COP26 begins on 1 November and is the 26th edition of the United Nations annual climate change conference. COP stands for ‘Conference of the Parties’. These parties are the signatories of the United Nations Framework Convention on Climate Change (UNFCCC) – a treaty agreed in 1994 which has 197 Parties (196 countries and the EU).
Official discussion at a COP takes place within a specially designated zone, where delegates from countries meet for formal negotiations and also more informal consultations. Representatives from civil society and media organisations may also be present, but attendance within this area is tightly controlled.
Traditionally, a wide range of public events also take place around a COP, including workshops, presentations, performances and installations.
Why is COP26 important?
COP26 will be one of the most important summits the UK has ever hosted and is being described as the biggest climate event since the 2015 Paris Agreement. The last COP, held in Madrid in 2019, finished with many big issues still unresolved. Since then, we’ve grappled with a global pandemic that has shown us the devastating effects of unpreparedness, and also highlighted the interrelated nature of our planet, people and prosperity. And this summer, we’ve seen severe weather events around the globe that are a stark reminder of the realities of climate change.
However, with decisive, collaborative action, runaway global warming could still be stopped. The outcomes from COP26 are vital for keeping us on track to avoid Earth-altering changes. It is also hoped that the COP will act as a catalyst to boost collective climate action and to amplify the voices of all those already campaigning on the issue.
Will banking and finance be part of the discussions?
Four key goals have been identified for the conference, and one of these focuses solely on the role of finance:
- Secure global net zero by mid-century and keep 1.5 degrees within reach
- Adapt to protect communities and natural habitats
- Mobilise finance
- Work together to deliver.
It has been recognised that trillions of private and public sector money is required to secure global net zero – that is, to reach a state in which the greenhouse gases going into the atmosphere are balanced by those being removed out of it.
It’s now widely acknowledged that to limit global temperature rise to 1.5 degrees, the whole economy will need to transition. That means the financial services industry (everyone from banks to insurers to asset managers) will need to change the way that they operate. Not only do we need to take into account risks presented by climate breakdown (for example as a result of flooding – such as that seen recently in Germany, the Netherlands and Belgium), but also to actively finance initiatives and innovations to support all companies in realigning their business models to net zero.
The Glasgow Financial Alliance for Net Zero (GFANZ) has been launched to support this shift in the run up to COP26. It’s a collaboration between former governor of the Bank of England Mark Carney and the COP26 Private Finance Hub, alongside the UNFCCC Climate Action Champions, the wider ‘Race to Zero’ campaign and the COP26 Presidency.
What is Triodos Bank doing?
We support the world’s transition to a low-carbon and climate-friendly future, in line with the Paris climate goals to limit the global temperature increase to at most 1.5 degrees. Since its foundation in 1980, the bank has always been committed to improving environmental impacts and outcomes. In 2020 alone, Triodos Bank and its investment funds financed renewable energy projects and energy saving projects that avoided the equivalent of over 5.7 billion kilometres travelled by car.
Triodos is also committed to setting a science-based net zero target informed by a full understanding of current carbon impacts and those of all loans and investments. To ensure a robust methodology, Triodos has supported the development of the Partnership for Carbon Accounting Financials (PCAF), which has now been adopted by over 100 financial institutions worldwide. Ahead of most of the banking sector, Triodos began measuring the emissions of a large part of its own portfolio in 2018. One year later we measured - for the first time - the emissions of all our loans and investments, and we repeated this in 2020.
In April 2021, Triodos Bank became one of the first banks to join the Net-Zero Banking Alliance (NZBA) – an initiative that is a member of the Glasgow Financial Alliance. As a signatory to the NZBA, Triodos Bank reinforces its commitment to address climate change through operational and lending practices.
We believe that COP26 must act as a catalyst, boosting the transition and galvanising action. And it’s about more than just setting and meeting net zero targets. We are calling for this to be a moment for the fundamental restructuring of the finance sector, how it operates and what is prioritised. We need a system that finds a way to account for, and address, the just transition and the biodiversity crisis, as well as CO2 and the impacts of climate change.
Hitting the target without missing the point
Triodos Bank is in the process of setting targets to steer its portfolio towards a net zero emissions economy. We plan to disclose our transition plan ahead of COP26.