• BDO on COP26

BDO COP26 Digest #4 - 03 November 2021

Welcome to day 4 of COP26.

Finance Day began with a number of sessions aiming to demonstrate how public and private finance can be (and is) mobilised at scale for net zero objectives, and for climate resilient growth and development supporting both Global South and North markets.

The UK’s Chancellor Rishi Sunak provided opening remarks under the theme ‘financing our future.’ Key extracts below:

“Our challenge now is to deploy the investment we need to deliver those targets around the world. We are going to meet the target to provide $100bn of climate finance to developing countries. Over the next five years, we will deliver a total of $500bn investment to the countries that need it most.”

“The United Kingdom will commit £100m to the taskforce on access to climate finance, making it quicker and easier for developing countries to finance their needs. The UK is also supporting a new capital markets mechanism, which will issue billions of new green bonds here in the UK, to fund renewable energy in developing countries.”

“The Glasgow Financial Alliance for Net Zero (GFANZ) has now brought together financial organisations with assets worth over $130 trillion of capital to be deployed. This is an historic wall of capital for the net zero transition around the world.”

“What matters now is action: to invest that capital in our low carbon future. We need to rewire the entire global financial system for Net Zero including:

  • Better and more consistent climate data
  • Sovereign green bonds
  • Mandatory sustainability disclosures
  • Proper climate risk surveillance
  • Stronger global reporting standards

“The UK will become the first ever net zero aligned financial centre, making it mandatory for firms to publish a clear, deliverable plan of how they will decarbonise and transition to net zero – with an independent taskforce to define what’s required.”

A financial system for net zero

Mark Carney, UN Special Envoy and the Prime Minister’s Finance Advisor for COP26 launched the Glasgow Financial Alliance for Net-Zero (GFANZ) commitments.

The Alliance now accounts for 40% of the world’s total financial assets. These assets are managed by 450 firms across 45 nations, from all parts of the financial industry. BDO is a GFANZ member as part of the Net Zero Financial Service Providers Alliance.

GFANZ members are required to transition their portfolios in line with the Paris Agreement and are being pushed to work towards 1.5C rather than 2C temperature pathways.

The five GFANZ member commitments outlined by Mr Carney include: 

  • Mandatory climate disclosure of all GFANZ members based on the Taskforce for Climate-Related Financial Disclosures Recommendations (TCFD)
  • Widespread climate stress-testing for assets, equity and debt portfolios
  • Defining best practice science-based net zero transition plans for all companies and financial institutions
  • Full portfolio alignment with 1.5°C by 2050
  • Establishing financial, social and environmental frameworks to wind down stranded assets e.g. coal mines

Mr Carney went on to say about GFANZ:

“The GFANZ covers the entire waterfront of finance banks, insurers, pension funds, asset managers, export credit agencies, stock exchanges, credit rating agencies, index providers and auditors; these are the best in finance that are committed to making the transition to net zero a reality. The GFANZ is the gold standard for net zero. All members have followed rigorous internal governance processes to make their commitments. The GFANZ commitments will reshape their business models to fund their sustainable transformations of our economies. GFANZ members will also target their fair share of the 50% GHG reductions by 2030 that are needed to keep the world on track for 1.5 degrees. And they are using the most stringent and rigorous science-based scenarios to set out detailed 5-year emission reduction plans and will report progress annually. 40% of the global financial system is in the GFANZ, and through this new window of finance we will be driving growth and jobs upwards while forcing emissions downwards.”

BlackRock CEO Larry Fink commented on the launch of the GFANZ and Net Zero
Key extracts below:

“Imagine USD 130 trillion dollars being put to work (GFANZ). It is not the capital which is the problem but deploying it to the right projects and faster. We need a better system to deploy it rapidly to and within the emerging world…”

“Achieving Net Zero does not only rely on banks, the financial sector and publicly listed companies that report under TCFD – we have to ask all of society to move forward or we are lying to ourselves as we will not get to net zero…

“The Covid pandemic showed us what fast and effective cooperation looks like – what is possible. We can do the same for the climate but not by asking the public, convenient companies but all of society to move forward…”

UK Government draws up verification scheme for corporate net zero transition plans

Last month, HM Treasury confirmed that large firms in high-emitting sectors will be required to publish net zero transition plans by 2023. These plans should outline how changes in their business model will affect their skills base and financial expectations, and how they intend to support workers and related communities in the coming decades.

