Problem
The global warming of the planet has sparked a UN call for “code red for humanity” in the wake of the destruction caused by traditional energy sectors. In the wake of growing concerns, The Paris accord (2015) set the precedent of creating an international legally binding treaty to combat climate change. The Paris scenario limits global warming well below 2°C (1.5°C preferably).
The Paris Agreement
Climate change is a global emergency that goes beyond national borders. It is an issue that requires international cooperation and coordinated solutions at all levels.
To tackle climate change and its negative impacts, world leaders at the UN Climate Change Conference (COP21) in Paris reached a breakthrough on 12 December 2015: the historic Paris Agreement.
The Agreement sets long-term goals to guide all nations:
- substantially reduce global greenhouse gas emissions to limit the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees;
- review countries’ commitments every five years;
- provide financing to developing countries to mitigate climate change, strengthen resilience and enhance abilities to adapt to climate impacts.
The Agreement is a legally binding international treaty. It entered into force on 4 November 2016. Today, 193 Parties (192 countries plus the European Union) have joined the Paris Agreement.
The Agreement includes commitments from all countries to reduce their emissions and work together to adapt to the impacts of climate change, and calls on countries to strengthen their commitments over time. The Agreement provides a pathway for developed nations to assist developing nations in their climate mitigation and adaptation efforts while creating a framework for the transparent monitoring and reporting of countries’ climate goals.
The Paris Agreement provides a durable framework guiding the global effort for decades to come. It marks the beginning of a shift towards a net-zero emissions world. Implementation of the Agreement is also essential for the achievement of the Sustainable Development Goals
How Does it Work
1
The Paris Agreement works on a five- year cycle of increasingly ambitious climate action carried out by countries. Every five years, each country is expected to submit an updated national climate action
plan - known as Nationally Determined Contribution, or NDC.
2
In their NDCs, countries communicate actions they will take to reduce their greenhouse gas emissions in order to reach the goals of the Paris Agreement. Countries also communicate in the NDCs actions they will take to build resilience to adapt to the impacts of rising temperatures.
3
To better frame the efforts towards the long-term goal, the Paris Agreement invites countries to formulate and submit long-term strategies. Unlike NDCs, they are not mandatory.
4
The operational details for the practical implementation of the Paris Agreement were agreed on at the UN Climate Change Conference (COP24) in Katowice, Poland, in December 2018, in what is colloquially called the Paris Rulebook, and finalized at COP26 in Glasgow, Scotland, in November 2021.*1
Market Size
Assets in ESG
investments >US$7.8t worldwide with more
than US$1.3 trillion of
net inflows since
the start of 2019
