Germany: The Coalition Agreement and the Real Estate Industry – From Climate-Neutral Heating to Mandatory Rooftop-Solar and Embodied Carbon

The upcoming traffic light coalition has published its coalition agreement and defined its priorities for the 20th legislative period in it. For the German real estate industry, there are some exciting announcements that will further accelerate the dynamic development.

One of the most striking and very concrete planned changes concerns the Building Energy Act (“Gebäudeenergiegesetz”, GEG). From 2025, every newly installed heating system is to be powered by 65% renewable energy. From 2024, the replaced parts of buildings must meet at least efficiency house standard 70 in the case of significant renovation works, conversions and extensions to existing buildings. The standard for new buildings will be KfW Efficiency House 40 from 2025. The level of ambition for the planning of calculated energy requirements will therefore be raised further. At the same time, the transformation of the national heating infrastructure will be driven forward.

Beyond that, there are a number of concrete measures to be found in the agreement:

  • Suitable roof areas are to be used for solar energy. For new commercial buildings, there will even be an obligation to install rooftop solar installations.
  • In data centers, waste heat is to be recovered. New data centers are to be operated in a climate-neutral manner from 2027.
  • The CO2 price should not fall below €60 per ton in the long term.
  • At several points in the contract, reference is made to the importance of neighbourhood solutions for the sustainable provision of heat. Heat networks are to be further expanded and 50% of heat is to be generated in a climate-neutral manner by 2030. The primary energy factors of many heat networks will benefit from this.
  • Tenants can also look forward with anticipation to the new legislative period. The construction of 400,000 new housing units, 100,000 of which are to be publicly subsidised, is to contribute to further easing the situation on the housing market. There are also concrete targets for the distribution of the additional burden of heating costs due to the additional CO2 price to be paid: The traffic light coalition wants to introduce a model that defines how the additional costs are shared between tenant and landlord according to the building energy performance certificates by June 1, 2022. The worse the EPC of the building, the higher the share of the CO2 price that the landlord has to pay. If no agreement is reached on the concrete design of this EPC-dependent model, the CO2 price is to be split 50% each between tenant and landlord from June 2022. 

Other measures announced have not yet been described in concrete terms, but they show the direction in which the coalition partners would like to steer the industry.

  • The legal and financial structuring of tenant electricity and neighbourhood concepts is to be simplified.
  • A so-called “construction, housing costs and climate check” is to be introduced. It remains to be seen what exactly is meant by this.
  • Serial construction and refurbishment are to be simplified – especially with regard to approval processes.
  • Grey energy (“embodied carbon”) and life cycle costs are to be considered more closely and stored in a digital building resource passport. This is intended to stimulate the circular economy in the construction industry. The keywords timber construction, lightweight construction and strategies for securing raw materials also come up here.
  • Renovation roadmaps are to be “widely and systematically used” and even become free of charge for condominium owners’ associations when they purchase a building.
  • The building energy certificate is to be improved and digitised. The creation of a digital building energy register is being examined.
  • ESG ratings are to be included in the credit ratings of the major rating agencies on a mandatory basis. The EU’s Corporate Sustainability Reporting Directive (CSRD) is supported and is to be supplemented by European minimum requirements.

And then the traffic light coalition has a surprisingly concrete opinion on one of the big trend topics since the start of the Covid-19 pandemic: the home office. Here, employees are to be given a so-called right to discussion (“Erörterungsanspruch“) about mobile working and home office in the future. The employer should only be allowed to object to the employee’s wish for mobile working if there are operational reasons for doing so. Mobile working should then be “possible without any problems” throughout the EU. So it appears that German offices in the future must evolve if they want to remain an attractive and productive place that attracts employees.

In some places, the coalition agreement is very precise with regard to the real estate sector and also wants to quickly follow up words with deeds. Instead of describing target values for the coming decades, some of the implementation deadlines are only a few years long. If the announced measures are actually implemented, this will provide a strong tailwind for the transformation of the real estate industry and the decarbonization of our buildings. We at EVORA very much welcome this.

Investors and developers are therefore well advised to incorporate meaningful and ambitious sustainability KPIs and ESG targets into all decisions already today. We are happy to support you!

What is EVORA Global doing as a business to tackle climate change?

Climate change is becoming an extremely popular combination of words; we can hear people talking more and getting interested in the topic, newspapers and tv releasing more information and adverts, and new sustainable start-ups rising in every sector.

