The world is at a critical point in the fight against climate change, and COP26 was considered the most significant climate talk since the 2015 Paris Agreement. During the conference, there were notable successes and some setbacks — both have implications for businesses globally.  

We reflect on the progress made during the climate change conference, discuss what this means for the global chemicals and materials industry moving forward and provide insights on how to help accelerate toward net zero together. 

Key takeaways

1. COP26 made progress toward delivering on the Paris Agreement goals of limiting global warming to “well below” 2 degrees Celsius (C) on pre-industrial levels, but the world is definitely not on track to limit the increase to 1.5C on the basis of plans submitted to date. 
2. In a scenario where all the climate pledges announced to date were met in full and on time, the International Energy Agency (IEA) estimates that global warming could be kept to 1.8C. However, the lack of firm plans for 2030 means the actual increase could be 2.4C
3. These commitments must be delivered upon if these temperature goals are to be achieved. This still represents progress since Paris, where the world was heading for 3C to 4C of warming, and COP26 should be seen as part of that ongoing process that started nearly 30 years ago and now plans to continue indefinitely to tackle climate change.  
4. Over that period, there has been a marked shift from “top down” reliance on governments taking the lead to “bottom up” action by businesses, investors, non-governmental organizations (NGOs) and consumers.  
5. COP26 has energized a raft of initiatives, including: 
  •  The Glasgow Financial Alliance for Net Zero (GFANZ). 
  • The Glasgow Breakthroughs on technology innovation.  
  •  The Powering Past Coal initiative and shifting to clean power.  
  • Nearly 100 countries committing to cutting methane emissions.  
  •  A commitment to end and reverse deforestation by 2030.  
  •  H2Zero: A pledge to accelerate use of decarbonized hydrogen. 
  • A new requirement for net-zero transition plans for listed companies in the UK. 
  • Establishing a new International Sustainability Standards Board (ISSB) globally.

6. Good progress was made on Article 6, the rulebook for carbon accounting. 

7. But there were also a number of setbacks: 

  • The US$100 billion per year climate finance target — due by 2020 — was delayed to 2023.  
  • Many of the new net-zero targets announced have limited detail on near-term plans to help reduce emissions, which is essential if there is a chance at limiting global warming to 1.5C. 
  •  Questions remain regarding the follow-through and implementation, with the final call to action requesting all parties to update their Nationally Determined Contributions (NDCs) ahead of the next COP in November 2022.

8. It’s becoming increasingly clear that the institutional investment world is starting to exercise real influence through investment policy and is starting to demand increased climate focus from investee companies. Importantly, these investors are focused on private companies as much as public companies.

9. The shift to net zero is the next great industrial revolution and businesses that seize the opportunity are expected to thrive — those that don’t, may not. 

The chemicals and materials industry has long been a leader in sustainable initiatives – despite public perception to the contrary – but much more should be done in the next decades to support global climate goals. In particular, cracking the code on circularity, continuing to reduce the carbon intensity of operations and diversifying energy usage to renewable sources are expected to be critical factors.