COP26: Decisions, Outcomes and Challenges ahead for ESG

cop26-esg

COP26 (the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change) was held in Glasgow, UK for a fortnight from 31 October 2021. It is said to be the most high-profile conference in the history of COPs, with a series of daily announcements on electric vehicles (EVs) and discussions on the abolition of coal-fired power.

In this article, we will provide an overview of COP26 and ESG-related issues that emerged at COP26. We will also cover some new jobs that will be created and the demand for talent in the sustainable and ESG sectors, which are expected to grow in importance in 2022.

 

What is COP26?

The Conference of the Parties (COP) is an international meeting of the member states of the United Nations Framework Convention on Climate Change (UNFCCC) to discuss a framework for preventing global warming. It has been held almost every year since 1995, with the exception of 2020 when it was cancelled due to the spread of Covid-19. The ultimate goal of the conference is to stabilise the concentration of greenhouse gases in the atmosphere, and to agree on the international measures needed to achieve this goal.

 

Five main outcomes of COP2

1. Phasing out coal-fired power generation

One of the highlights of COP26 was to "phase-out coal-fired power generation". This was a global acknowledgement that the reduction of coal-fired power generation is essential if the Paris Agreement targets are to be met.

 

2. The Paris Agreement strengthened the temperature increase target to 1.5 degrees Celsius

Another major achievement was the pledge to pursue efforts to limit the pre-industrial temperature rise to 1.5 degrees Celsius. This effectively reinforces the Paris Agreement's target of limiting temperature rise to 2°C by 2030, by limiting it to 1.5°C. This is an expression of the world's sense of urgency about climate change.

 

3. Rules for international trading of greenhouse gas reductions

Article 6 of the Paris Agreement establishes rules for a market mechanism for international trading of greenhouse gas reductions, including measures to prevent double counting and methods for calculating credits. However, due to various conflicts that have arisen so far, the necessary detailed rules for implementation have yet to be decided previously. At COP26, these rules were put in place, including measures to prevent double-counting when distributing emission reductions, and allowing only limited emission reductions under the Clean Development Mechanism (CDM).

This was a very important topic because Japan has been supporting developing countries in reducing their emissions through its own system of bilateral credits (JCM). With the development of Article 6, Japan has taken a step towards counting some of the emission reductions achieved in the developing countries it has supported as Japan's own reductions.

 

4.  Review of the 2030 target

As mentioned above, COP26 had set a target of limiting the temperature rise to 1.5 degrees Celsius but it was found that this 1.5 degrees Celsius target was difficult to achieve. This led to a call for countries to submit another target by the end of 2022, describing the current target for 2030 as "ambitious".

While the targets set by countries are currently insufficient and the resubmitted figures are not binding, the decision to resubmit them by the end of 2022, rather than waiting until the next target is due in 2025, is commendable.

 

5. Ensuring that $100 billion per year of aid is delivered to developing countries

In order to achieve the goal of limiting temperature rise, developing countries must also take further steps to reduce their carbon emissions. In 2009, COP15 in Copenhagen set a target of "$100 billion per year in aid to developing countries by 2020", and developed countries decided to continue their efforts in order to reach this target by 2025. Discussions will also begin on further funding targets beyond 2025, with the aim of doubling funding for extreme weather events by 2025 compared to 2019.

 

What are the challenges beyond 2022 for COP26 and ESG?

The decade up to 2030 is said to be a critical moment in the fight against global warming and climate change, and COP26 attracted a great deal of attention even before it was held. The fact that the entire world was able to agree on the goal of limiting temperature rise to 1.5 degrees Celsius or less at this conference means that we are finally at the starting point for adopting bold measures, including changes in social systems.

The focus will now be shifted towards how fast we can move to achieve this goal. Now that national emission reduction targets have been set, the role of the private sector and local authorities will become even more important, and the new "coalition of the willing" introduced at COP26 will hopefully provide a catalyst for major companies and countries to issue statements in support of these targets, forcing other companies and local authorities to reconsider their actions. It is now up to the private sector and local authorities to set concrete policy directions and promote their own initiatives to reach the 2030 target and, above all, to help future generations.

 

Two issues: Adaptation and Biodiversity

Naoyuki Yamagishi, Director of Climate, Energy and Marine Fisheries at WWF Japan, has identified "adaptation" and "biodiversity" as the two key issues that need to be addressed if we are to meet the targets set at COP26 to combat global warming and climate change.

 

Adaptation

Adaptation refers specifically to the adaptation of developing countries to climate change. This includes raising funds to prevent damage in areas already affected by climate change, as well as damage that is predicted to occur in the future. At COP26, developing countries expressed regret that the previously agreed target of $100 billion per year in aid to developing countries had not been met. The next COP27 will be held in the African continent, which is already experiencing the effects of climate change, and will focus more on "adaptation measures" and "damage and harm" (i.e. dealing with the damage that has already been done). This calls for a discussion on new funding targets for post-2025.

 

Biodiversity

However, according to data from the World Wide Fund for Nature's (WWF) Living Planet Index, which is based on population groups of species, biodiversity has been on a decline since the 1970s. On the other hand, global risk assessments show a sharp rise in biodiversity, and attention is also being paid to the impact of corporate activities on biodiversity as a whole. We need to understand these impacts in a global framework, says Naoyuki Yamagishi.

Recently, there have also been initiatives to encourage individuals and companies to engage with the Sustainable Development Goals (SDGs) by visualising the current state of biodiversity, such as the Biodiversity Mapping Project, which uses big data, and it is hoped that this type of activity will expand in the future.

 

Will jobs in Japan related to ESG and sustainable areas change?

In the wake of COP26, we are seeing the emergence of major trends in reducing greenhouse gas emissions and tackling climate change, which will undoubtedly require greater commitment on an individual and corporate level. The number of sustainable and ESG jobs, where there is currently a shortage of talent, is also set to increase. For example, the development of technologies and products that address environmental issues is likely to be used on a global scale, and recruitment in Japan is also becoming more active especially in the areas of energy-saving technologies and renewable energy.

Below are some resources which you may find helpful:

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Do you need career tips?

At Progressive Recruitment we have a number of vacancies in the renewable energy sector and the next generation of the automotive industry could be your gateway to a career in sustainability and ESG. Our consultants who have a wealth of experience and knowledge in this area would be delighted to talk to you and share with you on tips for your career progression in Japan. Please contact us for a free consultation on how we can help you y filling the form below.

 

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