For nearly three decades the UN has been bringing together almost 200 countries for global climate summits (COPs) or ‘Conference of the Parties’. In that time climate change has gone from being a fringe issue to a global priority meaning COP26 had a unique urgency. 2021 was the 26th annual summit with the UK hosting in Glasgow.
In the run up to COP26, the UK was working with every nation to reach agreement on how to tackle climate change. World leaders attended alongside tens of thousands of negotiators, government representatives, businesses and citizens for twelve days of talks. COP26 also drew several corporate giants, with CEOs including Amazon's Jeff Bezos, Salesforce's Marc Benioff and BlackRock's Larry Fink in attendance. What global leaders actually commit to could signal to investors the upcoming pace of change and the regions where it'll happen.
COP26 highlights:
Almost 100 countries agreed to slash methane emissions 30% by 2030.
India’s prime minister Narendra Modi pledged that half of its energy would be powered by renewable sources by 2030. This is a big move forward as India's the world's fourth-largest carbon dioxide emitter.
40 countries backed the ‘Glasgow Breakthroughs’ commitment to give developing countries access to the technology and innovation needed to reach net zero.
In the UK, all large companies and public enterprises will be required to publish a net-zero transition plan by the end of 2024.
Why does this matter for you as an investor?
COP26 showed us that climate change is a high priority on the political agenda for almost all countries in the world.
There is no area of our lives that will not be impacted by the need to manage and adapt to climate change. More sustainable plant-based diets, electric vehicles, less packaging, fewer flights, greater energy efficiency - all of these will create challenges but also present opportunities for investors.
Many investors are already managing their portfolios to benefit from the world’s shifting climate priorities. It is becoming easier to find a fund that matches up with your beliefs if environmentally aware investing is a priority for you.
Sustainable investing
Assets in dedicated sustainable investing strategies have grown at a rapid pace in recent years, and this trend is showing no signs of slowing. About half of investors currently own these investments, and about the same number would be willing to convert their entire portfolio to be sustainable according to a recent report (1).
The report also showed that the desire to invest ethically is especially pronounced among millennials. In essence the strategy seeks to consider both financial return and social/environmental good to bring about social change. Investors recognise that companies aiming to solve these global challenges are also well positioned to grow and be profitable over time.
How to get started
ESG is a system for how to measure the sustainability of a company or investment in three specific categories: environmental, social and governance. Investing in ESG can come in many forms: You can invest in an ESG fund or a single stock that has a high ESG score.
Starting a portfolio with ESG investments doesn’t need to be difficult, and since there are more ESG investments than ever, you’ll have lots of options to choose from.
Some investors like to read up on a company’s sustainability initiatives or check a fund’s companies are in alignment with their own personal goals.
Whether you choose to pick your own investments or use a digital advisor/manager there is something for everyone regardless of your moral compass.
At Wealth8, we offer a number of ESG funds which you can view on the app. ** with investment your capital is at risk