COP26 Implications: Regulatory Risks Rise, Methane and Deforestation Pledges Sharpen Focus on New Areas

Tue 30 Nov, 2021

Progress in key benchmarks for success for COP26 that Sustainable Fitch set out ahead of the conference was mixed, but there were agreements in areas that will have an impact. Specifically, this covers pledges for methane, limiting coal financing abroad, and a bigger success than expected on voluntary carbon credits market with the finalisation of Article 6. These agreements can catalyse change, both on a policy and regulatory level and corporate behaviour level. In addition, the pledge to limit unsustainable deforestation provide much new momentum for biodiversity and natural capital risk assessments that have been a rising area of importance for investors. This will bring new levels of scrutiny from investors and regulators on supply chains, commodities sourcing and agriculture.

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