Globally, we have seen an increased number of climate change manifestations and activist groups, and interactions around the keyword ‘sustainability’ grew 45.8% on Facebook and 30% on Instagram [1], proving that people are looking to connect with each over and with experts to become more knowledgeable about the topic and to act together.

In the last year, there has been a switch in many investors’ mindsets who are finally seeing climate change as the number one sustainability priority according to a poll of asset owners from more than 32 countries which came together for the Top1000funds.com online Sustainability event in March. 79% of investors said that climate is their number one ESG priority and this number is due to increase; more green funds will be provided to businesses who want to start or implement their sustainability journey.

This year, EVORA conducted an Investor Survey and one of the key findings is that a growing number of investors believe ESG will become common practice in 2022.  50% of respondents plan to include an ESG representative in their investment committee in the coming year. They said that integration of ESG in investment decision-making will mature in 2022 and more ESG focus is expected in the following investment lifecycle areas: investment mandates, deal sourcing, research and strategy, sustainable property management, internal training and governance. More than 75% of investors reported no link between ESG objectives and their remuneration, but 27% expect this to change in the coming years.

EVORA Global prides itself on being a sustainability consultancy and software business where our experts help clients by supporting them step by step during their ESG journey.

But what are we actually doing as a business to tackle climate change?

Let’s start from the beginning!

Back in 2011, Chris, Paul and Ed, EVORA Executive Directors and Co-Founders, had a big dream: to accelerate the evolution of real asset sustainability to enhance the wellbeing of the planet and its people. They thought hard about how to start helping businesses become sustainable. What could they do to gain trust? Where should they start from?

This is how our services were born. All of them are designed to bring sustainability to the forefront of real asset investment. Without even mentioning the benefits for our planet and its people!

Sustainability is still a developing journey with new and exciting innovations and opportunities for many people to make an impact; our services and support will certainly continue to evolve with it.

Recently, we have expanded into infrastructure sustainability, in addition to real estate, recognising that infrastructure assets can generate significant environmental and social impacts. Furthermore, this year we have introduced the Green Finance service as we recognised that the green finance agenda has been moved forward at a significant rate by the effects of climate change.

I am very proud to say that EVORA Global has signed up to several initiatives to advance the ESG agenda. They are a symbol of our hard work and our continued commitment towards sustainability.

The Planet Mark Business Certification is a recognised symbol of sustainability progress forcontinuous improvements; it encourages action and builds an empowered community of like-minded individuals. This is EVORA’s seventh year of business carbon footprint reporting and certification to Planet Mark. It demonstrates our achievement in reducing our carbon emissions associated with business operations by a minimum of 2.5% every year and our commitment to a continuous improvement in sustainability. Here’s to another seven years of great achievements!

In June 2020, EVORA joined nearly 100 other organisations in signing The World Green Building Council’s Advancing Net-Zero commitment. The commitment challenges businesses, organisations, cities, states and regions to reach net zero carbon in operation for all assets under their direct control by 2030, and to advocate for all buildings to be net zero carbon in operation by 2050. We are extremely proud of this commitment.

In December 2020, EVORA became a signatory to the United Nations Principles of Responsible Investment (UNPRI) underlining our commitment to advancing real asset sustainability. The UNPRI works to understand the investment implications of ESG factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions. In line with our company vision, we are committed to the Principles of Responsible Investment, and we actively support and endorse PRI among our clients.

The Sustainable Development Goals (SDGs) have been adopted by the UN General Assembly to guide global action towards a more sustainable future. Given that the real estate industry is responsible for almost half of energy and process-related emissions, we have a pivotal role to play in contributing to the achievement of these goals. We identified a number of SDGs that we can dedicate our expertise, ideas, and creativity towards achieving. We then divided them into two categories: ‘external’ SDGs that are relevant to EVORA’s service lines and ‘internal’ SDGs where EVORA can have the greatest impact through our people. Incorporating these goals into our work will strengthen our commitment and vision to accelerating the evolution and adoption of real estate sustainability to enhance the well-being of the planet and its people.

