NN IP: Post COP26 insights
During the last two COP26 weeks global warming and climate change were in the spotlight. What have we heard or deem important to share on consequences of the commitments discussed and agreed upon?
We should shift from words and intentions and policies to a shift in allocating capital. Isobel Edwards, Green Bond Analyst at NN Investment Partners and Adrie Heinsbroek, Chief Sustainability Officer at NN Investment share some observations and implications.
Adrie Heinsbroek:
‘’After being side-lined for many years in favour of mitigation, we were pleased to see adaptation financing received a spotlight at the COP26. Hopefully, in the sustainable and green finance space we start to see more adaptation allocation since we are already expected to exceed 1.5°C and our attention as asset managers needs to now turn to limiting the number of casualties associated with climate change while also reducing our emissions associated with our portfolios.’’
While there was some commitment to phase down coal, there were less strong commitments for fossil fuels as a whole. However, regardless of government policy, organisations are already taking action to publish fossil fuel phase out plans. The public is paying attention. Here a shift is witnessed in expectations of society at large towards also financial institutions.
‘’Governments deciding national and international policies is just one side of the conference and regardless of the COP 26 outcomes, we can still push for the policies that we want in our own portfolios. We can start applying more stringent deforestation criteria, encourage adaptation allocation in green bonds, continue with our fossil fuel phase out criteria for issuers and start to ask about methane metrics in the same way as CO2 metrics. We can take action within our own spheres of influence’’, says Isobel Edwards.