The UN Climate Change Conference COP26 begins in Glasgow Saturday. Hope, fear and cynicism are all palpable. Alerts and predictions are everywhere. White & Case has offered their views on the four top issues to watch:
- Nationally Determined Contributions (NDCs). These are basically each country’s targets for contributing to the Paris Agreement goals. The US has set “the target of reducing its net greenhouse gas emissions by 50%-52% below 2005 levels in 2030. The EU and its Member States, acting jointly, have committed themselves to a net reduction of at least 55% by 2030 compared to 1990.” I blogged last week about the increase in fossil fuel development projects planned by the US and EU, which seems to be inconsistent with the latest NDCs, so this will be an interesting conversation.
- Paris Agreement Article 6. “One proposal concerns greenhouse gas emissions reduction or offset credit trading, a model allowing countries that are Parties to the Paris Agreement to sell unused emission reduction or offset units. Another proposal focuses on an international greenhouse gas emissions reduction or offset credit market, where private and public sector parties can trade credits.” Undoubtedly, offsets will be the topic of much discussion in Glasgow.
- Finance. “The European Commission announced it is increasing its climate finance by EUR 4 billion until 2027, up from the existing $25 billion yearly contribution by the EU and its Member States. President Biden also announced that the US is doubling its financing to help developing nations tackle the climate crisis, and that with the help of increased private capital, the goal of mobilizing $100 billion to support climate action in developing nations will be met.” Biden’s overall budget proposals are not faring well in the House or Senate, so the US ability to meet such a commitment is uncertain. It will also be interesting to see what impact UK’s suffering post-Brexit economy has.
- Accountability and dispute resolution. “[T]he Paris Agreement has influenced climate change litigation in ways that cannot go unnoticed by negotiators. Climate actions have been filed not only against states but also against companies. In a series of landmark decisions, both states and companies were ordered to reduce emissions and comply with targets set out in the Paris Agreement… While the Paris Agreement did not provide a binding legal requirement in these cases, it provided the factual backdrop for judicial action and, in some cases, informed the duty of care of states and companies from which basis the courts calculated its decisions. These rulings not only put pressure on both states and companies to set emissions targets, they are also expected to accelerate negotiations during the upcoming COP26.”
I would add: responses and actions related to the IFRS Foundation’s International Sustainability Standards Board (ISSB). This has the potential of ultimately establishing new universal accounting standards for climate and ESG disclosures. I have written about the US process for developing accounting standards and that IFRS or ISSB actions are not automatically adopted as, or determinative of, US standards. I am anxious to hear more about the ISSB and its anticipated role with regard to national jurisdictions.
We don’t have long to wait until we find out.
