A regular briefing for the alternative asset management industry.
COP 26, the most important climate summit since the 2015 Paris Agreement, is just around the corner. The UK government, which is playing host, desperately wants it to be a success – and needs to show its own continued leadership on climate change if it is to marshal commitments from other countries. A series of important announcements this week are designed to underpin that leadership position, including a long-awaited Net Zero Strategy.
To be fair, the UK already has strong credentials: in 2008, Britain was the first country to set a legally binding climate change mitigation target and, in 2019, was the first major economy to set a net zero target. A number of concrete steps have followed, including another welcome first, announced in 2020, to require all significant economic actors – including many private funds managers – to use international standards to report on their exposure to climate change.
But there is no room for complacency. In its latest report, the Climate Change Committee – an independent, statutory body established by the Climate Change Act 2008 – was harsh in its criticism of the government's more recent record. Progress has, the Committee said, been particularly slow on the measures required to adapt to climate change, as opposed to those that could help to mitigate it. Many remain concerned that the public funds needed to finance the transition to net zero will not be forthcoming.
Public funds are vital, of course, but the government is also expecting to lean heavily on the private sector. The Green Finance Roadmap, also published this week, explains how new financial regulation will underpin the government's efforts.
...Some divergence from the EU taxonomy is expected but there is also a recognition that international alignment is desirable...