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Sustainable Finance Blog #2


News - 08 October 2021

Implications from IPCC and the road to COP 26 Glasgow

As you might remember from my 1st blog entry, I like starting off my writing with a statement. 2021 showed, especially in the Western World, that climate risks are all around us with severe impact. I was asked to showcase what this might mean to our organisation but also to our clients and thought it would be worth sharing with our wider community. So here we go:

“COP 26 will show how serious the global community really is about Sustainability”

Before we focus on what is ahead of us, I want to take you along the journey we are coming from as a global community and navigate you through all the abbreviations for it to all make sense and get us on the same page.

The basis of discussions around climate impacts already started back in 1992 via Earth Summit in Rio de Janeiro by forming the United Nations Framework Convention on Climate Change (196 countries are included). Based on this, the so-called Conference of Parties (“COP”) comes together on an annual basis since 1995. Some Conventions led to groundbreaking achievements, a few you might remember are:

COP 3 Kyoto (1997)

first binding emission limitations / reductions

COP 15 Copenhagen (2009)

first goal of limiting warming to 2°C (without quantifying reductions or time-lined)

COP 21 Paris (2015)

Since COP 17 (Durban), the parties worked towards a new global climate treaty by 2015, which has been finally achieved via a universally binding climate agreement with global-level targets.


COP 25 Madrid (2019)

Madrid underpinned both the strengths and weaknesses of the Paris Agreement. A clear pathway has been agreed upon, but negotiations failed to adopt rules for international carbon trading as an essential tool of the Paris Agreement.


One might now ask, “what does IPCC stand for and how is this connected to COP 26?”. The so-called Intergovernmental Panel on Climate Change (“IPCC”) was established to bundle expertise in global climate science in a comprehensive and consensus-oriented way. The first IPCC report on Global Warming was published in 1990, with the 6th Assessment Report just recently being published. The IPCC report is structured as a summary of recent scientific research around climate change and regularly serves as backbone for discussions / negotiations around the COP. The latest IPCC issue has made clear that severe climate impact in 2021 is to be seen as the new normal and that 2021 will perhaps go down in history as one of the better years. Here are some highlights summarised for you:

  1. Global surface temperature will continue to increase until at least the mid-century under all emissions scenarios considered. Global warming goals will be exceeded during the 21st century unless deep reductions in carbon dioxide (CO2) and other greenhouse gas emissions occur in the coming decades.
  2. Many changes in the climate system become larger in direct relation to increasing global warming. They include increases in the frequency and intensity of hot extremes, marine heatwaves and heavy precipitation, agricultural and ecological droughts in some regions; higher proportions of intense tropical cyclones; as well as reductions in Arctic sea ice, snow cover and permafrost.
  3. Continued global warming is projected to further intensify the global water cycle, including its variability, global monsoon precipitation and the severity of wet and dry events.
  4. The more CO2 emissions occur until mid-century, the less effective mitigation efforts at slowing the accumulation of CO2 in the atmosphere will be.
  5. Many changes due to past and future greenhouse gas emissions are irreversible for centuries to millennia, especially changes in the ocean, ice sheets and global sea level.

Whereby the 5th Assessment report on the state of climate change in 2013 has been summarized by Helle Bank Jorgensen (CEO Competent Boards) with the words “Pay now, or pay with interest in the future"[1], the summary for the 6th Assessment report should be read as:

“Pay now to mitigate climate change or be aware that your pockets might not be deep enough to pay in the future”

I know it sounds heroic but feel free to convince yourself by reading the full report[2]. So what do we do with this and what should and can we expect from COP 26 (#nopressure)?

I will present to you the four major goals of COP 26[3] and share my expectation on those with you.