Today, it was announced that the Government is developing a science-based ‘gold-standard' verification scheme for the plans, to safeguard against greenwashing. This scheme has been drawn up in collaboration with industry representatives, academics, regulators and civil society groups.

International Sustainability Standards Board launch

The IFRS Foundation Trustees have this morning confirmed the formation of an International Sustainability Standards Board (ISSB) to create a globe baseline for corporate sustainability disclosures that meet investor demands.

Erkki Liikanen, Chair of the IFRS Foundation Trustees, announced three significant developments at the COP26 UN global summit in Glasgow, Scotland:

  1. The formation of a new International Sustainability Standards Board (ISSB), which will develop a comprehensive global baseline of high-quality sustainability disclosure standards with an aim to meet investors’ information needs;
  2. A consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF – which houses the current Integrated Reporting Framework and SASB standards) into the ISSB by June 2022; and
  3. The publication of two prototype standards: one on climate and the other on general disclosure requirements. These prototype standards were developed by the Technical Readiness Working Group (TRWG) prior to the formation of the ISSB.

Read BDO’s news item and International Sustainability Reporting Bulletin to find out more about what this means for the future of sustainability reporting: https://www.bdo.global/en-gb/news/ifrs-news/issb-formed-and-prototype-sustainability-standards-released

Canada welcomes the IFRS Foundation’s decision to establish an office of the International Sustainability Standards Board (ISSB) in Montreal, Quebec

Earlier this morning, it was announced that Canada will host an office of the ISSB in Montreal, Quebec. BDO Canada is proud to have been a founding member of the Canadian Champions for Global Sustainability Standards, alongside the Government of Canada, that came together to back Canada’s offer to host the International Sustainability Standards Board (ISSB).

The new Board will develop a set of global standards for Environmental, Social and Governance (ESG) reporting and disclosures. Currently, there is not one globally recognised framework for reporting ESG disclosures. The result is an inconsistent reporting landscape that allows organisations to choose what metrics it will report on and how.

COP 26 insights from Germany

  • German Aerospace Centre (Deutsches Luft - und Raumfahrt Zentrum – DLR) makes a leading contribution with the provision of earth observation satellites for the ‘inventory taking’ of the earth (for example, measuring ice sheets or emissions in the atmosphere)
  • The International Sustainability Standards Board (ISSB) will have its global headquarters in Frankfurt, Germany

Other snippets from Glasgow today

Wednesday 3rd November was Earth Information Day, providing an exchange of information on the state of the global climate system and developments in systematic observation. COP26 celebrated this by organising a number of sessions looking at two areas:

  1. Updates on earth observation of the climate system and climate change
    • The state of the global climate (new records observed in global GHG concentrations, ocean heat absorption and acidification, sea level rise and melting glaciers)
  2. Interpreting all earth observations for implementing the Paris Climate Agreement including key developments, opportunities and challenges
    • Helpful illustrations of all detailed scientific observations can be found on the Earth Information Day website.

Climate Content Pledge for Broadcasters

In an industry first, 12 broadcasters and streamers have signed up to The Climate Content Pledge. Collectively, these channels account for more than 70% of the time UK audiences spend watching TV and film every year. Signatories include the BBC, ITV, Channel 4, Channel 5 and Sky.



The GFANZ launch and the formation of the International Sustainability Standards Board (ISSB) were the highlights today, as both will have BDO’s full attention. The ambitious agenda of the GFANZ will mean that our net zero and wider ESG performance will move into the public spotlight - requiring a robust, science based and committed approach to measuring, reporting and improving our emissions footprint. The ISSB’s planned work is important from a corporate reporting and assurance point of view as it will have implications for our service delivery and the disclosure requirements of our clients. We will prepare a more detailed evaluation post-COP26. Watch this space for details.