hongkongen
Good cop, bad cop? Our hopes for real action at COP26

Good cop, bad cop? Our hopes for real action at COP26

08-09-2021 | Insight
The most important conference on climate change is about to take place, six years after the Paris Agreement was signed. So what do we expect from COP26? Will it be a good COP… or a bad COP? We think it all depends on whether the participants realize the true extent of the crisis we’re in.
  • Lucian Peppelenbos
    Lucian
    Peppelenbos
    Climate Strategist

Speed read

  • COP26 conference in Glasgow is first review of policies since Paris Agreement
  • Net-zero policies and rules for carbon markets need to be beefed up
  • Robeco will cover the event live from Glasgow, sign up now and don’t miss a thing!

The 26th edition of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) – rather more simply known as COP26 – takes place in Glasgow, Scotland from 1-12 November. Attended by leaders from all over the world, it will be the first formal review of countries’ climate policies since the landmark Paris Agreement of 2015.

It comes after the Intergovernmental Panel on Climate Change (IPCC) issued its starkest warning yet that tackling global warming is ‘code red’ for humanity. The report, issued on August 9, warned that the Earth had already warmed by 1.09 degrees Celsius since 1850, and the effects were being seen with raging wildfires, increasingly extreme weather and melting ice caps.

Good cop, bad cop?
Good cop, bad cop?
Our hopes for real action at COP26
Stay up to date and register to view our video series
The extent of global warming graphically illustrated in the IPCC August report. Source: IPCC

The past five years have been the hottest on record, making it ever more important to massively cutting greenhouse gas emissions before irreversible climate damage occurs, the report says. The Paris Agreement calls on nations to limit global warming to a maximum of 2 degrees Celsius from pre-industrial levels by 2100, and ideally to restrict it to 1.5 degrees. It was signed by all 196 members of the UNFCCC. To do this, the world needs to achieve net zero emissions by 2050.

So, will world leaders rise to the occasion and take some serious action? COP26 has four goals: (1) Secure global net zero by 2050 to keep 1.5 degrees within reach; (2) Adapt to protect communities and natural habitats; (3) Mobilize finance to fund this, and (4) Work together to deliver solutions. 

Based on this wish-list, Lucian Peppelenbos, climate strategist at Robeco, says investors are therefore looking for four things to happen:

Beefing up net-zero policies:

Countries need to accelerate their decarbonization under what’s known as the ‘ratchet mechanism’ – making progressively bigger cuts in emissions to reach net zero. Robeco has its own roadmap to become carbon neutral by 2050 in all investment strategies by 2050, using the framework of the Net Zero Asset Manager’s Alliance.

“The policy ambition gap is factor one hundred,” he says. “Currently, the 2030 pledges only lead to a 0.5% emission reduction, whereas a 50% reduction is needed to reach the 1.5 degree limit. So, it’s a good COP if pledges are made to at least get to a 25% emission cut by 2030, as that puts the world onto a 2 degree trajectory.”

Using nature-based solutions and carbon markets:

Over half of all greenhouse gas emissions are absorbed by nature. Forests, land and oceans are our biggest allies in limiting global warming – and are also critical to resolving the biodiversity crisis. The protection and restoration of nature can be boosted through funding from carbon credits. Robeco has positioning papers on these topics along with engagement programs to accelerate decarbonization and to tackle deforestation and biodiversity loss. 

“Trading in carbon credits across countries, and clear rules for voluntary carbon markets, are essential for accelerating cost-effective action on the short term such as reforestation,” says Peppelenbos. “It’s a good COP if countries reach a deal that enables the execution of Article 6 of the Paris Agreement, which targets international cooperation through carbon markets.”

Financing adaption and mitigation:

The Paris Agreement aims to stimulate finance flows from rich to poor countries in order to mobilize USD 100 billion a year for climate action. This is one of the most controversial elements of the agreement, as the goal is seen as being far out of reach. Robeco offers climatic and thematic funds that provide a means of investing in climate solutions through mainstream equities and credits, green bonds and via the Sustainable Development Goals.

“Global warming has historically been caused mainly by developed markets, but the costs are mainly borne by emerging markets,” says Peppelenbos. “For this reason, countries agreed to the USD 100 billion per year in funding back in 2009. This pledge has not been fulfilled. It’s therefore a good COP if a post-2020 finance deal is reached.”