EVORA has at its heart the health and wellbeing of the team and I take this opportunity to unveil that we will soon move to a new office, how exciting! We have chosen a space that has better lighting and is visually more appealing to work in; the shape of the office space will allow a better desks configuration which will improve the social element. The building has been B EPC rated showing a very good property’s energy efficiency and fresh air is pumped in the office. 20% of the oxygen we breathe in is used by our brain to function and the amount of oxygen we have in our blood controls the release of serotonin which is the key hormone that stabilizes our mood, feelings of well-being, and happiness. Last but not least, the original building hasn’t been demolished but recently refurbished which means that less material has been used and less embodied carbon produced if compared to a new building.

At EVORA it is important for us to advance the ESG narrative around the globe. Because of this, last year we introduced the EVOLVE ESG Training Academy. These free webinars are accessible to professionals working in the real asset sector but also to whoever is curious to know more about sustainability. Yes, I have said FREE! The reason is simple, we want to make real assets more sustainable and to drive awareness of the changes needed to be made today, before it’s too late. The training webinars have reached 28 countries and more than 1300 individuals. Thanks to the support of everyone who has participated, we are motivated to keep the academy running for many years to come.

Nelson Mandela once said “Education is the most powerful weapon which you can use to change the world” and I wholeheartedly agree. Education is how people gain knowledge, critical thinking and skills to find solutions and create innovations to make this world a better place.

EVORA will continue to tackle climate change as a business, continue to expand our services and evolve our training programme; we will keep creating and promoting healthy and productive workspaces, and improving our business to retain all our ESG credentials.

I am really proud to be part of EVORA and I am delighted to work with like-minded people in such a respectful and transparent environment. There is an incredible bunch of people at EVORA who all really care – for one another, for the work they do, for their clients and for our planet.

[1] https://www.thedrum.com/industryinsights/2021/11/03/leading-sustainability

Infrastructure investors are leading other real assets

In October, EVORA Global and GLIO hosted a lunch with a select and insightful group of investment managers who are leading on the integration of ESG. In a number of ways, these leaders were ahead of other real assets, particularly real estate. There are obvious differences between direct investment in infrastructure and equity investment in both listed and private infrastructure companies, but there are some shared challenges.

Their main challenge is that their investor clients have lots of diverse, individual views on ESG – ranging from taking a hard line on exclusion screening through to being anti-ESG. The result is a split mentality between “sector shifting” through full or partial divestment vs. transitioning assets.

As reported in GLIO Journal issue 9 [1], strict exclusion criteria can see companies with >5% revenues from coal generation, or even nuclear power exposure excluded. In the latter camp, the successful transition of Danish Oil & Natural Gas (DONG) to renewable energy giant, Ørsted, is a resounding success story. Effective stewardship and the use of voting rights could be the key to requiring a successful transition. For listed companies this could mean addressing investor demands on transition progress or on the private side majority and full ownership is preferred by these leaders to enact change.

Can all infrastructure assets transition to Net Zero Carbon? Our guests felt that it was easier for real estate and that the measures were clearer for those assets. The plethora of carbon accounting standards doesn’t help provide clarity. However, the Transition Pathway Initiative is an industry initiative which is trying to provide useful, sector-specific guidance. The lunch conversation focused on operational GHG emissions and there was no discussion of embodied carbon, which is a present preoccupation for real estate. Other ESG categories, including green and social infrastructure, were not mentioned.

Like many others, these investment managers are being bombarded with information requests. This is time consuming for them and for the infrastructure companies, where many of them do not have in-house ESG expertise nor resource. It is even harder for debt providers who are one-step removed. There is no standardisation, and guidance developed for corporates is being forced into the requirements for real assets even when the risks are different. This means that, in some cases, data is being shared which doesn’t represent the underlying operational ESG risks (and opportunities) for infrastructure.

EU regulations, like SFDR and the Taxonomy, is expected to drive data collection and use. The UK, Singapore and Japan are all following suit. Even the US SEC could require mandatory climate risk disclosure in line with TCFD. If this is accompanied with better guidance on how to interpret and use data this would be welcomed, as guidance for real assets is presently inadequate.

The lack of ESG capacity within infrastructure companies is a barrier for the successful delivery of transition plans. Given the war for ESG talent and the shortage of supply in technical skills, this could be a systemic risk for real assets, both infrastructure and real estate. Proxy data will have to be used.

