A woman looks at a tablet in a field of crops on a farm

On the radar: Key accounting themes from COP26

What CPAs should know about the conference’s discussions that covered net-zero economies, a carbon market deal and reforestation strategies

A woman looks at a tablet in a field of crops on a farmCOP26 highlighted the many ways professional accountants can play an important role in combatting climate change (Getty Images/KDP)

To truly realize how intertwined accounting, finance and climate action are, look no further than the 26th U.N. Climate Change Conference (COP26), which wrapped up in Glasgow, Scotland last month.

“We saw recognition that climate change issues are highly interconnected, and that climate action must include strategies to deal with the wide-ranging societal, economic and environmental implications,” says Davinder Valeri, director of strategy, risk and performance at CPA Canada. 

Below are the top climate finance outcomes that CPAs should take note of, as they will all have an impact on business going forward.   


The International Sustainability Standards Board (ISSB) was formally created by the IFRS Foundation to develop much-needed global standards for reporting on environmental, social and governance (ESG) matters, with an initial focus on climate change. CPA Canada was among both private and public institutions to publicly back Canada’s bid to host the global office.

Those backing the Canadian bid were pleased when it was announced that offices in Montreal and Frankfurt, Germany (the seat of the board and the office of the chair) will be responsible for key functions supporting the new board. 

“This is an exciting moment for Canada to be selected as a critical ISSB office,” says CPA Rosemary McGuire, director of external reporting and capital markets at CPA Canada. “Robust disclosure plays an important role in ensuring the efficient allocation of capital and enabling financial markets to price risk correctly. International sustainability reporting standards will provide companies, investors and capital providers greater confidence that their activities and investments are supporting the transition to a lower carbon economy.”   

Ryan Riordan, professor of finance and director of research at Queen’s University’s Institute for Sustainable Finance, who attended COP26, is hopeful that both the creation of the ISSB and Canada hosting a Montreal office will enhance the quality of sustainability reporting. 

“It will make it much more likely that these standards will take into account the important perspectives of our high emitters and our transitioning sectors,” he says. 


An economy-wide transition is needed to achieve the Paris Agreement’s objective to limit global temperature increases to 1.5°C from pre-industrial levels. To help achieve this and accelerate the transition to a net-zero emissions economy, the Glasgow Financial Alliance for Net Zero (GFANZ), spearheaded by Mark Carney, was created to bring the financial sector together. 

“A total of 450 firms have collectively committed $130 trillion of private capital to the transition to a net-zero emissions economy,” says Valeri. “There is still work to ensure proper transition pathways are in place and to avoid greenwashing, but this is a significant step in the right direction.”


The U.K. will become the first net zero-aligned financial centre, meaning the government will require all financial firms to publish their plans to decarbonize and attain net-zero targets. The U.K. government will also create strong oversight to ensure financial flows accurately shift to support net zero.

“This will ask asset managers, regulated asset owners and listed companies to publish transition plans or provide an explanation if they have not done so,” says Valeri. 

The government will set up a taskforce to develop a “gold standard” for transition plans and metrics to help combat greenwashing. 

Experts see this as setting an example, with hopes that other nations will follow. “In Canada, that’s where this transition taxonomy (tools to help investors and companies make evidenced-based decisions on sustainable economic activities) is going to be important,” says Riordan, adding that the U.K.’s position is somewhat advanced since they decarbonized much of their economy in the 1990s.   


A major achievement to come out of COP26 is the deal reached on Article 6. Although this carbon markets deal originated with the Paris Climate Agreement, the pact was not finalized until Glasgow, when nearly 200 countries reached this agreement, which sets the rules around the international trade of emissions reduction

The significance of this article is the governing of how countries collaborate to create cheaper GHG reductions. It sets out how countries must approve the transfer of carbon from one country to another and adjust GHG inventory to show the emission reduction is credited to another country. 

Complementing Article 6 is the commitment to phase out coal power, with 46 countries acknowledging coal-fired power as the greatest cause of global temperature rise. These nations recognize the need to quickly implement clean power and advance this transition, evidenced by the signing of the Global Coal to Clean Power transition statement. 

Though not perfect, “the commitment is said to ‘keep 1.5°C alive’,” says Valeri, adding the pledge does not include Russia, China or India, some of the largest coal consumers. “However, scientists believe it could help the world avoid 0.3°C of warming by 2040. And when every increment counts, this could deliver real impact.” 

Riordan sees this milestone as one of the most significant outcomes of COP26. “Coal, next to methane, is the most important part of tackling emissions,” he says. “It is extremely low energy density to the amount of CO2 that it emits, [so] finding ways to replace coal with other types of fuels is an extremely important accomplishment.”   

Furthering commitments to cut down GHG emissions, more than 100 countries have signed onto the U.S. and E.U. global partnership to cut emissions of GHG methane by 2030. The Global Methane Pledge will limit methane emissions by 30 per cent as compared to levels in 2020.


More than 100 world leaders pledged $19.2 billion to end deforestation by 2030. “Turning commitment to action will be critical, with business and finance both having a role to play in the response,” says Valeri.

Several countries also led a $1.7 billion funding pledge to go directly to Indigenous Peoples and communities as part of a wider commitment to deforestation, in recognition of their role in protecting forests and land. 

The pledge to stop deforestation by 2030 is strengthened by the commitment to increase reforestation post-2030. “There’s a lot of opportunity to do creative financing around reforestation,” says Riordan, explaining the positive financial implications this can have. “We can put together innovative financing vehicles to support the stop of deforestation and [initiate] reforestation,” he says, such as by using forests as an asset in an asset-backed bond or loan. 


Climate finance initiatives and implications were emphasized at this year’s conference, but the human rights implications of this climate crisis cannot be ignored, says Valeri.

“We have seen first-hand how social inequities are exacerbated by climate change,” she says. “There is a need to ensure that no one is left behind in the transition to net-zero economies—particularly those working in sectors, cities and regions reliant on carbon-intensive industries and production.” 

To this point, the “Just Transition Declaration” was signed by Canada and more than 30 other countries, committing to strategies that ensure “workers, businesses and communities are supported as countries transition to greener economies,” she says. 


CPA Canada has been at the forefront of understanding climate change as a business issue. Watch this exclusive interview with Mark Carney as he talks about the future of business and saving the planet. Discover these climate change resources for accountants and learn why the position of chief sustainability officer is growing in popularity.