COP26 message to businesses: clean up to cash

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GLASGOW – The hard-fought Glasgow Climate Pact has sent a clear message to global companies and executives: reevaluate corporate strategies and carbon footprint to reap monetary rewards, or delays and risk losses.

The https://www.reuters.com/business/cop/un-climate-negotiators-go-into-overtime-save-15-celsius-goal-2021-11-13 agreement announced on Saturday evening, ending two weeks of intense negotiations between nearly 200 nations, pushes countries to do much more https://www.reuters.com/business/cop/factbox-whats-glasgow-climate-pact-2021-11-13 to curb emissions of carbon that cause climate warming. This pressure will increasingly be imposed on investments and industry to keep the emissions associated with their activities under control.

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The Glasgow Pact also produced a breakthrough on the rules for governing carbon markets https://www.reuters.com/business/cop/outline-carbon-markets-deal-emerges-un-climate-summit-2021- 11-13 and targeted fossil fuel subsidies.

In addition to political negotiations, the Glasgow gathering brought together many of the best CEOs, mayors and world leaders in the sectors, including finance, construction, vehicles and aviation, agriculture, renewable energy and infrastructure.

“COP26 unleashed a wall of new private sector money,” said Gregory Barker, executive president of energy and aluminum company EN + Group, via email. “For business around the world, one thing is certain, the big change is coming and it is coming fast.”

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Two separate investment conferences alongside the UN climate summit touted profits for those who meet the environmental conditions for the money. Many agreements have been announced https://www.reuters.com/business/cop/mission-coalition-cop26-spawns-confusing-clusters-2021-11-05, including plans for a standards body to review disclosures on the corporate climate that will challenge meeting rooms.

GOAL OF 1.5 DEGREES

With the pact reaffirming the global commitment to contain global warming to 1.5 degrees Celsius (2.7 Fahrenheit), coupled with “accelerated action in this critical decade,” councils can expect more national pollution policies. strict in all sectors, especially in transport, energy and agriculture.

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This will leave companies without a plan to adapt to a low-carbon economy that will appear exposed, U.N. climate action champion Nigel Topping said.

“If you don’t have a net zero goal now, you don’t seem to care about the next generation and aren’t paying attention to the regulations that are coming,” Topping said. “Your credit rating is at risk and your ability to attract and retain talent is at risk.”

To increase the pressure, financial services firms with approximately $ 130 trillion in assets have pledged https://www.reuters.com/business/cop/wrapup-politicians-exit-cop26-130tn-worth-financiers-take -stage-2021 – 11-03 to align your business with the net zero goal. They will increasingly lean on the boards of directors of the corporate climate laggards.

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CARBON MARKETS

The Summit Settling Rules for Global Trade in Carbon Offsetting Credits has been applauded by businesses for its potential to unlock trillions of dollars in funding to help countries and companies manage the energy transition https: / /www.reuters.com/business/cop/ dirty-dollars-big-ag-pays-farmers-control-their-soil-carbon-2021-10-25.

Observers said agreed rules addressed major concerns https://www.reuters.com/business/cop/toughest-tasks-un-climate-talks-article-6-co2-markets-2021-10-26 and would likely prevent most abuses of the system.

The nonprofit We Mean Business coalition, which works with climate companies, said the rules “have the potential to free up huge investments.”

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By putting the framework for a global trading system in place, the pact also brings the world closer to having a global carbon price, demanded as a priority by investors and companies prior to the talks.

A global pricing would allow companies to more accurately assess asset value, as well as costly externalities, driving more climate-aligned decisions about anything from where to build factories for companies to buy or products to launch.

With carbon offsets linked to efforts to preserve nature, more than 100 global leaders https://www.reuters.com/business/environment/over-100-global-leaders-pledge-end-deforestation-by-2030- 2021-11-01 at the conference pledged to stop and reverse deforestation by 2030. Businesses and investors also said they would step up efforts to protect forests.

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FOSSIL FUELS

For the first time, the deal saw countries recognize that fossil fuels were the main cause of climate change and called for an end to “inefficient fossil fuel subsidies”. He did not say how to determine if the subsidies could be justified.

It identified coal, the most polluting of fossil fuels, although at the eleventh hour it went from urging a “phasing out” of coal energy to a “phasing-out”.

The change in wording, following objections from India, China and other coal-dependent nations, has been viewed by developing economies as a recognition that industrialized nations are the biggest culprits of the climate problem. But many in rich economies feared it could mean more years of rampant emissions as developing nations grew.

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Calling the move “dangerous and damaging to the climate,” Germany’s largest industrial association has warned it could hamper its industries as they are forced to abandon cheap fossil fuel that international competitors can still use.

“This concentrates emissions in countries with less stringent climate measures and unilaterally affects companies that are already facing large financial burdens,” the Federation of German Industry said Sunday.

However, the mere mention of coal and fossil fuels in the Glasgow Pact has been hailed as a breakthrough in UN climate talks, which have sidestepped the issue for decades.

Saker Nusseibeh, chief executive of the international business of Federated Hermes asset manager, said the result will put pressure on some oil companies that “weren’t as helpful as others.”

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He also said that “the coal companies will have to think very carefully about their future plans”.

Meanwhile, the world’s major economies are driving change.

The first two, the United States and China, have announced cooperation plans on climate action, including reducing emissions of the potent greenhouse gas methane.

Elsewhere, six countries, including France, have joined the Beyond Oil and Gas Alliance, pledging to stop new oil and gas drilling.

Twenty countries including the US and Canada have pledged to stop https://www.reuters.com/business/cop/19-countries-plan-cop26-deal-end-financing-fossil-fuels-abroad-sources-2021 -11 -03 public funding of fossil fuel projects abroad and 23 nations have promised to phase out coal-fired energy.

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A number of companies in sectors including transportation are already betting big on increasing electrification, with US auto makers Ford and General Motors among those saying they will phase out fossil fuel vehicles https: // www .reuters.com / business / cop / six- major carmakers agree to phase out fossil fuel vehicles by 2040

The Glasgow talks “drew attention to the great opportunities arising from a different form of development: stronger, cleaner, more efficient, more resilient and more inclusive,” said climate economist Nicholas Stern https: // www.reuters.com/business/ policeman / economy-must-step-up-green-challenge-says-lses-stern-2021-11-05. The findings “seek to make clean and green manufacturing competitive in all of these areas by 2030”.

(Reporting by Simon Jessop, Jake Spring and Ross Kerber in Boston; Additional reporting by Victoria Waldersee in Berlin; Written by Katy Daigle; editing by Barbara Lewis)

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