COP27: 3 Takeaways To Look For
As COP27 begins in Sharm el-Sheikh, Egypt, the overarching aim over the next 12 days continues to be reaching mutual consensus on limiting global warming to “well below” 2 degrees Celsius.
While this increasingly seems unlikely, perhaps Scientific American put it most astutely almost a year ago, “The world is slowly moving in the right direction - that’s the good news. It just needs to move faster”. Gone is the time for vacillation.
Yes, there are evidently huge political bottlenecks to unplug, and binding international collaboration still seems a lofty goal, but faster is the key here. That doesn’t necessarily mean waiting on regulation to come into force to act, rather looking for the signals at COP27 that could help energise the transition to business sustainability, whether we leave the conference with effective agreements in place or not.
Here are three takeaways we would like to see from COP27:
GFANZ Implementation
COP26 brought us the Glasgow Financial Alliance for Net Zero (GFANZ), where over $130 trillion was pledged by over 500 companies to enable net-zero emissions by 2050. As part of the larger ongoing Race to Zero, the UN-led coalition to build economic resilience through partnerships targeting decarbonisation opportunities, the GFANZ focus has been on mobilising private capital to emerging markets (EMs) and developing countries (DCs) via public-private collaborations.
While this seems a credible amount, the IEA estimates that, by the end of this decade, the energy transition investment in EM&DCs needs to be seven times the current amount, which means over $1 trillion annually, something to watch for. The potential for financing to reach SMEs in emerging markets is absolutely critical if we are to mainstream sustainable business practices and prevent unsustainable business models from predominating at the early growth stage of new company life cycles.
Mayor Power
The public-private initiative, C40 Cities, is working to scale up climate action at the city level, raise awareness, and implement science-backed solutions. Net-zero by ‘’mid-century’’, or by the 2040s, is the goal. A growing list of participant cities is committing to new pathways and partnerships to private investment, something that has been “limited by national policies, taxation powers, and institutional capacity”.
The historic human migration to ever-expanding urban life has arguably been one of the major contributing factors to climate change, and indeed, cities have been found to generate two-thirds of our total emissions. However, the potential for the private capital they generate to drive emissions reductions technology advances must also be a key driver to mitigate the problem.
The opportunities for SMEs, as well as corporates, to both drive those solutions while effectively branding their ESG credentials at the community level, are massive. We would like to see a significant expansion of this initiative to EM&DCs to give local business leaders insight into how they can drive change in the built environment, within community-led initiative, and as a greater partnership between local business and city governments.
Solid Progress on “Loss and Damage”
The issue that has stalled real progress more than any over recent years, the developing countries’ request for a “Loss and Damage” fund to help adapt to increasing adverse climate-related events has been stonewalled by richer nations.
As with any insurance claim, the problem becomes contentious when attempting to define exactly what the causative factors were in the damage. Also, would any such agreement only cover physical assets such as urban infrastructure and property, or should it also extend to areas of valuable biodiversity or cultural significance?
While the issue will likely continue to derail much potential progress, the fact is that losses from climate-related disasters will skyrocket in coming years. And without substantial forward momentum, this issue alone will be the key obstacle to providing the financial support necessary in EM&DCs to help with adaptation. This would, in turn, provide more reasonable conditions for critical public-private partnerships to be fomented, and for companies to prioritise ESG in their operations.
---- In short, COP27 needs to substantially flesh out the discussion on climate change responsibility and the allocation of potential financial resources to, in particular, developing economies. Global impact is possible from the local level, but this needs to be driven by viable incentive and leadership internationally.
There are credible mechanisms for financing in motion, and a growing localised willingness to take action. However, the conditions needed for change need to improve, and that will take an unfettered, binding commitment by all parties to develop the support structures necessary to do so.
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