BDO COP26 Digest #3 - 02 November 2021
Welcome to day 3 of COP26.
Key commitments and decisions
- Over 100 leaders, accounting for more than 86% of the world’s forests, committed to work together to halt and reverse forest loss and land degradation by 2030 and pledged $19 billion of public and private climate finance from 2021 to 2025 to a new Global Forest Finance Pledge. This will support action in developing countries, including restoring degraded land, tackling wildfires and advancing the rights of indigenous people and local communities
The pledge includes activities that support and strengthen:
- Forest and land governance and clarify land tenure and forest rights for indigenous people and local communities
- Deforestation-free and sustainable agricultural supply chains, including systems for transparency, traceability and integrity, the development and effective implementation of sustainability standards and certification and increasing the availability of finance for smallholders and community forestry, to improve livelihoods and support a transition to sustainable practices
- Deforestation-free and sustainable financial markets and the leveraging of significant private investment in sustainable forest management, forest protection and sustainable deforestation free agriculture
- Large-scale landscape restoration and forest conservation
- Actions to reduce forest crime and forest fires
Additionally, a $2 billion fund will be established to protect the world's second largest tropical rainforest in the Congo Basin. The governments of 28 countries also committed to remove deforestation from the global trade of food and other agricultural products such as palm oil, soya and cocoa. These industries drive forest loss by cutting down trees to make space for animals to graze or crops to grow. More than 30 of the world's biggest financial companies - including, Aviva, Axa and Schroders - have also promised to end investment in activities linked to deforestation.
Canada pledges to end deforestation by 2030, along with more than 100 nations
Deforestation is a major contributor to climate change. Cutting down huge areas of forest without replacing the trees causes an inadvertent amount of carbon dioxide to be released into the atmosphere. Forests are vital for human and animal survival as they prevent soil erosion, absorb greenhouse gases, produce oxygen, among other essential benefits needed in the fight against climate change.
It is important to understand the science behind the decision at COP26, in order to appreciate the significance of the deal. Canada is one of the countries that has endorsed the Glasgow Leaders’ Declaration on Forest and Land use, along with more than 30 CEOs of large financial institutions who have also committed to ending investment in activities linked to deforestation. For this deal to succeed, Canadian business, indigenous people and government officials must work together.
Below are three important considerations for the agriculture industry and businesses to implement in the fight against climate change:
- Build and implement an ethical supply chain, including sustainable procurement criteria, that aligns with the new expectations of investors, government bodies and financial institutions
- Streamline reporting to demonstrate progress towards deforestation and other environmental, social and governance goals to key stakeholders
- Ensure appropriate tracking mechanisms are implemented to measure metrics and goals, year on year
- The EU and United States have announced a global partnership to cut emissions of the greenhouse gas methane by 2030. The Global Methane Pledge aims to limit methane emissions by 30% compared to 2020 levels
- Methane is one of the most potent greenhouse gases and is responsible for a third of current warming from human activities
- More than 100 countries have signed up to the voluntary initiative
- The EU will propose legislation to measure, report and verify methane emission, put limits on venting and flaring, and impose requirements to detect leaks and repair them. It will also work to accelerate the uptake of mitigation technologies through the wider deployment of ‘carbon farming’ in European Union Member States and through their Common Agricultural Policy Strategic Plans, and to promote biomethane production from agricultural waste and residues
- The United States is pursuing significant methane reductions on multiple fronts. In response to an Executive Order that President Biden issued on the first day of his Presidency, the Environmental Protection Agency (EPA) is promulgating new regulations to curtail methane emissions from the oil and gas industry
- The EPA will implement stronger pollution standards for landfills and the Department of Transportation's Pipeline Hazardous Materials and Safety Administration is continuing to take steps that will reduce methane leakage from pipelines and related facilities
- The US Department of Agriculture is working to significantly expand the voluntary adoption of climate-smart agriculture practices by US farmers and ranchers, to reduce methane emissions from key agriculture sources by incentivising the deployment of improved manure management systems, anaerobic digesters, new livestock feeds, composting and other practices
Clean technology funding
- The launch of an international plan or Breakthrough Agenda to deliver clean and affordable technology everywhere by 2030
- A ‘Breakthrough Agenda’ will assist in global efforts to halve emissions by 2030.
