Was COP26 a success? The answer depends on what happens next

By ibmblogsMay 3, 2022

Was the 2021 Conference of the Parties (COP26) in Glasgow a success? Is the global community on track to avoid the worst effects of climate risk and achieve climate justice across all nations?

The answer is yes – and no. Yes, the annual global climate summit achieved agreement on the ‘rules’ that underpin the Paris Agreement – things like transparency and consistency of ESG reporting, and time frames for the phaseout of coal-based power sources. In addition, net zero commitments were secured from 153 countries, with over 90% of the world’s GDP now covered by Nationally Determined Contributions (NDCs) between 2030 and 2050.

But, ultimately, COP26 fell short of achieving the international commitments required to limit global warming to 1.5C by 2030. COP26 failed to:

Identify the requirements to meet those objectives and the consequences of not meeting them. Keeping the pledges of the Paris Agreement alive cannot be achieved without measurable targets.
Set up the sustainable financing required to give developing countries the ability to adapt to the climate change often caused by industrial nations
Develop a call for a partnership could be used to mitigate the impact of climate change.

In short, COP26 did not help government and industry determine “how” to get to net zero in the next eight years – or to understand the catastrophic consequences of failing to do so. The onus is on governments and corporations to take action now—through innovation and partnerships to scale effective sustainability solutions across industry value chains and supply chains.

To be successful, a shift in mindset is required. We can’t view sustainability as simply a regulatory requirement or a stakeholder expectation. We must see it as a business opportunity and catalyst for transformation. Data and technology are the levers that make that shift possible.

We need to act now – but how?

How can the global community fulfill the pledges of COP26? How can we work together as industry and government players across the value chain to meet decarbonization targets by 2030?

Customers, employees, investors, business partners, and governments won’t wait. They are pressuring corporate management and boards to place sustainability at the top of their corporate agendas. According to a recent IBV Report, Sustainability as a Transformative Catalyst, sustainability has roared to the forefront of corporate priorities, with 73% of executives surveyed reporting that their organizations have set a net zero carbon emissions goal.

The Glasgow Climate Pact states that carbon emissions must be reduced by 45 percent by 2030 to keep the 1.5°C goal alive. Canada – alongside other members of the G7 – has committed to reducing its emissions by 40 to 45 percent below 2005 levels by 2030 – and to achieving net zero by 2050.

Other countries have set similar emissions targets. In the Visual Capitalist June 8^th, 2021 newsletter, it reports that “Bhutan and Suriname are the only two countries that have achieved carbon neutrality and are actually carbon negative (removing more carbon than they emit). Uruguay’s 2030 target is the earliest to try and match that feat, followed by Europe’s Finland, Austria, Iceland, Germany, and Sweden, who are all targeting 2045 or earlier with the remainder of countries following by 2050 and beyond”.

For most industries, meeting emissions goals is dependent upon:

Creating open sources to improve access to, and quality of, the GHG data needed for climate risk and carbon management reporting.
Enabling ESG business model innovation to be more circular and beneficial for people, planet and profit.
Embracing sustainability as a transformation catalyst.
Integrating sustainability and digital transformation.

Some industry sectors are already meeting their decarbonization goals. For example, Canada’s electricity grid is over 80% emissions-free—one of the cleanest in the world—and is on track to meet its goal of having 90% non-emitting electricity generation by 2030. But others, such as heavy manufacturing, transportation, agriculture and natural resources, must rapidly intensify their efforts to meet net zero commitments by 2050.

All industry sectors can leverage data to deliver on ESG goals with profitability, but we still have a long way to go. While 86% of companies have a sustainability strategy, but only 35% have taken action on that strategy. As companies embrace sustainability as a transformation catalyst and work with others across the value chain to decarbonize, they will differentiate themselves and create a more relevant profile to customers.

Closing the carbon gap with data and technology

Digital business transformation goes hand in hand with sustainability transformation. According to IBV, a group of “transformation trailblazers” have managed to narrow the gap between talk and action. These leaders are integrating their sustainability and digital transformation efforts and outperforming on innovation while achieving better sustainability outcomes and revenue growth.

With data and technology as critical levers for achieving net zero targets, the issues we need to act on now include:

1. Prepare clients for the impact of climate risk.

The past decade had the largest natural disaster impact on record, which resulted in a significant financial impact on businesses. With estimates of 6% of annual earnings affected by extreme weather and climate events, businesses must factor climate change into their decision-making. Governments, investors and consumers demand action to address climate change setting net zero greenhouse gas emissions (GHG) targets.

2. Establish intelligent operations, sustainable asset management, and secure infrastructure.

Infrastructure must be designed, built and managed with resiliency in mind to ensure business continuity. The lifespan of infrastructure assets such as buildings, bridges and dams can be extended by intelligent operations that can enhance sustainability while delivering greater value to stakeholders. Sund & Baelt is using AI and IoT to preserve and protect some of the world’s largest infrastructure, thereby eliminating tonnes in CO2 emissions.

3. Create a sustainable supply chain.

With 80% of carbon emissions ‘locked up’ in the supply chain, this is a natural place to start. While 70% of consumers indicate that traceability of the goods they purchase is very important and they are willing to pay up to 35% more for this insight, only 20% of companies have real insight into their supply chain. Supply chain insights can have synergistic benefits for suppliers and vendors across the chain. Farmer Connect used blockchain resources to achieve that change.

4. Improve electrification, energy & emissions management.

Clean energy electrification is vital for achieving net zero. Electricity ecosystems are becoming more complex and diversified. Enabling clean electrification at scale for consumers and businesses will require leaders to rethink how electrical systems operate and their role in a net zero GHG emissions economy. This includes eliminating coal use, accelerating EV transition, improving mitigation tactics for companies, and creating collateral and funding pools to protect the most vulnerable to climate change as we head toward that target.

Leaders of tomorrow are taking action now

So, was COP26 a success? Pledges were affirmed and progress was made, but the real answer depends on what happens at COP27, 28 and 29.

Although an estimated $275TN will be spent on assets between now and 2050 to fulfill the net zero pledge, there is still a considerable chance we will miss the 1.5 to 2 degree target, As climate risk pushes political and corporate change, more organizations are looking to be part of that sustainable finance spend.

IBM is progressing far and fast into sustainable transformation by leveraging client AI and data and technology. We are working with key industries and partnering with organizations to deliver five levers of digital advantage that will predict data-driven outcomes, automate at scale for productivity and efficiency, secure all touchpoints, modernize infrastructures and transform with new technology-driven digital business models.

The time for talk has passed and time to act is now. Achieving net zero targets won’t be easy, but there is a path forward. When world leaders reconvene at COP27 in Egypt, those who understand that sustainability and business transformation go hand in hand – and act on it – are well positioned to become tomorrow’s leaders in their industries, countries, and the world.

Learn more

How sustainability can become part of your transformation strategy.

Read the IBV Report, “Sustainability as a transformative catalyst.”

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