Lessons learnt from COP26

The UN Conference on Climate Change held in Glasgow in early November 2021, otherwise known as COP26, was billed as a crucial milestone in global efforts to avoid climate catastrophe. The stakes are high, and actions agreed at the 2015 Paris COP to restrict global warming to no more than 1.5% appear to be falling short. The tension was clear throughout the conference, with lots of talk about doing the right thing, but the jury is still out on whether the commitments that were made about reaching net zero, supporting poorer nations, the methane pledge (more on this later) and the cooperation between US and China will be enough.

Taking on global climate change is no small challenge and can feel impossible from an individual perspective. It is clear that political leadership is key in setting the direction of travel and giving businesses certainty about actions and investments they need to take. A good example of this is the UK Government’s commitment to stop the sale of petrol and diesel cars after 2030. The UK Net Zero Strategy published in October sets out a range of commitments on short- and long-term policies to achieve net zero by 2050. One of the key sections is on natural resources, which has commitments about nature-based solutions.

Nature-based solutions had a high media profile as part of the COP26 Nature programme, as a ready solution to climate mitigation and adaptation around the globe. Nature-based projects can deliver multiple environmental outcomes such as carbon sequestration, enhanced wildlife, clean water and air, as well as social wellbeing benefits from access to nature. This is a key focus for the CLA going forward, with opportunities for members. But, how can this be funded? Currently, markets do not adequately value nature, but this is changing as markets for carbon and biodiversity become established.

There were many nature-based ‘fringe’ events at COP26. The CLA had a presence at an event organised by the Global Ethical Finance Institute (GEFI) in partnership with the Scottish Government at Ross Priory on the banks of Loch Lomond - thankfully a long way from the hubbub of the blue and green zones and very picturesque. The event itself focused on finance for nature-based solutions, a core area for the CLA, and was attended by many leading global experts, as well as over 200 virtual participants. The event showcased several successful projects in Scotland and had presentations from the Scottish National Investment Bank that has a mission to invest in projects that support the net zero transition, address place-based inequality and drive innovation. It certainly felt that there was a lot to learn from Scotland, and the government is taking a proactive approach.

There was a lively discussion of the Financing UK Nature Recovery report. Over the past 12 months, the CLA has been working through the Broadway Initiative on this project, led by the Global Finance Initiative. It aims to ensure long-term sustainable funding for a nature-based solution, and the event provided a platform to highlight the government action needed to kickstart the move from perennial pilot projects to the mainstream market.

Archie Ruggles-Brise, a CLA member from Essex, who also sits on Policy Committee, presented the landowner perspective, which is often not sufficiently considered. His key points related to ensuring the risk and reward equation has enough reward for landowners hosting projects and the need to focus on multiple outcomes, not just carbon. Other speakers considered the business models that are needed to bring finance and conservation together, the need for standards to ensure high-quality environmental outcomes, and a debate on the right institutional organisation to ensure the market operates well.

What were the key takeaways on finance for nature-based solutions?

• Climate and nature are fully interrelated and interdependent and must be considered together.
• There are challenges for financial institutions and nature-based project managers around decision-grade financial data and how to measure quality.
• Financial investment in nature-based solutions must be outcome-focused, and communities must benefit fairly from projects.
• Currently, no country has a full strategic approach for developing a market for natural capital. Scotland has a leadership role based on a strong body of work that has already been completed, with lessons to be learnt across the UK

And finally, a few words on the methane pledge. The UK has signed up, along with many other nations, to the methane pledge. The pledge is a commitment to a collective goal of reducing global methane emissions by at least 30% from 2020 levels by 2030. From a global climate perspective, this is a good thing – reducing methane has the potential to result in negative emissions and cool the planet. But, given that agriculture is one of the biggest (but not the only) emitter of methane, accounting for 35% of all methane emissions, mainly from enteric fermentation in ruminants, it is likely to be a particular focus. The question is whether reducing methane emissions from agriculture means simply reducing ruminant numbers or if there are technological and husbandry methods that can achieve that level of change within the timescale. There is more to come in this area, so watch this space.