The UK and Italy are to jointly host the 26th United Nations Climate Change Conference of the Parties (COP26) in Glasgow on 1st November 2021. The ultimate aim of this summit is to bring 197 signatory countries together to make critical decisions on the global response to climate change.
COP26 is deemed incredibly significant, as it is the first COP following the Paris Agreement and parties are expected to present updated, more ambitious pledges for the coming decades. The negotiations at this summit will focus heavily on how to implement these pledges, rather than simply agreeing action points.
One thing the parties will all agree on is the delivery of COP26 will be a challenging task, as it takes place after the COVID-19 global response. The virus has already forced the summit to be postponed from November 2020, but it has also created a new outlook on a post-pandemic approach to climate change.
The COP26 Unit in the Cabinet Office has stated the summit will feature five key themes:
- Clean Energy;
- Clean Transport;
- Nature-based solutions to protect, manage and restore ecosystems;
- Adaptation and resilience to climate change impacts; and
- Climate Finance.
What points will the UK want to get out of the COP26?
COP26 can be a unique and highly publicised platform for the UK to promote itself as a global leader in green technologies. This opportunity will be invaluable to showcase a sustainable and innovative UK who is eager to build international agreements, especially after our withdrawal from the EU. As such, it will be vital for the four UK nations to present a coordinated front at the summit.
This unified force is also necessary to succeed in hitting each point of the Government's Ten Point Plan for a Green Industrial Revolution. This plan is promised to mobilise £12 billion of government investment, and potentially 3 times as much from the private sector to help the UK build back better, support green jobs and accelerate the path to net zero. The UK needs to reduce emissions by 75% across all sectors by 2035 to align with the Paris Agreement.
The following issues that may be particularly relevant to businesses and entrepreneurs would be:
As the real estate sector contributes up to 40% of UK greenhouse gas emissions, we predict COP26 to heavily focus on the built environment and how to improve its sustainability. We base this prediction on the fact this change is already heavily in motion.
UKGBC has revealed that a group of influential property leaders have joined forces as UK Built Environment Climate Ambassadors to champion the development of a Net Zero Whole Life Carbon Roadmap for the UK built environment. This ambitious roadmap will be launched at COP26 and focuses on the entire life-cycles of buildings. The project aims to produce a trajectory for reducing real estate emissions in line with limiting global temperature rises below 1.5 degrees.
An additional weapon for the UK to reduce carbon emissions relating to construction and real estate is found within the London Plan 2021, which strategizes how to reach net zero by 2050. For example, Policy S12 will force developers to consider for the first time the carbon embodied in materials, construction, maintenance and demolition of their projects. They must now consider whole life carbon assessments and demonstrate action points to reduce emissions – a critical step in taking London closer to its decarbonisation goal. Perhaps COP26 will assist in reviewing ways to improve the carbon assessment process, which is largely in its infancy.
We understand that building a greener real estate industry isn’t without its hurdles. Developers and landlords need to urgently review their entire supply chain to be aware of direct and indirect emissions, as well as those relating to travel, procurement, waste and water. A supply chain is incredibly wide in scope, but must be assessed and measured in its totality to meet our net-zero targets - hence why there is such a pressing need to improve transparency and data collection throughout real estate supply chains.
Many UK investors are actively trying to improve the energy efficiency of existing buildings, but there are those who are not considering future consequences. This will be detrimental in the long term as the government is actively considering future regulations to enforce carbon-reduction changes in the property sector. This will likely be a topic of great discussion at the COP26 summit.
A COP26 Energy Transition Council has already been launched to accelerate the transition to zero emission technologies. In addition, the Climate Change Committee (CCC) published the world's first blueprint for a fully decarbonised nation late last year.
Boris Johnson, the Bank of England, the Financial Conduct Authority and the Chancellor of the Exchequer have already made clear the UK will build back post COVID-19 with a huge 'green' focus. Similarly, the Energy White Paper 'Powering our Net Zero Future' (December 2020) aims to reform the energy system such that it is fit for future purpose.
High carbon sectors are predicted to shrink as investment in greener alternatives expands. COVID-19 has very much enlightened the public to the power of reducing fossil fuels, with the UK lasting 67 days using no coal power at all. This is stated as the fastest power sector decarbonisation in the world. We predict the UK will continue to ride this green energy wave at COP26, not just for the environmental benefits, but also to secure a competitive position in the global markets for low-carbon goods and services.
In addition, we are seeing rapid improvements in the cost and productivity of low-carbon technologies, such as renewable energy and electric car batteries. This transition from manufacturing jobs to areas such as hydrogen, carbon capture and storage and wind energy can only ramp up post COP26.
The Chancellor of the Exchequer has already set out a new green plan, including policies designed to position the UK at the forefront of the move to a sustainable future, whilst also managing climate risks in the financial sector. Investment firms are also realising there is a large financial incentive to being 'green', rather than merely charitable.
Investors are publicly demanding transparency in their investments and actively supporting sustainable objectives. Those ahead of the curve may benefit from preferential lending rates, depending on the nature of the investment. In addition, investors are increasingly looking to the energy efficiency of buildings, their carbon footprint and the use of innovative technologies.
Climate change is set to make historically safe investments "existentially risky" and on the flip side, innovate and previously speculative investments will be much safer on the path to net zero. It's clear that sustainable finance is the future and therefore vital to understand. COP26 will undoubtedly focus on the opportunities green finance may bring, as it's clear sustainable investments are the future. It's therefore vital for firms to understand how to practically implement ESG factors and comply with new legislation that is within the scope of their business.
How to Prepare
The low-carbon revolution is an inevitable aim across most of the globe. The coronavirus pandemic has opened the eyes of many world leaders to the intimate link between the environment and our economic stability. We predict COP26 will light the fire for innovative improvements to the UK's sustainability targets, as well as laying the stepping stones for implementation of regulations and policies to ensure these targets are met.
We strongly urge developers, landlords, investors and investment managers alike, to be ahead of the curve and be ready for these radical but welcome changes. COP26 will without a doubt be a ground-breaking summit.