COP26 brought parties together to accelerate action towards combating climate change. The gathering in Glasgow was billed as ‘the world’s last best hope to avert disaster’.
Geoff Cook, Chair of Mourant Consulting, a law firm-led professional services business, looks at what the implications of COP26 are for the finance industry:
The key focus for the post-pandemic period is to ‘build back better’ and there is now an even sharper focus on climate change and sustainability. Even though politicians may be at the centre of COP26, there are real ramifications for the private sector, and the finance industry will be expected to play its part.
The concepts of sustainable finance and ESG investment have entered the mainstream; accelerating the flow of capital into climate-friendly investments will be both required and expected. Governments and regulators will be looking to hold businesses responsible for their every financial decision, taking climate change into account.
On 18th October, just a couple of weeks before COP26, the UK Government published Greening Finance: A Roadmap to Sustainable Investing, a document outlining its aim to ‘green’ the financial system, including through new Sustainability Disclosure Requirements (SDRs). Since 1 October, trustees of specific occupational pension schemes must ensure they embed climate change risk into their governance, strategy and risk management processes.
IFCs (International Finance Centres) will want to make contributions to setting science-based targets for 2025-2030, committing to phase out coal finance, announcing new net-zero adaptation-aligned financing to developing countries and emerging markets, and committing to nature-positive finance action.
Thankfully, there are indications of proactivity amongst British IFCs – most have already launched sustainable finance initiatives. Guernsey has run a Sustainable Finance Week for several years in the Channel Islands, while the Government of Jersey recently hosted an inter-jurisdictional webinar entitled ‘Climate Change and Small Islands’, drawing participants from Bahrain, Antigua and Barbuda, Guernsey, Isle of Man, Madeira and St Helena.
IFCs will need to continue to be on the front foot and evidence their contribution, and the fact that many attended COP26 either virtually or in-person was a positive step.
