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Investment Insights Blog: Climate Change and Wespath: Why COP26 Matters and What We’re Doing

November 01, 2021

Ryan McQueeney portrait photo

   By Ryan McQueeney
   Content Manager, Investments


Over the next two weeks, political leaders from around the world are meeting in Glasgow, Scotland, for this year's United Nations (UN) Climate Change Conference. The event is expected to result in countries announcing greater climate ambitions than ever before, meaning this could be an important historical moment in the global response to climate change.

What is COP26?

You are likely to hear this climate change conference referred to as "COP26." Technically speaking, the event is the 26th annual Conference of the Parties (COP) to the UN Framework Convention on Climate Change, which is where it gets its colloquial name.

This year's meeting is particularly important because it is the fifth COP since the Paris Climate Agreement. As part of the Paris Agreement, signatories are expected to update their Nationally Determined Contributions (NDCs), each country's individual commitment to reduce emissions and invest in the transition to net-zero, every five years. This gradual updating of NDCs is called the "ratchet mechanism."

Beyond that, the U.K., COP26's host nation, and other event organizers will be facilitating negotiations centered on four key goals: securing a global transition to net-zero by 2050, protecting communities and natural habits from the effects of climate change, mobilizing financial systems to fund these efforts, and working collaboratively to achieve global climate ambitions. While there will be plenty of photo opportunities and impassioned statements from world leaders, COP is very much a working conference, and many policymakers and climate experts will be working hard behind the scenes to determine important next steps.

Why does Wespath care about COP26?

We believe meetings like COP26 are important because they help shape government policy that addresses climate change, which has huge financial implications and can ultimately affect the investment assets of our pension participants and institutional investors.

There is little doubt that climate change will—and has already begun to—impact the economy. There is a clear physical risk that climate change will alter property and land, causing uncertainties in our food system and reshaping countless commercial industries. There is also a transition risk—this describes the challenges arising from changes to rules and regulations, technology, and consumer behavior as the world transitions to a net-zero economy.

Investors with globally diversified portfolios are exposed to these risks through their investment holdings. There are also opportunities here—as we collectively respond to physical and transition risks, some investments will become more compelling as companies, industries and countries come up with new strategies, technologies and other solutions to adapt.

So, in short, we care about COP26 because we care about the global response to climate change, and we care about the global response to climate change because it presents risks and opportunities that affect the assets we steward on behalf of our participants and clients. Even shorter: we care about climate change because it is our fiduciary responsibility to!

Will Wespath be participating in COP26?

While we don't have a physical presence at COP26, we will be keeping a close eye on the proceedings and announcements, updated NDCs, and other news from the event. We will also look for ways to support and amplify the messaging of our partners who are in attendance, including those from the UN-backed Net-Zero Asset Owner Alliance.

In addition, we will continue to share climate-related content and resources to coincide with the conference.

COP26 also happens to share a date with the three-year anniversary of the Wespath | BlackRock Transition Ready Strategy, which we will highlight next week. Check back here, and on our social media pages, for the latest updates. In the meantime, if you would like to read up on climate-related finance and COP26, we recommend these guides: