The COP26 UN Climate Change Conference came to a close on 13th November, resulting in the Glasgow Climate Pact – a series of bold collective commitments.
The conference arrived with high expectations after being delayed due to the pandemic; plus, it came hot on the heels of the UN’s Intergovernmental Panel on Climate Change (IPCC), which produced a report described as “code red for humanity”.1
The main task at hand at COP26 was reducing the global temperature – in 2015, it was predicted that, if we did nothing, the global temperature would increase around 5°C above pre-industrial levels. We’re currently on track for around 3°C.2
“If, working apart, we are a force powerful enough to destabilise our planet, surely working together we are powerful enough to save it.”
– Sir David Attenborough, speaking at COP26.
A collective step forward?
The Glasgow Climate Pact was welcomed by many as progress in a number of areas. Here are some of the key outcomes:
- Countries agreed to present more ambitious climate pledges next year, in order to cut emissions of carbon dioxide (CO2) and try to keep temperature rises within 1.5°C.
- A scheme to cut 30% of methane emissions by 2030 was agreed.
- Countries agreed to ‘phase down’ coal. It had been hoped that it would be phased out; however, there was a late intervention by China and India.
- A pledge to significantly increase money to help vulnerable nations cope with the effects of climate change and make the switch to clean energy. While some observers felt this was progress, some felt not enough progress was made.
- An agreement to phase out subsidies that artificially lower the price of coal, oil, or natural gas (no date set).
- Leaders from countries accounting for 85% of the world’s forests promised to stop deforestation by 2030.
- The US and China – the world’s biggest CO2 emitters – pledged to cooperate more over the next decade in areas including methane emissions and the switch to clean energy.
It’s clear that collective action from countries across the globe is vital in protecting the earth for future generations. And, while this hard-hitting context might seem overwhelming for the individual, if you’ve got any money in pensions and investments, you can actually make a significant difference.
How? By writing a simple email to your pension provider, asking if your money is invested in businesses that are on the right side of climate change. Why? Because every company you invest in through your investment and pension funds has their part to play in tackling climate change – and it’s your money that helps make sure they do precisely that.
The money in UK pensions was £6.1 trillion between 2016 and 20183, and these companies’ actions have a huge impact on the environment – far more than we can ourselves. As you own a share of these businesses through your pension, you can help point them in a new direction, and that’s powerful!
Indeed, research shows investing your pension responsibly can have 27 times more impact on your personal carbon footprint than flying less, taking shorter showers, eating less red meat and taking the train instead of the car combined.4
Make it happen
Pensions are undoubtedly about returns – but by investing responsibly, the returns can be much more than just financial. There’s a whole host of ways to marry your investments with your values and your hopes for the future.
Responsible investing – also sometimes known as environmental, social and governance (ESG) investing – directs money into high-performing companies that operate sustainably, which means you could earn returns while taking better care of the planet and its people. It also engages with businesses in sectors where change will have the largest impact, such as oil and gas, encouraging them to transition to clean energy.
Research in early 2020 discovered that 85% of investors see climate change as the largest long-term threat and, in turn, many have begun to move their money into greener assets.5 Essentially, if you take charge of what other people do with your money, by the time you come to spend it, the planet could be in better shape.
The time is now
To summarise, then, while time will tell with the COP26 pledges, it’s clear we’re taking steps towards a carbon-free world. There’s no time to waste. If we all act – as consumers, as citizens, as businesses and investors – we can make the difference, and help create a world that’s a better place for future generations.
Imagine if every person with a pension sent an email to their provider. The shift could be seismic. Remember: money talks, and your pension is loud!
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
1 Secretary-General calls latest IPCC climate report ‘code red for humanity’, stressing ‘irrefutable’ evidence of human influence, UN, August 2021
2 Climate change 2021: the physical science basis, Intergovernmental Panel on Climate Change, August 2021
3 Pensions, savings and investments, Office for National Statistics, September 2021
4 Sustainable finance at Nordea, Nordea, 2019
5 Socially responsible investing predicted to double in 2021, Unbiased, April 2021 (Based on research by OnePlanet Capital, 2005 people surveyed).