At the moment, the best quality disclosures are coming from a variety of companies who are open, transparent and prepared to engage with GLIO and GRESB. Many of these companies own and operate legacy assets which have a more material impact on the environment. This is reflected in the recent GRESB scoring, which values the availability of data and information transparency more highly than progress on material performance. GRESB is the best available option at present and there was a recognition that this doesn’t make all of the ESG risks transparent for investors. This is clearly an area for development in the short to medium term.

Given the variety of investor information requests, there is an expectation that tailored metrics may be required, which adds to the confusion and makes standardisation of metrics more difficult.

Where ESG is being integrated into investment decisions, screening is a popular approach. ESG knowledge is appearing in Investment Committees and whilst there may not yet be ESG ‘red lines’ there are some amber ones. Reducing over time a fund’s exposure to fossil-fuel intensive sectors. There was a clear consensus that some sectors, like coal, will be fully excluded within this decade, if they’re not already. Oil & Gas infrastructure is being given more leeway, but the clock is ticking. However, utilities companies also own our electricity infrastructure – essential transmission and distribution lines, which needs to grow and be renewed, so starving them of capital through screening could slow our shift to electrification of transport, buildings and industry.

Another approach to ESG integration is in valuations, with the discount factor being tweaked to represent both downsides and upsides. Alignment with SDG objectives is also happening, but mainly focused around clean energy and climate change.

Both of these approaches require forward-looking, as well as historical, data. Some managers are looking for this from third parties, with some difficulty, but others are insistent that these models will only be created in-house. For the long-term hold periods of infrastructure assets, this forward-looking perspective has to be refined in the short to medium term. Clarity over climate action and a clear policy framework will be a determining factor for both mitigation and adaptation infrastructure. Important decisions have to be made at inception to avoid making transitions impossible.

If you would like to discuss improving the sustainability of your infrastructure assets or funds, please get in touch with our dedicated infrastructure team.


[1] https://en.calameo.com/read/005185466d83293b468ac?page=44

Keeping It Transparent

Sustainability reporting grows ever more mature, complex and demanding.

Investors are demanding more transparency. Regulatory requirements are intensifying. The number and complexity of frameworks, standards, ratings and indices has increased – even with efforts to increase harmonisation. Formats and channels are diversifying, with digitalisation accelerated by the pandemic.

This is generally positive and certainly a testament to the efforts made to accelerate the prominence of sustainability in business. Sustainability reporting is becoming increasingly rigorous. At the same time, it is more accessible and mainstream than ever before, allowing it to provide valuable input to decisions made by your stakeholders. But this boom in reporting does not come without its challenges.

What are the main reporting challenges?

As the complexity of the reporting landscape intensifies, we’re seeing an increase in the quantity of information being communicated. However, whether the quality of reporting has followed suit is debatable.

An article produced earlier in the year from the Harvard Business Review highlighted a range of challenges, with its headline stating that while sustainability reporting has become widespread, environmental damage and social inequality is still growing. Reporting on its own does not ensure environmental and social improvement.

What’s the way forward?

  • Measure less, but better. There is no point expanding on further metrics if that most-crucial data – usually your carbon emissions – is unreliable. Ensure accurate meter setup, continually improving your monitoring processes and explore data automation solutions.
  • Mapping what is material. Materiality assessments enable companies to identify sustainability issues that are important to all stakeholders. Used to their full potential they can help shape company strategy, galvanise internal functions and gain senior buy-in, as well as uniting disparate teams and processes. Materiality assessments should be regularly reassessed to better integrate sustainability into business strategy and to inform meaningful sustainability communications. 
  • Report to your different audiences. It may be said that a report aimed at everyone will resonate with no one. This doesn’t mean ignoring secondary audiences, but rather making a conscious choice about which audience you’re prioritising across the different channels of the reporting ecosystem. If you’re prioritising a specific audience through your main sustainability report, think about how you could leverage and personalise your website and social media to communicate with your secondary audience(s).

EVORA designs reporting strategies for organisations, enabling them to apply frameworks, communicate meaningful sustainability outcomes and impacts to key stakeholders and use reporting as a tool to improve sustainability performance. Get in touch with the EVORA reporting team today.

COP26: A Summary

What is a COP?

A Conference of the Parties (COP) is an annual meeting of the signatories to a UN convention – an agreement to co-operate to tackle a global challenge. In the case of climate change, there are almost 200 states who have signed the UN Framework Convention on Climate Change (UNFCCC) since its creation at the Earth Summit in Rio in 1992.