The Breakthrough Agenda’s aim is to make clean technologies the most affordable, accessible and attractive choice for all globally in each of the most polluting sectors by 2030, particularly supporting the Global South to access the innovation and tools needed to transition to net zero
- Over 40 world leaders have committed, including the US, India, EU, China, Global South economies and some of the countries most vulnerable to climate change – representing more than 70% of the world’s economy and every region. Leaders acknowledge that the 2020s must be a decade of delivery across all major GHG emitting sectors
The Breakthrough Agenda has five goals covering more than 50% of global emissions:
- Power: Clean power as the most affordable and reliable option for all countries to meet their power needs efficiently by 2030
- Road Transport: Zero emission vehicles as the new normal - accessible, affordable, and sustainable in all regions by 2030
- Steel: Near-zero emission steel as the preferred and efficient choice in global markets, with near-zero emission steel production established and growing in every region by 2030
- Hydrogen: Affordable renewable and low carbon hydrogen globally available by 2030
- Agriculture: Climate-resilient, sustainable agriculture as the most attractive and widely adopted option for farmers everywhere by 2030
These five goals could create 20 million new jobs globally, while boosting the world’s economy by $16 trillion.
Other highlights from day 3 include:
- Boris Johnson spoke at the ‘Build Back Better’ meeting at the COP26 World Leaders Summit hosted by US President Joe Biden and President Ursula von der Leyen. The Prime Minister stated: “In the UK, through our net zero strategy, we’re pioneering a green industrial revolution, with public investment leveraging billions of pounds of private funding into whole new industries, from offshore wind to carbon capture and storage, allowing us in the UK to level up our whole country with thousands of new green jobs. And by partnering with developing and emerging economies to invest in climate-smart infrastructure, and meeting our $100 billion climate finance commitment.”
- The UK announced new funding today to support African governments to roll-out critical adaptation projects so at-risk communities can adapt to the impact of extreme weather and changing climates. COP26 President Alok Sharma announced the new UK support for the Africa Adaptation Acceleration Program (AAAP) – an initiative endorsed by African Union leaders and led by the African Development Bank, Global Centre on Adaptation and the Africa Adaptation Initiative, to back African-led plans to accelerate resilience-building across Africa. This is expected to unlock up to $2 billion worth of new financing for projects across the continent, half of which will help countries adapt to the impacts of climate change.
- In the September federal elections, the topic of climate change played a major role and continues to play a prominent role in the ongoing coalition negotiations, alongside the CO2 price and the financial incentives for climate innovations
- Germany also announced a new partnership with South Africa to support a socially fair phase-out of coal
- At the World Leaders Summit in Glasgow, departing Chancellor Angela Merkel increased pressure on the coming German government to succeed in terms of climate change policy in her speech ‘One Decade to act’
The three big topics of the day were forest protection, methane reduction and clean technology finance, with speakers providing a ray of hope that COP26 will end with strong, binding commitments from the majority of countries.
All three commitments are voluntary, which has already drawn criticism from climate challenged Global South countries and environmental charities. Despite this, they do indicate the direction of travel that stakeholders including the global business community are starting to prepare for.
The forest pledge will likely impact companies with supply chains into global forest regions -including foods such as palm oil, coffee and cocoa plus timber, paper, livestock farming and more.
The methane reduction pledge will likely impact companies in agriculture, energy including coal, oil, natural gas and biofuels as well as managed landfills.
Finally, the clean technology pledge has emissions reduction commitments that will impact companies in the power, transport, steel and agriculture sectors.