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.
* References to RBC GAM includes BlueBay Asset Management LLP (BlueBay), RBC Global Asset Management Inc. (including Phillips, Hager & North Investment Management), RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management (UK) Limited, and RBC Global Asset Management (Asia) Limited, which are separate, but affiliated subsidiaries of RBC.
This publication has been issued by Royal Bank of Canada on behalf of certain RBC ® companies that form part of the international network of RBC Wealth Management. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by Royal Bank of Canada, its affiliates or subsidiaries.
The information contained in this report has been compiled by Royal Bank of Canada and/or its affiliates from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgments as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Every province in Canada, state in the U.S. and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, any securities discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.
This material is prepared for general circulation to clients, including clients who are affiliates of Royal Bank of Canada, and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law neither Royal Bank of Canada nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of Royal Bank of Canada.
Clients of United Kingdom companies may be entitled to compensation from the UK Financial Services Compensation Scheme if any of these entities cannot meet its obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for up to a total of £85,000. The Channel Island subsidiaries are not covered by the UK Financial Services Compensation Scheme; the offices of Royal Bank of Canada (Channel Islands) Limited in Guernsey and Jersey are covered by the respective compensation schemes in these jurisdictions for deposit taking business only.