At each COP meeting the details of how to co-operate, who will act and to what end is refined. In between each annual meeting there are a series of preparatory meetings of government officials and elected representatives. The progress in those intermediate talks can provide an indication of the political significance of each COP and its perceived success.

The first agreement to act was the Kyoto Protocol signed in 1997, and this was superseded by the now famous Paris Agreement in 2015.

This global political platform follows the success of the Vienna Convention and subsequent  Montreal Protocol, signed from 1987, to reduce the production and use of ozone depleting substances which created a whole in the Ozone layer. Amended in Kigali in 2016 to tackle F-gases, which also have a significant contribution to global heating.

Other related UN conventions, which have had less success to date, include the Convention on Biological Diversity. Whose COP15 took place online in October and will continue in Kunming in 2022.

Everything you need to know about COP26

We must prepare for at least 2°C of global heating. That’s the implicit outcome of COP26. The decisions which have been agreed upon by global leaders don’t meet the aspirations of the Paris Agreement to limit the average global temperature increase to well below 2°C; ideally to 1.5°C. This inevitably means that more lives will be lost and more economic damage will be done as a result of man-made climate change.

There is an obvious gap between meaningful action and all of the Net Zero announcements and the political fanfare about climate action. A report published during COP26 by Climate Action Tracker shows that we have a 66% probability of exceeding 2°C of global heating. It highlights the ‘credibility gap’ between all of this talk, and the intended action. That’s based on their review of the Nationally Determined Contributions (NDCs) – essentially each nation’s plan to reduce their Greenhouse Gas (GHG) emissions.

It assumes that these NDCs are fully implemented. We know that the best laid plans of Governments are never fully implemented, for instance the UK’s Building Regulations to limit energy consumption and GHG emissions are not enforced. Every new building emits more in operation than the design intent.

The Climate Action Tracker report is reinforced by analysis from CarbonBrief of three similar studies, which have reached a similar conclusion about the present best-case scenario being >2°C.[1]

When we talk of adapting to 2°C of global heating, it might not seem like much of a change. In the UK, it can lead to talk of a Mediterranean climate and an increasing number of vineyards. The truth is that this average temperature increase will be unevenly distributed and it will affect us all. We will experience more frequent and more extreme weather events. Those peoples closer to the equator and in the Global South will be disproportionately affected. The locations which are more climate resilient will become much clearer over the coming years, which will be reflected in their desirability and value.

We need to think about how this could affect our buildings and infrastructure. How well protected are they from flood risks, heat stress, wildfires and storms, and who bears the costs when damage is done?

The next two COPs, in 2022 and 2023, will be in locations which are closer to the equator and with a significant exposure to a changing coastline and increasing desertification – these are COP27 in Sharm El-Sheikh in Egypt and then COP28 in the United Arab Emirates.  It is likely that the immediate effects of climate change will be closer at hand and more visible than in Glasgow.

The State of Climate in Africa Report states that ‘by 2030, it is estimated that up to 118 million extremely poor people will be exposed to drought, floods and extreme heat in Africa”. In Madagascar, according to the World Food Programme, more than 1 million people are suffering right now from the first famine caused by climate change.

However, the 5-year cycle of submitting NDCs means that we could be five COPs away, in 2027, from the national action we need. That’s in the context of the need to halve emissions by 2030 and then halve them again by 2040. We’re running out of time and that is why we need to adapt.

Next year we will see the scientists of the Intergovernmental Panel on Climate Change (IPCC) publish their sixth assessment report (AR6). It is expected to forewarn us that the time left to take climate action is reducing and could be as little as four years. The AR6 Working Group I presented to COP26 and stated that ‘climate and weather extremes and their adverse impacts on people and nature will continue to increase with every additional increment of rising temperatures’. We know that there has already been lobbying by governments to weaken the text of AR6 which describes the latest climate change science.[2]

It is not surprising that this slow action and blocking of progress is causing ‘climate anxiety’ amongst young people, mentioned by Barack Obama in his COP26 speech. Greta Thunberg summed up her frustrations on Twitter, “Unless we achieve immediate, drastic, unprecedented, annual emission cuts at the source then at means we’re failing when it comes to the climate crisis.”

