Investors lack confidence around COP26 outcomes

Pedro Gonçalves
clock • 3 min read
Investors lack confidence around COP26 outcomes

Over half (57%) of investors do not believe the deals and pledges signed at COP26 are enough to put the world on the unified goal of tackling climate change, according to a survey by asset manager Ninety One.

The survey of more than 5,000 investors across five markets, including the UK, Italy, Germany, South Africa and the US, revealed that COP26 did not have much effect on investors as expected. Only 58% of all investors said they took an interest in COP26.

The global climate summit was considered the last chance to put the world on track to meet its climate ambitions but ended with a pact that was neither a triumph nor a train wreck.

To really save the planet we must help emerging markets go green."

Over 57% of those surveyed felt that COP26 delivered enough to spark a global alignment on tackling climate change. Just 21% of investors felt alignment will be achieved.

Weighing on this view was China and Russia's snub of the summit, as both nations declined to attend at the head of state level. This lack of high-profile leadership from Beijing and Moscow has made the Paris Goal "even more difficult" to achieve, according to 69% of investors.

The Glasgow deal, reached after two weeks of hard-fought negotiations, included rules for a global carbon market and financial commitments to help countries adapt to climate change.

Still, governments will not meet the $100bn pledge to help poorer countries fight the effects of climate change until at least 2023 - three years late. COP26 President Alok Sharma said it was "regrettable" that countries won't meet the cash goal, which was one of the UK Government's four key aims ahead of the summit.

According to the survey, 71% of investors felt that richer countries should be helping poorer countries to transition to net zero.

Hendrik du Toit, founder and chief executive of Ninety One, said: "There is a sobering and incontrovertible fact about the drive to net zero: any effort that does not work for the world's 7.9 billion people, most of whom live in emerging markets, will fail everywhere. To really save the planet we must help emerging markets go green. That means robust carbon markets, debt for climate deals and financing options to speed the transition."

58% of all investors agreed that it is now even more important for them to invest their money to help achieve net-zero emissions. 86% said they were willing to pay a higher fee on a fund that was going to achieve environmental and/or societal benefits. This rose to 93% among those in funds who had also taken an interest in COP26.

The figures also showed that 45% of all investors prefer for their investments to help companies, sectors and countries transition away from a reliance on carbon. In comparison 36% prefer a divestment approach and to stop supporting companies or countries that are high-carbon users or producers straight away.

After COP26, 35% of investors in the UK said they preferred to divest compared to 43% who were more keen on the transition approach. In the US, 49% leaned towards offloading while 42% preferred to engage. Those based in South Africa had a clear preference to engage (63%) compared to divesting (21%).

"Net zero for some means no net zero at all. To divest is irresponsible and simply demonstrates a lack of either understanding, awareness or transparency regarding the climate crisis. We must focus on long-term transition plans consistent with net zero by 2050 for companies and countries, not near-term reductions," Du Toit added.

39% of investors said they encouraged reducing carbon emissions through their investment options, regardless of financial return. 40% said the same "but expect a competitive financial return".