What did we learn from COP26? Consider the three Ms
The just-concluded Glasgow climate-change conference delivered a flood of messaging. Here’s a way to make sense of it.
The recently concluded COP26 in Glasgow was, among other things, a festival of acronyms. There’s COP itself (Conference of Parties). And also GFANZ (Glasgow Financial Alliance for Net Zero), ISSB (International Sustainability Standards Board), and TSVCM (Taskforce on Scaling up Voluntary Carbon Markets).
Watching from afar, I came up with my own acronym to define the key takeaways from the two-week confab: MMM. Momentum, money, and measurement.
Momentum. There is something to be said for bringing together people in person, especially after nearly two years of virtual events and Zoom summits. These gatherings act as gravitational forces, attracting hundreds of leaders from the worlds of business, government, and nonprofits. Those people in turn attract a massive amount of press coverage. And as any marketer will tell you, a little earned coverage can be worth more than a whole lot of paid media. The volume of articles, livestreams, reports, blogs, and podcasts emanating from COP26 provided an important signal boost for the messages that participants were trying to get across.
Momentum is also key to unlocking a crucial force for combating climate change: collective action. Efforts to reduce emissions or transform global trade networks only work if many people lock arms and agree to jump into an uncertain future together. Some activists will surely conclude that there wasn’t enough collective action taken at COP26. But the public pledges made at the conference—on deforestation, on methane, on electric vehicles—were substantial. And these public promises help create momentum for further action. After all, upon reading a declaration of intent, the next question is: how do you plan to live up to it?
Efforts to reduce emissions or transform global trade networks only work if many people lock arms and agree to jump into an uncertain future together.
One of the biggest commitments made at COP26 had to do with the second M: money. Take GFANZ: spearheaded by former UK central banker Mark Carney, who spoke to strategy+business last summer, the Glasgow Financial Alliance for Net Zero brings together 450 institutions with collective assets of US$130 trillion. That’s a lot. One of the noteworthy developments of the last couple of years has been the volume of capital lining up behind technologies, products, services, and goods aimed at lowering emissions. To be sure, some of these dollars—and pounds and euros—can be ascribed to the good intentions of finance leaders concerned about their public image. But GFANZ demonstrates that there’s a larger, more powerful dynamic at work.
With each passing year, more and more low-emissions businesses pencil out, yield profits, and find viability in competitive marketplaces, from solar power plants to electric buses. As a recent PwC survey found, investors aren’t yet willing to accept notably lower returns for the sake of the planet. The good news? Because of the momentum and innovation rampant in the world, that’s not a sacrifice investors will feel they have to make as frequently going forward. In many instances, in fact, the low- or no-emissions alternative is the more economically viable one.
How do we know this? Well, it’s because of the third M: measurement. There’s an old saw in manufacturing that what gets measured in this world gets controlled. That speaks to efforts like tightly managing inventory and eliminating waste. When it comes to climate issues, measurement takes on a more important meaning. Measurement is one of the levers that will accelerate the energy transition that was discussed with such gravity in Glasgow, that will harness all that momentum, and that create a safe harbor for all those investor dollars. After companies, organizations, and countries make pledges to reduce emissions, both from their operations and from supply chains, they will have to measure and report those reductions accurately and carefully. Prices are one of the most familiar forms of measurement. And as a joint PwC/World Economic Forum report, released on the eve of Glasgow, found, establishing an (acronym alert) ICPF, which stands for an International Carbon Price Floor, could spur emissions reductions.
As we look ahead, our responsibility—as consumers, businesspeople, and leaders—to measure our own progress will grow, and fast. Indeed, one of the to-do items for the participants in COP26 is to come back next year—not six years from now—with a road map for reducing emissions.