When a credibility gap exists between political announcements and concrete actions on climate change, particularly when it is seen as unjust and deadly, we can expect more peaceful protests and civil unrest. Obama has recommended Kim Stanley Robinson’s novel The Ministry of the Future. This describes a bleak future where a new global Ministry is created to protect the rights of future life on Earth after a catastrophic heatwave in India. It is a well-informed novel about climate change, but it does take these protests to the extremes of terrorist activity which is not an outcome any of us wish to see.

There were many global leaders at COP26, including President Biden, Bill Gates and Greta Thunberg, however there was also notable exceptions like President Xi Jinping. A mixed message from China when there is a concerted effort from the country’s leadership to act on climate change. There are signs of collaboration between the USA and China, including a joint statement and close negotiations in the final hours of COP26 between John Kerry, a hero of the Paris and Kigali negotiations, and Xie Zhenhua, China’s Climate Envoy. Xie has described climate change as an “existential crisis”.

Reasons for hope

There are reasons for hope from COP26. It is clear that there was a lot of energy at COP26, in the Blue and Green zones as well as on the fringes. More public and private sector commitments have been made than ever before. For example, India committed to a target of Net Zero emissions by 2070. Over $130tn AUM are now Net Zero aligned via the Glasgow Financial Alliance for Net Zero (GFANZ). Over half of the FTSE100 companies, with a market cap of over £1.2tn, have committed to be Net Zero Carbon by 2050.

The Chancellor, Rishi Sunak, announced that the UK will become the ‘world’s first net zero aligned financial centre’ with plans to publish a Net Zero Transition Pathway next year. This was supported by FCA announcements on a new ESG Strategy and a Disclosures & Labels Advisory Group for sustainable investments to support the development of the Sustainable Disclosure Regulation (SDR).

As regions and countries publish regulations to increase transparency of climate risks across all asset classes, the long-expected announcement by the IFRS Foundation that the International Sustainability Standards Board (ISSB) had been formed, was welcomed. This is an important step in standardising company reporting as it joins together the Value Reporting Foundation and Climate Disclosure Standards Board (CSDB), and builds on the Taskforce on Climate-related Financial Disclosures (TCFD) Recommendations.

For the UK, a Net Zero Whole Life Carbon Roadmap to 2050 was published by UKGBC.

Whilst there is obviously a concerted effort to mobilise private climate finance, there is still a shortfall in the $100bn (0.001% of global GDP) by 2020 commitment of finance for developing countries to enact necessary climate mitigation measures. At the same time, there continues to be $500bn of government subsidies for fossil fuels and the same amount to farming practices that damage our planet and our health.

Some small concessions were made at COP26 to increase this funding, such as the Breakthrough Agenda, MOBILIST, the Clean Green Initiative and the Climate Investment Funds’ Capital Markets Mechanism, specifically for clean technology including renewables and electric vehicles. The Urban Climate Action Programme will support cities in Africa, Asia and Latin America to transition to Net Zero by 2050. An Adaptation Fund and the Climate Action for a Resilient Asia (CARA) programme will support measures to improve climate resilience in Asia-Pacific cities.

For the UNFCCC process, the technology mechanism is led by the Technology Executive Committee (TEC) and the Climate Technology Centre and Network (CTCN). It can provide a focus for incubation and acceleration of relevant cleantech.

Over the last year, we have seen a number of initiatives to phase out coal power, including significant private divestment and China, Japan, Korea and the G20 commitments to end overseas funding of coal. At COP26, 190 countries and organisations agreed to end all investment in coal power generation. For major economies, this will be in the 2030s and in the 2040s for the rest of the world.[3]

Momentum is also building for the phase of the internal combustion engine, with a COP26 declaration to work towards 100% zero emission vehicles sales globally by 2040. This includes commitments from Ford, GM, Mercedes-Benz and Volvo, but not Toyota, VW and Nissan-Renault.

The USA, EU and UK also endorsed five principles for infrastructure development:[4]

  1. Infrastructure should be climate resilient and developed through a climate lens.
  2. Strong and inclusive partnerships between host countries, developed country support, and the private sector are critical to developing sustainable infrastructure
  3. Infrastructure should be financed, constructed, developed, operated, and maintained in accordance with high standards.
  4. A new paradigm of climate finance—spanning both public and private sources—is required to mobilize the trillions needed to meet net-zero by 2050 and keep 1.5 degrees within reach.
  5. Climate-smart infrastructure development should play an important role in boosting economic recovery and sustainable job creation.

These principles may be seen in practice in the Build Back Better World, Global Gateway and Clean Green initiatives.

