The voice and interests of future generations were not well understood. In 2021, several publications by the IPCC (the UN panel of climate scientists), the UNEP (the environmental program of the UN) and the International Energy Agency made clear that, currently, the world is following a pathway of global temperature rise well above 2°C in 2100. Scientific evidence shows that climate change is already taking place, faster and with more impact on people and livelihoods than previously thought. The reports indicate that the world should aim to keep the global temperature rise within 1.5 °C. Therefore, a large portion of existing fossil reserves should not be exploited. The Glasgow Climate Pact falls short of delivering on these ambitions.

The pulse is weak
In the run up to the 26th UN Climate Change Conference of the Parties (COP26) many countries submitted stronger climate plans (NDCs, Nationally Determined Contributions). Others came empty handed. Before Glasgow the world was heading to 2.7°C in 2100. After Glasgow estimates on the impact of the sum of the (renewed) NDCs differ from around 2°C to 2.4 °C. Although some progress was made, the direct effect is that the remaining global carbon budget of about 400 gigatons - that is consistent with the limit of 1.5°C - will be exhausted even faster, causing extra pressure to force an even quicker transition in the near future. As Alok Sharma, the UK chair of COP26, put it: ‘1.5°C is within reach, but the pulse is weak’. It requires a great display of optimism not to consider this as an overconfident statement.

Goals for 2030
One litmus test of a timely sustainable transition is setting goals for 2030. In many national or regional climate plans (like the EU: 55% reduction of emissions in 2030, Fit for 55) intermediate goals are of paramount importance to put pressure on governments, business and finance to act in time and start now. In Glasgow no 2030 targets were defined. Instead, all countries are requested to submit better plans in 2022, also for 2030, when the COP27 will take place in Sharm-el-Sheik in Egypt.

A just transition
In the history of the previous 25 COPs, the lack of climate justice has been a dominant factor in holding the world at a standstill. OECD countries have repeatedly failed in their recognition that mainly Europe and the US bear responsibility for three-quarters of the historic greenhouse gas emissions since the start of the industrial era, causing damage today to poorer countries that already experience the worst effects of global climate change. In response to that, developing countries and emerging markets like China and India refuse to adopt (more) ambitious transition targets and plans. A just transition would require rich countries to act upon the most ambitious NDCs and contribute to the funds needed to finance the sustainable transition. Meeting this ‘Kopenhagen’ pledge (USD 100 billion in annual support for developing countries for climate action, promised in 2009) is again delayed. So, in Glasgow, like at previous COPs, the world was stuck between OECD countries, especially the US, not doing enough and countries (partially operating on coal) refusing to do more.

1.5 degrees already in the books
Reports from, among others, Carbon Tracker show that 1.5°C is already ‘in the books’, indicating that current fossil loans and investments will already cause global emissions to rise to (or maybe beyond) the 1.5°C-level, consuming the entire remaining global carbon budget. So, new fossil projects should be cancelled and forbidden now. Credible offset projects are not expected to be available (at a sufficient scale) to offset surpluses of emissions. This was not decided at Glasgow.

The elephant in the room has a name
Nevertheless, some progress is worth mentioning here: the Glasgow Climate Pact says that unbated coal should be phased down. For the first time in the history of the climate COPs, fossil fuels are mentioned: the brown elephant in the room has a name. The same applies to fossil subsidies (the ‘inefficient’ ones should be phased out, according to the pact). The UK took the initiative to set up a coalition of countries phasing out facilities (like government-backed insurance) for foreign fossil projects in 2022.  Denmark and Costa Rica launched an ambitious alliance to phase out oil and gas. Until now, no country in which Triodos Bank has banking activities – the Netherlands, Belgium, Spain, Germany and the UK- has supported this initiative.

The contribution of Triodos Bank
Business and finance were both present at the Glasgow COP at a significant scale. Triodos Bank attended discussions on the role of finance in the COP26 programme, building on the creation of the Glasgow Financial Alliance for Net Zero (GFANZ). Bevis Watts, CEO of Triodos Bank UK, called for net zero transition plans to be made mandatory. It is critical that the standards developed for such plans are robust, science-based and aligned to 1.5-degree scenarios, in line with recent guidance produced by the Climate Safe Lending Network in The Good Transition Plan, to which Triodos Bank contributed.

And as a co-founder of the Partnership for Carbon Accounting Financials (PCAF), Triodos Bank has called for all financial institutions to use common methodologies when measuring the impact of their loans and investments. Triodos Bank has contributed to several impact standards at an international level, including the UN Principles for Responsible Banking, and also to a number of national climate agreements.

End investments in fossil fuel
More is needed. Business and financial institutions must make good their commitments to deliver their ‘fair share’ of the UN-endorsed 50% emissions cuts by 2030, for example. In addition, we call for an end to investment in fossil fuel expansion and exploration. And in support of this, we want to see a carbon pricing mechanism that fully reflects its social and environmental cost and for fossil fuel subsidies to be systematically dismantled.

Central banks should steer on assets
Financial regulators should recognise that we need to look not only at the risks, opportunities, or consequences of climate change for the financial sector, but to more overtly recognise the impact of the sector itself – particularly with regards to investment in high carbon sectors and the mechanisms that facilitate this. Central banks should go beyond stress testing and reporting to strong asset steering, incentivising or penalising banks based on their behaviours related to climate change.

Social inclusion
Whilst addressing climate change is fundamental, we must reduce emissions in a way that respects the social inclusion of all people alongside planetary boundaries, enabling a just transition. This isn’t about slowing the pace of change or offering up excuses, but in ensuring, for example, that households in energy inefficient properties have access to affordable retrofit; in converting agriculture to support rather than threaten nature and in building a vibrant new economy through new climate solutions and infrastructure.

The answer comes from society
You might think the politicians have not delivered at Glasgow. That’s true. Was it just ‘blablabla’, like Greta Thunberg says? No, not entirely. The COP at Glasgow made clear again how incredibly difficult it is to move away from the fossil era. Frank Elderson, today a member of the ECB Board, said in 2018 at a Triodos Bank programme in Pakhuis de Zwijger in Amsterdam about the transformation of our economy and society: “Ultimately, it’s simple: we have to do everything differently’. The vested interests are phenomenal. Trillions of dollars are at stake. Inequal societies, bothered by Covid-19, are not well equipped to deal with this huge challenge. We don’t have the global institutions that can make a difference.

The final answer to this challenge should come from society. Bold and collective action of civil movements, frontrunners in business and finance, climate scientists and transformation experts is more necessary than ever, keeping pressure on solving this issue.The longer it will take to bring global emissions down, the more important the transition to a Beyond Zero economy becomes. The world will probably need regenerative business of all kinds to bring down the concentration of CO2 in the atmosphere. So, there’s work to be done by Triodos Bank and the community we serve.