The 2021 United Nations Climate Change Conference, or COP26, that takes place later this year will be of particular significance as it will mark a milestone for the Paris Agreement.
It is here that all nations are expected to commit to enhanced ambition since COP21, under the first iteration of the "rachet" mechanism, which occurs every five years. The goal is to ultimately limit global temperature rises to well below 2 degrees Celsius (ideally 1.5) to avoid "dangerous" climate change, which means reducing greenhouse gas emissions by 50% by 2050 — or achieving net zero carbon emissions by that date.
So far, only a handful of countries have submitted new 2030 targets and on the whole the indications are that they will be insufficient to meet the Paris Agreement. In the absence of government leadership, attention has shifted to the investment community to help drive the agenda forward.
One of the larger cohorts within this community are obviously pension funds, which represent more than $33 trillion in assets. Though we are increasingly finding greater engagement from pension funds on environmental, social, and governance issues like climate change, challenges still exist.