Government leaders, policymakers, investors, companies, and sustainability advocates from around the world have emptied out of Glasgow, the site of the COP26 climate conference that wrapped up over the weekend. Now, it’s what they do when they get home that will determine the summit’s legacy — and our children’s future.
To be sure, COP26 featured progress on many fronts in confronting the climate crisis.
Agreements reached to dramatically reduce dangerous methane pollution and end deforestation by 2030 are laudable and critical. It was also promising to see explicit recognition among countries of the role of coal and fossil fuels in causing this crisis. And even with limited details, the agreement between the U.S. and China to work together to increase their ambition on climate action is a positive and significant development among the world’s two leading sources of climate pollution.
But none of this is enough to limit global temperature rise to the goals of the Paris Agreement and protect us from climate wreckage that could make the tragic floods, fires, and storms of the last year look tame.
At this point, the most important agreement to come out of COP26 is the one that gives countries another shot to do enough, and soon. The closing agreement, which required buy-in from all countries, calls for governments to update and strengthen their climate commitments by the end of 2022.
Given the global nature of this crisis, all countries must stand up and do more. As important as it has been for governments to set clear targets to reduce emissions in the future, it is time to pass and implement the policies that will actually make these goals achievable. Countries must also strengthen and then follow through on their promises to fund the clean energy transition in poor and developing nations, many of which face existential risk from climate change yet are the least responsible for causing it.
Here in the U.S, there is much work we need to do in adopting the policies that will incentivize investments in zero-emissions cars, energy, and buildings, and ensure we slash emissions in half by 2030. This is where investors and companies have a critical role to play. Many are already powerful voices for climate policy, recognizing both the financial risk of failing to confront this crisis and the economic opportunity of solving it. In the run-up to COP26, 778 businesses representing $2.7 trillion in annual revenue and 733 investors managing more than half of the world’s assets called on governments to raise their climate ambition and implement meaningful climate policies.
Now companies and investors must keep the pressure on, ramping up the advocacy to get these policies delivered as quickly as possible. At the same time, they must raise their own ambition on climate action by laying out detailed, aggressive, and transparent plans for how they will transition their businesses and portfolios to a net zero economy by 2050 or sooner. The U.K.’s new requirement, announced during COP26, that asset managers, asset owners, and listed companies must publish climate action plans is consistent with what Ceres and our global partners have long expected of companies and investors.
In the U.S. there is no time to pause on policy: a number of near-term decisions will shape our success in quickly pivoting to a more equitable, clean energy economy.
We must make it clear to U.S. lawmakers that the climate provisions in the Build Back Better budget package before Congress will unleash an investment boom in clean energy, zero-carbon transportation, and manufacturing. We can’t let trade associations allow the entrenched interests of the fossil fuel industry to undermine the huge economic opportunities this plan promises.
The package’s $555 billion in climate measures features a set of incentives to aggressively direct investment toward clean energy, creating new industries and good jobs. Its passage would mark the largest climate legislation in U.S. history. Yet it would also be a bargain, since cutting emissions will prevent costly climate disasters from getting worse, saving the country trillions over time and ensuring that Corporate America is a leader in the clean energy economy.
And going forward, to even further bolster the incentives to invest in clean energy, we will also need to keep up the pressure to put a price on carbon that for too long has been polluted for free.
Investors and companies must also be at the forefront of building climate action into the U.S. financial systems.
The U.S. Securities and Exchange Commission is right now weighing climate risk disclosure rules for companies, to make sure they are accounting for the many ways this crisis threatens their businesses and their investors. Meanwhile, the Department of Labor is weighing a rule to allow retirement savings to be invested in funds committed to sustainability — which would help direct investment to forward-thinking companies and clean technology, while increasing long-term returns for beneficiaries. Both agencies need to hear from smart business leaders who see the clear benefits of these rules.
We have more work ahead of us. So, let’s keep the momentum going here in the U.S. from investors and companies. We all know that to achieve the goals of Paris — and, for that matter, to make Glasgow a success — the shift toward a clean energy future must be global. But why shouldn’t the U.S. lead it?
Mindy Lubber is CEO and president of the sustainability nonprofit Ceres and a founding member of the global steering committee for Climate Action 100+ and The Investor Agenda. She was the recipient of the Champions of the Earth award —the United Nations highest environmental honor — for her leadership on climate change and sustainability. Lubber was also named Barron’s 100 most influential women in U.S. finance.
Barney Schauble is the chairman of Nephila Climate, a leading investment management firm specializing in reinsurance risk, and the chair of the Ceres board of directors.