Net Zero is the buzz on everyone’s lips this week as publication of the pre-COP 26 strategy report “Building A Private Finance System for Net Zero” was announced earlier today. Mark Carney, UN Special Envoy for Climate Action and Finance, speaking at the Green Horizon Summit, hosted by the City of London Corporation with support from the World Economic Forum and sponsored by DLA Piper, amongst others, noted that private finance will play a critical role in enabling the whole economy transition required to achieve this key target. Mr Carney said, “It is within our grasp to create a virtuous cycle of innovation and investment for the net zero world that people are demanding and that future generations deserve. Let’s seize it.”
As reported earlier in our article on Climate Risk: Turning the dial on disclosure, reporting and corporate accountability, COP26 is being hosted by the UK in 2021 and will be a crucial meeting given that it marks the end of the initial five year period from the adoption of the Paris Agreement. We anticipate that the role of financial services in delivering investment for net zero will be front and centre during the upcoming COP session and everyone accepts that there is much work to be done. The new report states that “every company, bank, insurer and investor will have to adjust their business models, develop credible plans for the transition and implement them” and the scale of this task is clearly recognised.
There are four main goals documented here, on Reporting, Risk Management, Returns and Mobilisation, with a list of deliverables under each, noting the type of industry participant required to take the relevant action. Some are very specific, for example under Mobilisation (increasing private financial flows to emerging and developing economies to finance transition to net zero), the insurance sector is specifically tasked with closing the protection gap and improving resilience in climate-vulnerable countries. Others are very broad, including having all companies responsible for delivering scenario analysis in the real economy for Risk Management modelling, through development of sector-specific scenarios and guidance.
The full report is available to download below.Pre-COP26 Strategy Report