COP26: understanding a key moment for the climate
From 31 October to 12 November 2021, the dedicated climate conference COP26 takes place in Glasgow, Scotland, around four major themes: Securing the ‘global net zero carbon’ goal, protecting communities and natural habitats, mobilising finance and working together to achieve the goals set out in the Paris Agreement. But, if you’re still wondering what exactly is a COP and what you can expect over these weeks, here are the answers.
What exactly is a COP?
The COP or Conference of the Parties is an annual gathering of nearly 200 states and regional organisations that are signatories to the United Nations Framework Convention on Climate Change (UNFCCC), which was adopted in 1992 in Rio de Janeiro at the Earth Summit. Since 1995, the COP has been taking place over two weeks, each time in a different city, to take major decisions at a global level with the aim of limiting the impact of human activity on the climate as well as addressing adaptations to the consequences of climate disruptions.
Bit of history: notable COP moments
- COP3 in 1997 culminates with the Kyoto Protocol to reduce developed countries’ greenhouse gas (GHG) emissions by more than 5% over the period 2008-2012, compared to 1990 levels.
- COP21 in 2015 is marked by a strong involvement of non-state actors (notably companies), unlike previous COPs which involved mainly national governments. It gives rise to the Paris Agreement in which 195 states commit to reducing their GHG emissions in order to contain global warming well below 2° C from pre-industrial levels and aim to limit it to 1.5° C by 2100.
- At COP24 in 2018 in Katowice, five major international banks, including BNP Paribas, committed to developing an open source methodology to measure and implement the alignment of their credit portfolios with the objectives of the Paris Agreement
Why is the global net zero carbon target so important?
Organised by the UK in partnership with Italy, COP26 should have been held in 2020, and this 26th edition was already highly anticipated. Many of those who will be present view it as the last chance to limit the most dramatic consequences of climate change. There is an urgent need for action to achieve the global target of net zero greenhouse gas emissions by 2050 in order to stabilise global temperatures at 1.5° C by the end of the century. To date, 131 countries, businesses, municipalities and financial institutions have made commitments and already set targets to meet them.
1.5° C limit: Reality or illusion?
To keep global warming within 1.5° C by the end of the century, radical action is needed over the next five to ten years. Of the 191 parties to the Paris Agreement, 113 countries have met the obligation to submit first ‘Nationally Determined Contributions’ (NDCs). However, all of these climate actions planned by 2030 cover only 49% of GHG emissions and are far from meeting the 1.5° C target, or even the 2° C target.
BNP Paribas climate commitments
In late 2015, following COP21, BNP Paribas committed to progressively align its loan portfolio with the objectives of the Paris Agreement. Since then, the Group has made several notable advances. Among these:the end of financing new coal fired power plant projects in 2017, and then the acceleration of its coal exit schedule in 2020 (for EU and OECD countries by 2030 and by 2040 for the rest of the world). BNP Paribas also participated in the first publication of the PACTA methodology, the result of collaborative work with four other major European banks.
More recently, BNP Paribas has committed to reducing its credit exposure (by 10% between now and 2025) to oil and gas exploration and production activities after having committed to ceasing its relations with companies whose primary business is the exploration, production, distribution, marketing or trading of oil and gas from shale and/or oil from tar sands.
In 2021, the Group joined the Net Zero Banking Alliance (NZBA), a coalition of international banks committed to financing a carbon neutral economy by 2050.
“By being a founding member of the #NetZeroBanking Alliance, we commit to aligning our credit and investment portfolio with clear targets and science-based methodologies. Reaching this goal is a challenge for not only BNP Paribas but the entire banking industry, because no bank can do it alone. The common work we have carried out to create a common framework and methodology for measuring our investments is therefore key.” Jean Laurent Bonnafé, Chief Executive Officer of BNP Paribas
On the COP26 agenda: The link between communities, natural habitats and climate change
Another topic for discussion at COP26: Adapting communities and natural habitats to the impacts of climate change. Terrestrial and marine ecosystems play a major role in climate regulation by absorbing nearly half of the carbon dioxide emissions generated by human activity. However, at the same time, climate change is diminishing biodiversity and degrading ecosystems. It’s a vicious circle that will prevent several of the UN’s Sustainable Development Goals (SDGs) from being achieved.
Many initiatives exist to act in favour of biodiversity, such as act4nature, which brings together companies, public authorities, scientists and association. Through act4nature, BNP Paribas first made public commitments to preserving biodiversity in 2018 and then reinforced them in 2021. These Group commitments are complemented by the actions of the BNP Paribas Foundation, which works to raise public awareness and supports scientific research. BNP Paribas also reiterated and strengthened its commitments for biodiversity by joining the TNFD, a task force responsible for ensuring global consistency in the assessment and reporting of nature related risks and opportunities for companies.
COP and TCFD related to nature. as early as 2023
At COP21 in 2015, the G20 Financial Stability Board established the Taskforce on Climate-related Financial Disclosures (TCFD), which in 2017 issued recommendations to help companies and financial institutions identify, analyse, manage and communicate on their climate related risks and opportunities. This topic has been embraced by many companies and organisations, including BNP Paribas, which has published a report since 2020 on its actions in line with the TCFD’s recommendations. The TNFD, which aims to complement the TCFD, should foster more financial transparency relating to risks and opportunities related to nature. as early as 2023.
BNP Paribas a leader in mobilising the financial sector
COP26 will also raise the role of public and private climate finance, and the issue of mobilising countries, businesses, civil society and citizens to implement the Paris Agreement. Ahead of COP26, the French Banking Federation and several major French banks announced their commitment to limit financing and investment in unconventional oil and gas sectors; this collective advancement is in line with the commitments made by BNP Paribas in 2017, which remain even stricter and therefore still among the most demanding sector policies.
In addition, as part of the work within the Financial Services Taskforce (FSTF) spearheaded by the Prince of Wales, BNP Paribas and 11 other international banks worked together to produce a Practitioner’s Guide. This important tool will further enable a large number of financial players to align their portfolios with Net Zero commitments. As underlined by Jean Laurent Bonnafé, “Finance is an essential lever for accelerating the energy transition. Our priority is to help our clients give their actions the breadth and scope necessary to achieve a ‘Net Zero’ economy by 2050.”