The Hope Sculpture overlooking the Clyde serves as a permanent reminder of Glasgow’s role in hosting last year’s Cop26 climate summit, but what will be the legacy of this global event?

There were some pivotal moments at the conference including the deal announced between the US and China to work together on climate change, and the fact that 197 nations signed the Glasgow Climate Pact (GLP), which keeps the focus on limiting global temperature rises to a maximum of 1.5 degrees.

While these agreements, with their compromises and caveats, were not the ideal outcome many wanted, we should be encouraged by the high level of engagement we are seeing across all aspects of society.

Many people are beginning to make choices in their daily lives that support the drive towards net zero, including making changes to their diet, their source of heating energy, or the type of car they drive. The business community is also showing real ingenuity and innovation in finding solutions, from the growing use of green hydrogen and other fossil fuel alternatives, to the development of new technologies that will help promote greater sustainability.

Equity markets and banks are also heavily engaged, increasingly demanding companies have a strong commitment to ESG (environmental, social and governance) before they will provide investment. This approach is driving capital towards emerging start-ups focused on finding innovative solutions to address environmental challenges.

CMS is also part of this sea change. We are committed to a programme of reducing and offsetting carbon emissions across our entire portfolio to net zero by 2025, and we are engaged in programmes which promote understanding and critical thinking around climate action.

We are proud to be part of a much wider movement aimed at delivering meaningful change to benefit our planet. This commitment going on across society is what will ultimately ensure we succeed in addressing climate change and is a powerful source for optimism and hope going forward.

Transition from fossil fuels gathers pace

Looking at the finer detail of Cop26, firstly from an energy perspective, the commitment to phase down coal-fired power generation as part of the global energy transition is ground-breaking. While harder measures to accelerate this process and actually phase out coal were opposed by India, China and South Africa, the Glasgow conference marked the first time that we heard a direct reference to reducing fossil fuels and is an important step forward.

The focus going forward will need to be on clarifying timelines, which are currently vague. The world’s major economies have committed to phasing out coal during the 2030s while it is likely to take many other nations a further decade to achieve this.

Power from coal sources where the environmental impact is mitigated by carbon-reducing technologies are not covered by the GLP, which presents a significant opportunity for clients in the field of carbon capture and storage.

This will open markets in countries wishing to continue pursuing coal power for the fitting, retrofitting and maintenance of storage facilities and could prove to be a catalyst for growth and investment.

A further feature of Cop26 was the lack of any reference to oil and gas. While this represented further disappointment for climate activists, real progress is being made across the oil and gas sector where energy transition is gathering strong momentum.

Norwegian state-owned energy company Equinor has pledged to bring the greenhouse gas footprint of its onshore and offshore fields to near zero by 2050.

The company is divesting in oil and gas and using its substantial capital reserves to invest in renewable energy sources. Meanwhile BP has also invested heavily in its subsidiary company Lightsource bp, which has become one of the world’s leading solar energy providers.

While there is a substantial distance to travel in transitioning away from fossil fuels, the need to pursue this course of action is now formally recognised by 197 of the world’s nations. There is real progress being made with a growing level of international cooperation between private and public sector organisations to deliver this agenda.

The rise of ESG investment

Cop26 also saw the strongest ever showing from banking and financial sector representatives, building on huge momentum for sustainable finance over the past two years. Investment in ESG funds rose by 88% to more than $152bn in the fourth quarter of 2020, reportedly outperforming their carbon-intensive competitors across the board. While ESG performance was not as dramatic in 2021, there is great cause for optimism: the US Labour Department is due to finalise rules permitting companies to offer ESG metrics in their retirement plans. Meanwhile, the largest US retirement plan is also set to offer ESG funds in 2022.

UK high street banks are also putting a greater focus on their community impact, both socially and environmentally, by supporting ethical and sustainable companies. Cop26 sponsor NatWest has committed to at least halving the climate impact of its financing activities by 2030. It also joined HSBC and Lloyds Banking Group in the Powering Past Coal Alliance at Cop26, aimed at phasing out the world’s dependence on coal. These steps are part of the wider efforts of retail banks to reduce their carbon footprint by pivoting away from companies whose operations are harmful to the planet.

Chancellor Rishi Sunak’s announcement that the UK would become the “first-ever net zero aligned global financial centre”, in part by requiring large firms to publish their transition plans, was another significant Cop26 development. In parallel, the UN also confirmed it intends to increase scrutiny to police net zero commitments over 2022, further incentivising all sectors to stand behind ESG claims with real world data and robust evidence.

These initiatives will be supported by the International Financial Reporting Standards Foundation’s drive to coordinate the fragmented and opaque world of corporate sustainability reporting.

These developments sound the death knell for greenwashing in global financial markets. In that sense, perhaps the most important outcome from a finance and investment perspective from Cop26 will be the proliferation of comprehensive and ‘decision useful’ sustainability data.

The impact of people power

While these developments are significant, the most impactful legacy of Cop26 could, however, come from young people, who inspire and influence decision-makers to drive progress. Our own CMS colleague Kirsty Mitchell attended the event as an observer with the 2050 Climate Group to amplify the youth voice.

This was just one example of the unprecedented levels of engagement that occurred in Glasgow, where we saw a huge mobilisation of young people, civil society, and a range of other organisations all pushing for change. This coming together provided a great platform for collaboration and knowledge sharing on the best means of addressing climate change for groups and communities across the world. It also promoted far greater public understanding of the different perspectives and on-the-ground experiences of how climate challenges are impacting on people in different parts of the globe.

This coalition of the willing that came together in Glasgow will continue to spread as a legacy of the conference and is helping ensure the world’s governments will adhere to and, in some cases, exceed their commitments towards net zero.

While there were some disappointments, Cop26 should be seen as a success where key agreements were made and vital partnerships were forged between nations. These are all welcome steps in the right direction that have the potential to create a ripple effect that will deliver the change we need to secure a positive future for our planet and all its people.