  1. Secure global net zero by mid-century and keep 1.5 degrees within reach

Some facts hereon[4]:

  • In 2020, we experienced already a +1.2°Celsius global temperature increase
  • Based on current policies by the parties, a global temperature increase of +2.9°Celsiusis predicted (considering current pledges and targets instead of actual policies, the prediction is +2.4°Celsius).
  • 75 countries (out of 196) have not updated their initial emission reduction targets since 2015


  1. Adapt to protect communities and natural habitats

According to the program, key emphasis is set on:

  • protect and restore ecosystems
  • build defences, warning systems and resilient infrastructure and agriculture to avoid loss of homes, livelihoods and even lives.


  1. Mobilise finance

Goal 3 is identified as key dependency for 1 + 2:

  • Within the Paris Agreement, developed countries committed on mobilising at least $100bn in climate finance per year by 2020 (=> latest available status per 2018: $78.9bn)
  • “International financial institutions must play their part (…) required to secure global net zero”.


  1. Work together to deliver

At COP 26, it is planned to:

  • “finalise the Paris Rulebook (the detailed rules that make the Paris Agreement operational)”
  • “accelerate action to tackle the climate crisis through collaboration between governments, businesses and civil society.”

My expectation:

I do not expect major agreements on tightening national CO2 emission budgets on a wide scale, due to:

  • Large disputes on funding climate pathways from the past
  • Significant increase in national indebtedness as result of the ongoing covid crisis
  • Current crisis environments increase macro risks and stress global community / interaction
  • Ongoing tendency towards bilateral vs. multilateral agreements in international politics of leading economies

However, recent climate events, especially in developed countries, might lead to a broader acceptance of the 1.5° Celsius hard target, rather than simply understanding this expected tipping point as an ambition. Further, my hope is that the ambitious EU agenda / policies will serve as a blueprint on how transition of economies can be facilitated globally.

To break this down, what this could mean for you and me respectively and the organisations we are working in:

  • Policymakers are required to integrate social/environmental costs, this will most likely lead to a price put on carbon dioxide and in the long run also on other greenhouse gas emissions, which will shape several industries (both positively and negatively)
  • Especially in developed countries national targets on emission reductions might lead to enhanced channeling of funds towards emission friendly industries / activities
  • Organisations without a reasonable commitment towards net-zero future will face more and more difficulties by stakeholders

What I am expecting from my blog community:

  • Support and acknowledge that climate-competent decision makers are needed in economy as this is an extraordinary threat to your company, your employees, your suppliers, your customers and all your other stakeholders
  • Determine if your company is part of the problem or part of the solution
  • Be transparent and disclose if/how your company assesses/changes strategic plans and priorities

Radical ambitions require radical changes, this doesn’t stop at your front door. It may well be that climate change isn’t won in the EU only, but changing own habits and challenging supply chains on climate impact is unavoidable. If you insist on sticking to your habits, this might (and should) be at a price to compensate for it. All organisations (including my own) will need to adapt in order to remain competitive and find solutions to support our clients whilst not harming the environment. This won’t change in course of COP 26. What is essential, is that we can make this a common task across the global community, otherwise the various economic and geo-political interests around the parties might be too big to overcome. Here we might have some more answers if the parties are “putting their money where their mouth is” (which would probably also ease the pressure on future pockets to close the loop towards my initial statement).

"This is the decade we must make decisions that will avoid the worst consequences of a climate crisis […] Good ideas and good intentions are not good enough." (cite by Joe Biden, President United States of America)

In the meantime, let me know your thoughts and/or topics you would like to zoom into via E-Mail (Stefan.stubing@abnamroabf.com).

Yours Stefan


At ABN AMRO, sustainability is more than just a buzzword. We actively look to support businesses with a sustainable focus. We provide a broad range of flexible funding solutions that support your shift to sustainability. We're in it together, helping to create a stable economy and a sustainable society. Find out more now

[1] See: https://www.greenbiz.com/article/what-ipcc-report-means-corporate-boards [last accessed at 28.08.2021]

[2] See: https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_SPM.pdf [last accessed at 28.08.2021]

[3] See: https://ukcop26.org/cop26-goals/ [last accessed at 28.08.2021]

[4] See: https://climateactiontracker.org/global/cat-thermometer/ (latest updated in May 2021) [last accessed at 28.08.2021]

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