#WhyESGMatters A guide to COP26 | Article – HSBC VisionGo

In this issue of #WhyESGMatters, we explain why a successful COP26 is significant to achieve the goals set forth in the Paris Agreement, and more.
Management  ·    ·  6 mins read

A guide to COP26

Crucial negotiations will take place at the UN Climate Change Conference (COP26) from October 31 to November 12, with many loose ends to tie up after last year’s pandemic delay. This is a key event for global leaders to get onto the net zero emissions trajectory by 2030 and to keep temperature rises to well below 2°C (and preferably at 1.5°C), vs pre-industrial times. Although both the science and impact on climate are clear, our outlook still remains cloudy as the gap to limit global warming wanes.

In this issue of #WhyESGMatters, we explain why a successful COP26 is significant to achieve the goals set forth in the Paris Agreement[1], what key issues investors should pay attention to, and what technologies can help transition the world to a low-carbon environment. Climate change is increasingly shaping the regulations around us, and clarity from policymakers will be critical to investors and businesses for decision making.

[1] An international treaty on climate change with a goal to keep global temperature rises in this century to below 2 ̊C above pre-industrial levels; it is ­ratified by 191 parties (countries and territories) worldwide

1. Understanding COP26

Figure 1: The goals for COP26 – from the perspective of the UK

2. Key issues to watch at COP26

The last negotiations, COP25 (in 2019), resulted in a number of outstanding issues that could be detrimental to climate ambitions if left unresolved. We outline what they are and what investors should look out for.

Carbon emissions saved or avoided in one economy can, through a credit system, be used by others to meet their own targets. But that requires definitions of who can sell how much of what and to whom, and when. Therefore, a monitoring body and an accounting system that avoids double-counting must be established.

3. Technologies to help lower emissions

A successful COP26 can accelerate climate policies to radically reduce emissions, as such we highlight some of the key technologies that may benefit from a low-carbon transition.

However, we think other technologies can play a greater role in the future including:


The widely anticipated COP26 will see more parties of the Paris Agreement finalise on climate action plans. Since the landmark accord in 2015, there has been greater clarity on the science and implications of climate change, including evidence pointing to human causes on the severest impacts of global warming and its irreversible damage. These in turn have highlighted the need from investors and companies for policymakers to take more action, thereby creating visibility on longer-term climate mitigation and adaptation policies.

A successful COP26 is likely to result in an acceleration of climate policies – unlocking incentives for investment to reduce emissions as well as build resilience. Investors should be aware of key ‘green’ technologies that will benefit from this momentum, including existing and emerging renewable energy sources, increasing energy efficiency, and carbon capture technologies. In the fight against climate change, we believe that the corporate sector will be infiltrated with more innovative green solutions. Investors should prepare for the global transition as more climate actions plans are announced, more solutions are developed to achieve these goals, and more likelihood for net-zero emissions to become the norm of our future.

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