Mandatory and harmonized disclosure:

Currently, this is random and voluntary. This year saw a strong push for global harmonization of climate disclosure, and for making it mandatory. Robeco routinely discloses the carbon exposures of the assets that it manages under guidance from the Taskforce on Carbon-related Financial Disclosures (TCFD). Investment teams also use emissions data from investee companies.

“This already has support within the G-7, and it has been boosted by the new EU Sustainable Finance Disclosure Regulation and EU Taxonomy which will standardize reporting across the 27-nation bloc,” says Peppelenbos. “We already require climate disclosures from companies in our investment process. It’s a good COP if climate reporting becomes mandatory across the world.”

So will it be a good COP or a bad COP?

Robeco will produce a series of five pertinent, up-to-date videos as COP26 unfolds, to help you navigate whether the summit is a gamechanger. Watch our very own Kenny Robertson, Robeco’s man on the ground, as he follows the progress being made towards tackling climate change, and the potential outcomes for the investment and financial industry. These 15-minute, daily videos and other engaging, relevant content is available on our COP26 landing page, where we will also be happy to answer any questions you might have.

Stay up to date and sign up now!

 
Disclaimer

I agree to the Robeco Disclaimer and the collection and use of my personal data by Robeco, for the purposes for which such data is collected and used as set out in the Privacy Policy, including for the purpose of direct marketing of Robeco products or services. Your data will be treated with utmost care and will not be passed on to third parties.

Important information

The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong.
This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing
This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions.
The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.
Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.

Subjects related to this article are:
Logo

Disclaimers

1. General
Please read this information carefully.

This website is prepared and issued by Robeco Hong Kong Limited ("Robeco"), which is a corporation licensed by the Securities and Futures Commission in Hong Kong to engage in Type 1 (dealing in securities); Type 4 (advising in securities) and Type 9 (asset management) regulated activities. The Company does not hold client assets and is subject to the licensing condition that it shall seek the SFC’s prior approval before extending services at retail level. This website has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

2. Important risk disclosures
2. Important risk disclosures Robeco Capital Growth Funds (“the Funds”) are distinguished by their respective specific investment policies or any other specific features. Please read carefully for the risks of the Funds:

  • Some Funds are subject to investment, market, equities, liquidity, counterparty, securities lending and foreign currency risk and risk associated with investments in small and/or mid-capped companies.
  • Some Funds are subject to the risks of investing in emerging markets which include political, economic, legal, regulatory, market, settlement, execution, counterparty and currency risks.
  • Some Funds may invest in China A shares directly through the Qualified Foreign Institutional Investor (“QFII”) scheme and / or RMB Qualified Foreign Institutional Investor (“RQFII”) scheme and / or Stock Connect programmes which may entail additional clearing and settlement, regulatory, operational, counterparty and liquidity risk.
  • For distributing share classes, some Funds may pay out dividend distributions out of capital. Where distributions are paid out of capital, this amounts to a return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.
  • Some Funds’ investments maybe concentrated in one region / one country / one sector / around one theme and therefore the value of the Fund may be more volatile and may be subject to concentration risk.
  • The risk exists that the quantitative techniques used by some Funds may not work and the Funds’ value may be adversely affected.
  • In addition to investment, market, liquidity, counterparty, securities lending, (reverse) repurchase agreements and foreign currency risk, some Funds are subject to risk associated with fixed income investments like credit risk, interest rate risk, convertible bonds risk, ABS risk and the risk of investments in non-investment grade or unrated securities and the risk of investments made in non-investment grade sovereign securities.
  • Some Funds can use derivatives extensively. Robeco Global Consumer Trends Equities can use derivatives for hedging and efficient portfolio management. Derivatives exposure may involve higher counterparty, liquidity and valuation risks. In adverse situations, the Funds may suffer significant losses (even a total loss of the Funds’ assets) from its derivative usage.
  • Robeco European High Yield Bonds is subject to Eurozone risk.
  • Investors may suffer substantial losses of their investments in the Funds. Investor should not invest in the Funds solely based on the information provided in this document and should read the offering documents (including potential risks involved) for details.

