Governments have an important role to play in establishing effective policies and incentives to support a stable, orderly, and just transition to a net-zero economy.
Climate change is one of the most pressing issues of our time, with potential impacts on the economy, markets and society.
Rising greenhouse gas (GHG) emissions are causing global temperatures to increase, which contributes to more extreme weather events and changing climate patterns. In order to reduce emissions, significant transformation is required across energy, food, transportation and infrastructure systems. This will require investment in both “green” opportunities (e.g., renewable electricity, energy efficiency and green buildings) and “transition” opportunities (e.g., energy companies in the process of decarbonizing, producers of critical minerals for batteries and solar panels and low-carbon technologies for hard-to-abate sectors like steel and cement). At the same time, a focus on adaptation is needed to enable resilience in the face of a changing climate and more intense and frequent extreme weather events.
Governments have an important role to play in establishing effective policies and incentives to support a stable, orderly and just transition to a net-zero economy. In 2015, with the signing of the Paris Agreement by 195 countries, governments committed to a shared ambition for global mitigation and adaptation. Five years after the signing of the Paris Agreement, we are at a pivotal moment for climate change. This year’s annual climate change conference will set the tone and direction of climate action for the decade to come.
COP stands for Conference of the Parties, and it’s an annual global United Nations summit about climate change and the actions countries are planning to take to address the needs of climate mitigation and adaptation. These summits are held annually and attended by countries that signed the United Nations Framework Convention on Climate Change (UNFCCC)—a treaty agreed to in 1994. After cancelling the 2020 COP due to Covid-19, the 2021 summit will be the 26th meeting, which is why it’s called COP26.
The Paris Agreement was negotiated and agreed to at COP21 and included commitments by countries:
Signatories to the Paris Agreement will participate in negotiations on a range of topics. The key priorities for COP26 are:
In Aug. 2021, the Intergovernmental Panel on Climate Change (IPCC) updated their 6th Assessment Report on the state of climate change—their previous report was published in 2014. The IPCC is a United Nations (U.N.) body of 195 member states that assesses the science related to climate change. The scientific bodies of every U.N. member country agree on the findings of the report, which will serve as the foundation of climate science at COP26. Here are some key takeaways from the report:
Hosted by the UK, in partnership with Italy, COP26 will take place in Glasgow in Nov. 2021.
This article was originally published on rbcgam.com
As an asset manager and fiduciary of our clients' assets, RBC Global Asset Management (GAM)* has a duty to consider all material factors that may impact the risk-adjusted returns of our investments. Climate change is one such factor.In April 2020, RBC GAM published “Our approach to climate change,” which formalizes the commitments and actions we're taking to fully integrate climate change into our investment process. This includes the use of climate data and analytics to measure and assess the impact of climate risks and opportunities at an issuer and portfolio level. We also use climate scenario analysis to measure the potential financial impact of these risks and opportunities on our investments under different climate pathways, such as a 2℃ or 1.5℃ scenario. RBC GAM publicly supports the principles of the Paris Agreement and the international goal to hold global warming to well below 2℃. We'll continue to advance global efforts to enable climate mitigation and adaptation and actively work with our clients to advise them on how best to meet their climate-related goals, if possible.
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