What was the point of COP26?

Boris Johnson and Sheikh Tamim bin Hamad Al Thani at COP26

With the dust having now well and truly settled on the 2021 United Nations Climate Change conference, known more widely as COP26, Business Leader investigated whether the event was a signal that positive climate action is on the horizon, or whether COP26 was just a big waste of time.

Despite the event going on for two weeks, one of the key goals for the summit was missed, which was to get every country to commit to cutting their emissions to net zero by 2050. Indian Prime Minister Narendra Modi instead pledged to meet this target by 2070, and as India is currently the third-largest emitter of global greenhouse gases, many will feel this is a significant failure of the event.

China, whose President Xi Jinping was notably absent from the event, also did not commit to meeting this target. Back in September, Xi Jinping announced China’s plans to be carbon-neutral by 2060.

Whilst a host of world leaders did attend the event, Russian President Vladimir Putin was also absent. However, Russia and China did send delegations to attend COP26.

It’s also key to point out that despite many of the commitments made at COP26, only a few countries are set to make their pledges legally binding. Therefore, many countries will have to police themselves, which could lead to potential greenwashing.

The event was also heavily criticised for world leaders flying in on private jets, whilst The Courier also reported that close to £100 million was expected to be spent by the UK Government to cover the cost of hosting the event. Many will feel this sum is far too costly considering the event didn’t achieve all it set out to do.

Supply chain issues

Over the course of the two weeks that COP26 went on for, countless UK organisations gave net zero pledges, and Chancellor Rishi Sunak announced that UK organisations will have to release detailed public plans to meet climate change targets by 2023.

Whilst this could have a highly positive impact in time, provided all these companies stick to their pledges, Alex Saric, smart procurement expert at global spend management cloud provider Ivalua, argues that this level of transparency and accountability will only matter if it includes the supply chain.

He comments: “With sustainability dominating government and public agendas, more organisations are pledging to meet net zero targets. However, words are not enough. Firms need to act, ensuring environmental efforts extend beyond their own four walls to cut carbon emissions and avoid greenwashing.

“For most organisations, emissions from their supply chain are several times greater than their own direct emissions. This means it’s critical they work with immediate and sub-tier suppliers to drive improvements in environmental practices.”

These comments came off the back of Ivalua’s latest research, which showed that just 24% of European suppliers were being measured routinely on carbon emissions. The research, titled The Ivalua 2021 Supplier Relationships Report, also found that only a small percentage of suppliers say that organisations routinely measure them on environmental factors such as air pollution (22%), water pollution (21%) and deforestation (20%).

“Suppliers have a vital role to play in reducing environmental impact, but organisations have a responsibility to give them the right tools to boost green initiatives,” continues Alex. “This means regularly communicating with suppliers, assessing their efforts, and providing them with flexibility to offer innovative solutions.”

“By taking a smarter approach to procurement, organisations can facilitate collaboration and access actionable insights to drive continuous improvement and help hit CO2 goals. There is also a real business imperative tied to hitting sustainability targets. Environmentally conscious organisations can build their brand reputation, increase sales, and gain the edge over less-green competitors.”

However, the launch of the Small Business Saturday campaign, a UK roadshow visiting 20 towns and cities to showcase the sustainable switches small business can make, looks to be a positive that came from the event.

Launched at COP26, the campaign features a striking fleet of zero-emissions ‘small business style’ vehicles – including an electric van, car, scooter and ‘delivery style’ bike – and offers support on a variety of business topics, including committing to net zero.

“As 99% of all businesses, and responsible for a now estimated third of all UK emissions, small businesses must be at the very heart of the nation’s response to the climate crisis,” said Michelle Ovens CBE, Director Small Business Saturday UK.

“Small businesses offer a grassroots, agile response to sustainability, and will be the source of innovation in our society as we move to a more sustainable world.”

Did COP26 inspire business sustainability?

In her article Did COP26 Inspire Business Sustainability Or Just Encourage A Future Of ‘Greenwashing’?, social media and immersive technology specialist Rebecca Barnatt-Smith argued that the importance of COP26 has enhanced sustainable consumer behaviour.

In the article, Rebecca writes: “If we look at the modern-day consumer, it’s clear to see that the importance of COP26 has only enhanced sustainable consumer behaviour. Post COP26, 75% of millennial consumers said that they consider sustainability when making a purchase, therefore making this modern audience not so passive and much more active.”

Whilst this suggests things look good for the future, there is still a potential problem with older consumers, who might not be so eco-conscious when it comes to their purchasing habits.

From an investment perspective, Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown, also points out that pressure COP26 put on people to invest in sustainable companies is likely to increase, although there is still a generational imbalance when it comes to willingness to make eco-conscious investments.

She comments: “The collective efforts of COP26 are likely to be disappointing for many climate activists, but the pressure from investors for fresh action to lower emissions and act more responsibly will continue to be ramped up over the months and years to come. Investors are showing they will use their money when it comes to supporting companies with good sustainability credentials, even without fresh direction from governments.

“There is an age split in just how important the environment, social and governance issues are when it comes to investing. More younger people have responsible investing higher up on their list of priorities than older people according to the latest HL survey.

“Investing in responsible companies is more important to 44% of 18-34-year olds, than making as much money as possible. Among the over 55 age group, 27% said that investing in responsible companies was more important. Although baby boomers have more financial clout right now, Generation Z will increasingly flex their money muscles over the decades to come and companies judged to be responsible towards the planet, employees and society at large will attract their investment.

“Already, investors are investing record amounts into responsible funds. According to the Investment Association, savers poured £1.6 billion into responsible funds in September – two thirds of total fund inflows. HL clients have also put record money into responsible funds on the platform with net flows up 17% in the first nine months of 2021 vs the same period in 2020.”

“However, there is still worry around about just how much return greener investments will offer. More than a quarter of those surveyed who didn’t pick responsible investments as being more important (27%) said it was because they wouldn’t make as much money with those investments. Another 22% said it just wasn’t a priority and 21% said it was just too much effort to research and switch investments.

“There is still a challenge ahead about convincing more investors that investing with environmental, social and governance issues in mind is about doing the long-term profitable thing. There is also clearly a need for more clarity for investors about the claims companies make in terms of their sustainable investments. It’s increasingly evident that if there was a clearer set of criteria on sustainability, investors may feel more confident about putting money where their ethics are.’’