Nature-based Solutions to climate change were also a big theme at COP26. This follows a clearer scientific understanding of the need to tackle both climate change and biodiversity loss at the same time, as well as growing interest in the Taskforce for Nature-related Financial Disclosure (TNFD).

The Glasgow Leaders’ Declaration on Forests and Land Use saw over 100 leaders, accounting for 86% of the world’s forests, commit to halting and reversing forest loss and land degradation by 2030. This was reinforced by an increase in the number of NDCs which include measures to reduce nature loss.[5] However, more is required for agriculture, which occupies half of the habitable land on Earth, and is still missing from many NDCs, with significant uncertainty about the related national emissions.[6]

Glasgow Climate Pact

Despite Alok Sharma’s best efforts, this compromised Pact will be seen as a political failure by many parties who do not have a vested interest in the fossil fuel-driven status quo. It is the first time a COP decision has recognised that there is an end for fossil fuels. Stopping the use of coal is considered a necessity to achieve 1.5°C – 8,500 coal plants would have to be closed by 2030 according to the IEA – and this part of the Pact was weakened.

The late intervention by India to change the wording of the agreement to ‘phasing down of unabated coal power and inefficient fossil fuel subsidies’ rather than ‘phasing out’ would not have been possible without the support of China and, in turn, the USA. It is a clear demonstration of how these politics work at the end of a very long extra day, and it provides a short extension in the support for fossil fuel power.

There has been progress since Paris. We have seen agreement of the ‘Paris Rulebook’, which is an important step in the implementation of the Paris Agreement, and this will ensure we see a ratcheting up of action.

In terms of the hope for achieving a temperature increase of well below 2°C, with a continued aspiration for 1.5°C, the Pact (article 29) does introduce a new annual ratchet mechanism – to revisit the NDCs in 2022 rather than in five years. There is a hope that they can be improved and it raises the stakes for COP27 in Egypt next year. The AR6 Working Group II will present to COP27 on adaptation.

The parties also recognise the concept of developed countries making payments to developing countries for ‘loss and damages’ for historic emissions which are causing damage now. This will be an ongoing dialogue and a reminder of the meetings which take place between each COP. There is a UN Subsidiary Body for Implementation (SBI) and it is focused on the implementation of the Paris Agreement and this Glasgow Climate Pact. SBI meetings 56-60 will take place between 2022-2024. Technical assistance will be provided via the Santiago Network.

If you want to see how fast we can progress politically keep an eye on the SBI and the other intervening UNFCCC meeting over the coming year. For future COPs we can expect the increasingly diverse involvement of women leaders, young people, indigenous people and local communities.

The collective efforts to tackle climate change, and the related challenge of biological diversity, will only ratchet-up over the next five years as we see increasing losses and damages from insufficient action. Decisions about what, how and when to invest and finance assets will have to consider this complex, dynamic landscape with a need to balance both climate adaptation as well as mitigation.


[1] https://www.carbonbrief.org/analysis-do-cop26-promises-keep-global-warming-below-2c

[2] https://www.bbc.co.uk/news/science-environment-58982445

[3] https://www.gov.uk/government/news/end-of-coal-in-sight-as-uk-secures-ambitious-commitments-at-cop26-summit

[4] https://www.gov.uk/government/news/us-president-biden-european-commission-president-von-der-leyen-and-pm-boris-johnson-announce-commitment-to-addressing-climate-crisis-through-infras

[5] https://wwf.panda.org/wwf_news/?4248391/NDCsreport

[6] https://ccafs.cgiar.org/resources/tools/agriculture-in-the-ndcs-data-maps-2021

Act on Climate Change

COP26 is well underway and the world is keenly waiting to see what is discussed and then acted upon.  Whilst the seriousness of the event can not be understated we thought, as we approach the end of the first week, to take a slightly different and optimistic look at the issues we face by rereleasing a blog article we wrote a couple of years ago. Hopefully, this will serve to emphasise the importance of the issues but also remind us that some of the challenges we face can be a simple refocus on modern life and most of all keep the faith we can succeed!