3. Local legal and sales restrictions
The Website is to be accessed by “professional investors” only (as defined in the Securities and Futures Ordinance (Cap.571) and/or the Securities and Futures (Professional Investors) Rules (Cap.571D) under the laws of Hong Kong). The Website is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of the Website is prohibited. Persons in respect of whom such prohibitions apply or persons other than those specified above must not access this Website. Persons accessing the Website need to be aware that they are responsible themselves for the compliance with all local rules and regulations. By accessing this Website and any of its pages, you acknowledge your agreement with understanding of the following terms of use and legal information. If you do not agree to the terms and conditions below, do not access this Website or any pages thereof.

The information contained in the Website is being provided for information purposes.

Neither information nor any opinion expressed on the Website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. The information contained in the Website does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, most recent annual and semi-annual reports, which can be all be obtained free of charge at www.robeco.com/hk/en and at the Robeco Hong Kong office.

4. Use of the Website
The information is based on certain assumptions, information and conditions applicable at a certain time and may be subject to change at any time without notice. Robeco aims to provide accurate, complete and up-to-date information, obtained from sources of information believed to be reliable. Persons accessing the Website are responsible for their choice and use of the information.

5. Investment performance
No assurance can be given that the investment objective of any investment products will be achieved. No representation or promise as to the performance of any investment products or the return on an investment is made. The value of your investments may fluctuate. The value of the assets of Robeco investment products may also fluctuate as a result of the investment policy and/or the developments on the financial markets. Results obtained in the past are no guarantee for the future. Past performance, projection, or forecast included in this Website should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Fund performance figures are based on the month-end trading prices and are calculated on a total return basis with dividends reinvested. Return figures versus the benchmark show the investment management result before management and/or performance fees; the fund returns are with dividends reinvested and based on net asset values with prices and exchange rates of the valuation moment of the benchmark.
Investments involve risks. Past performance is not a guide to future performance. Potential investors should read the terms and conditions contained in the relevant offering documents and in particular the investment policies and the risk factors before any investment decision is made. Investors should ensure they fully understand the risks associated with the fund and should also consider their own investment objective and risk tolerance level. Investors are reminded that the value and income (if any) from shares of the fund may be volatile and could change substantially within a short period of time, and investors may not get back the amount they have invested in the fund. If in doubt, please seek independent financial and professional advice.

6. Third party websites
This website includes material from third parties or links to websites maintained by third parties some of which is supplied by companies that are not affiliated to Robeco. Following links to any other off-site pages or websites of third parties shall be at the own risk of the person following such link. Robeco has not reviewed any of the websites linked to or referred to by the Website and does not endorse or accept any responsibility for their content nor the products, services or other items offered through them. Robeco shall have no liability for any losses or damages arising from the use of or reliance on the information contained on websites of third parties, including, without limitation, any loss of profit or any other direct or indirect damage. Third party off-site pages or websites are provided for informational purposes only.

7. Limitation of liability
Robeco as well as (possible) other suppliers of information to the Website accept no responsibility for the contents of the Website or the information or recommendations contained herein, which moreover may be changed without notice.
Robeco assumes no responsibility for ensuring, and makes no warranty, that the functioning of the Website will be uninterrupted or error-free. Robeco assumes no responsibility for the consequences of e-mail messages regarding a Robeco (transaction) service, which either cannot be received or sent, are damaged, received or sent incorrectly, or not received or sent on time.
Neither will Robeco be liable for any loss or damage that may result from access to and use of the Website.

8. Intellectual property
All copyrights, patents, intellectual and other property, and licenses regarding the information on the Website are held and obtained by Robeco. These rights will not be passed to persons accessing this information.

9. Privacy
Robeco guarantees that the data of persons accessing the Website will be treated confidentially in accordance with prevailing data protection regulations. Such data will not be made available to third parties without the approval of the persons accessing the Website, unless Robeco is legally obliged to do so. Please find more details in our Privacy and Cookie Policy.

10. Applicable law
The Website shall be governed by and construed in accordance with the laws of Hong Kong. All disputes arising out of or in connection with the Website shall be submitted to the exclusive jurisdiction of the courts of Hong Kong. 

Please click the “I agree” button if you have read and understood this page and agree to the Disclaimers above and the collection and use of your personal data by Robeco, for the purposes for which such data is collected and used as set out in the Privacy and Cookie Policy, including for the purpose of direct marketing of Robeco products or services. Otherwise, please click “I Disagree” to leave the website.

I Disagree