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Glasgow diary: What...

17 November 2021

3 min read

Glasgow diary: What happened at COP26?

More than a day after it was meant to finish, COP26 finally came to an end, with 197 parties agreeing to the newly-dubbed ‘Glasgow Climate Pact’.

Louisiana Salge
Louisiana Salge,

Senior Sustainability Specialist

I returned from COP26 last week, having witnessed a flurry of new commitments:

  • Developed countries agreed to support developing nations in their transition with $100bn funding a year.
  • More than 100 countries pledged to stop deforestation to protect these natural carbon sinks, and to focus on reducing high-impact methane emissions (from gas leaks & agriculture) by 30% by 2030.
  • The US and China announced a surprise collaboration to boost climate co-operation over the next decade to achieve the 1.5C temperature goal set out in the 2015 Paris Agreement.
  • For the first time, nations agreed to ‘phase down’ coal and agreed to come back with better national decarbonisation targets next year.

Not the stuff of triumph; but not a train wreck, either. Despite these pledges, without stronger net-zero 2050 commitments by key nations and the subsequent translation of these into tangible policy, regulation, and economic incentives, we are unlikely to create the degree of green transformation needed to meet our warming targets.

Can the private sector come through for climate action?

A major announcement at COP26 was the pledge of the Glasgow Financial Alliance for Net Zero (GFANZ) – a global coalition of over 450 finance firms across 45 countries, jointly managing $130 trillion – to align their financing activities to achieve net-zero emissions by 2050.

Leaving aside fair questions as to whether it is enough or realistic and the lack of consistent frameworks to effect real economic impact, this pledge is indicative of the scale and ambition needed. It also indicates an important mentality change from the finance sector as a whole.

As most of you know, EQ has been investing sustainably since 2012. Now, for the first time, larger asset managers and owners understand the strategic position, and thus responsibility, they hold in transitioning to a low carbon, sustainable economy. By placing a value on decarbonisation of investee firms, these will transition faster as they respond to intensified shareholder pressure and new expectations of value creation that goes beyond their quarterly financials.

What was missing?

As a B Corp, EQ creates benefit for all stakeholders, including the communities we operate in and the environment we rely on. When we set a goal, such as to adhere to net-zero by 2030, we are held accountable.

COP26 missed a key message for finance. Whilst firms can set targets and state their intentions, they also need to be held to account. We need to instil long term incentives for all-businesses to do the right thing for society and the environment.

B Corp Finance Coalition

If global finance is serious about acting on their responsibility to mitigate climate change, to fund the transition and stop funding businesses that are lagging, they should change their constitutional documents to reflect this better purpose.

At a COP event in Glasgow, the B Corp Finance Coalition including EQ launched its campaign to make stakeholder alignment part of director’s duties. This would move the duty of financial firms away from prioritising ‘shareholder supremacy’ and place more focus on their purpose.

Reflecting on COP26

Research published at the summit indicated the short-term plans put in place by countries would amount to a rise of 2.4 degrees. The window on keeping 1.5 degrees Celsius global warming within reach is closing.

We are determined to play our part in transitioning our financial system to net-zero. Climate aligned investment is the only way to mitigate the investment risks and capitalise on the immense opportunities from the green transition to come.

Louisiana Salge

Louisiana Salge


Senior Sustainability Specialist

Louisiana joined EQ in October 2018 after completing a masters in sustainable business at Imperial College London. She is now responsible for innovating EQ’s approach to sustainable investing. Louisiana oversees EQ’s ESG and impact integration strategy across all assets, EQ’s stewardship efforts and sustainability data reporting. Previously, Louisiana graduated from UCL with a BSc in Geography and spent a year working for a Cleantech innovation research company before starting her masters. She now also holds the CFA IMC and CFA ESG Investing qualification. Outside of her career, Louisiana loves travelling and discovering new places, cooking with friends and spending time outdoors.

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