know from our 25 years of experience, working with inspiring partners around the world, that we can create communities, products and services that enable people to live more sustainable lives within the limits of our one planet
Do get in touch using the form below and share your challenges and reflections. We are all on this journey together, and very much look forward to working with partners and clients old and new to make truly sustainable cities and business a reality in 2022.