COP26: Bridging the gap of climate ambition
This FTSE Russell paper estimates that the resulting global trajectory will lead to a 2.9°C warming ‒ a level that still falls short from the “well below 2°C” Paris target.
Following recent revisions of commitments during the UN “Climate Ambition Summit” in December 2020 and the US-led “Leaders Summit on Climate” in April 2021, this FTSE Russell paper estimates that the resulting global trajectory will lead to a 2.9°C warming ‒ a level that still falls short from the “well below 2°C” Paris target.
To bridge the gap, the collective efforts to reduce GHG emissions would need to improve significantly in the next months and during COP26 to include:
- a strong reinforcement of policy interventions to limit GHG emissions;
- some profound economic transformations in the fossil fuel consuming sectors (power generation, transport, manufacturing activities, buildings, etc.);
- a massive asset reallocation, with key implications for investors globally in relation to risk management, asset prices and investment strategies.
The impetus to do so is both desirable (given its economic and social benefits compared to the severe impact of global warming), and increasingly possible due to positive policy and technological developments:
This paper examines the "ambition" gap between countries’ official commitments to limit greenhouse gas (GHG) emissions and their requirements to reach the Paris Agreement objective, and key levers available to meet that goal and some likely trends to anticipate in this context.
To read the full research paper click here.
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