For those of us old enough to remember the amazing and thought provoking Baz Luhrmann song of the late 1990’s ‘ Everyone’s free to wear Sunscreen’ you will be amazed to know that it is twenty years since this early viral internet phenonium grabbed our attention. You will also no doubt recall those amazing thought provoking and immortal words of the writer Mary Schmich, the original author of the words that were wrongly attributed to Kurt Vonnegut. For those of you too young to remember the song I recommend you hunt it down and listen. It was whilst listening to a recent BBC World Service programme of the history of the song it occurred to me, as somebody who has spent the past 30 plus years in the sustainability world, what advice would I most like to pass on to the younger generation about the climate change challenge and living sustainably. So in honour of Mary, Baz and the amazing voice of Lee Perry here goes my reinterpretation of their lessons in life…


Ladies and gentlemen, readers of EVORA Insights.

If I could offer you only one tip for the future,

Acting on climate change would be it.

The long term impacts of climate change have been shown by scientists whereas the rest of my advice has no basis more reliable than my own meandering experience.

I will offer my advice on how to address this challenge now.

Take seriously the power and passion of youth.

Dismiss this at your peril.

You may not understand the power and passion youth until you have children and grandchildren of your own.

But trust me, in 20 years from now you’ll back at this time in a way you can’t grasp now and wonder why you didn’t act when there was still possibilities to change our trajectory and how many opportunities acting now could open up before you.

The future is not as hopeless or as difficult as you imagine.

Don’t worry about the science, but know that worrying is not effective or going to change the outcome.

The real challenges in modern life are our relentless consumptive behaviour in pursuit of false happiness but know that it’s not about having what you want but wanting what you have, the simple things in life such as spending time with family and friends is free.

Do something every day that challenges the perceived wisdom.

Publish your commitment to act on climate change.

Don’t be reckless with our resources and don’t be reckless with other counties resources.

Don’t accept the suggestion the World has endless capacity.

Recycle.

Don’t waste do more with less. The World has evolved over millions of years and everything in the universe is recycled. Time is endless and our future uncertain but our place in history is not guaranteed.

Be respectful.

Remember your successes and learn from any mistakes but don’t let them restrict you, the journey in tackling climate change is challenging and we are all on it together.

Display any awards for best practice it will keep you motivated, don’t throw away your utility bills, it’s valuable data that can help you improve management of your assets

Innovate.

Don’t feel guilty you don’t know how yet, embrace the possibilities and engage with technology. Some of the best businesses I’ve known didn’t know how to innovate at the start of their sustainability journey, some of them have been able to secure Government grant funding to help them.

Embrace the power of the Sun.

Preserve the rainforest, biodiversity and ecosystem services you’ll miss then when they are gone.

Maybe you’ll strive to solve the challenge on your own.

Maybe you’ll partner with others to work together.

Maybe you’ll offset your carbon.

Maybe you’ll just go veggie and reduce meat consumption.

Whatever you do don’t congratulate yourself too much or be defeatist the future of humankind is in our hands today, so is the rest of life on Earth.

Get plenty of exercise, walk cycle run, don’t over eat or poison your body with unhealthy substances it’s the only one you’ll own.

Pause….. take time to look around you and marvel at the wonders of life.

Read and keep abreast of climate science it’s moving fast.

BEWARE the fashion industry it contributes more to global warming than aviation and shipping combined.

Celebrate and respect your culture and heritage we can learn lots about good lives from our ancestors that can guide our future.

Work together with your peer group. They understand your challenges and together you can find mutual respect and encouragement in the future.

Understand that friends come and go, but for the precious few you should hold on.

Spend time with family and friends, enjoy preparing and eating local seasonal food together, avoid cheap fast foods.

Work to bridge the gaps in geography, although the challenges can differ slightly between countries the essential issues are the same, think global act local.

Only travel sustainably.

Accept certain inalienable truths carbon taxes will come.

Politicians will eventually legislate.

You too will get older, and when you do you’ll fantasize that taxes were reasonable politicians were noble and will recall it was our children that made us aware of the threats of climate change to life on earth.

Respect mother Earth.

Maybe you need financial support, maybe you can reinvest some profits but be under no illusion time is running out.

Don’t rush ahead without considering proper science based targets or by the time we hit 2050, you’ll realise you’ve been chasing the wrong goals.

Be careful with those who sell existing stuff carefully repackaged with a green claim. Get proof of their credentials with an appropriate assurance or verification certificate. Engage a good independent consultant to help you.

But trust me on the seriousness of climate change.


EVORA will be live streaming our panel discussion at COP26 via Zoom, register here and find out more about COP26.