As we kick off two weeks of global climate policy wrangling at COP28 in Dubai from 30 November to 12 December, ESG Clarity spoke to those involved in sustainable finance across a wide range of sectors from law to fund management and activism, to find out what they most want to see come out of this vital meeting.
Collaboration on oceans
Sonali Siriwardena, global head of ESG at international law firm Simmons & Simmons:
“As a law firm working with businesses to unlock sustainable investment opportunities, our COP28 wish is for greater commitment and collaboration on oceans. As the world’s largest carbon sink, the oceans hold the power to transform the climate challenge.
“Protecting and restoring blue ecosystems can capture and store carbon, help coastal communities adapt to climate impacts and support local economies. Greater collaboration between countries, corporates and development finance initiatives on blended finance solutions linked to the oceans could unlock financial flows to support a just transition. Let’s use COP28 to move beyond mere conversations and aspirations to meaningful commitments and actions.”
Renewable energy & biodiversity
David Harrison, manager of the Rathbone Greenbank Global Sustainability fund:
“Ideally we would like to see some strong language and a clear commitment to phase out fossil fuels – rather than simply ‘phasing down’. Momentum has been building to commit to a phase out, but such action would clearly be a significant step forward towards achieving a 1.5 degree energy transition
“Also a significant ramp up in renewable energy capacity. The IEA has called for a tripling in renewable energy capacity by 2030 and this would be extremely welcome. Alongside this would be better financing for renewable energy technology (particularly in poorer countries) and further incentives for investment.
“Finally more action to protect biodiversity, with additional funding. Equally a removal of subsidies for activities that harm biodiversity.
“In general we want a clear stance that there is no rowing back on climate commitments and short-term compromises that will harm our ability to achieve a 1.5 degree energy transition.”
Clarity on commitments
Andy Howard, global head of sustainable investment at Schroders:
“In the run up to COP28 a few areas of likely focus are emerging. These include greater clarity on ways dirtier fossil fuels will be phased out, the role of carbon markets, the relationship between nature and climate goals and the need for financial support to emerging economies to facilitate their transition.
“The Global Stocktake released in September highlighted that the sum of global targets and policies falls far short of the commitments made in Paris in 2015, and action is needed across all of those areas, rather than any single silver bullet. Rather than any single initiative, clarity on global leaders’ commitment to action will be key. We have seen stalling action climate policies in recent years in some countries; COP28 may provide a moment to clarify and confirm commitment to action and to providing the support societies will need to ensure a just transition.”
Phasing out of fossil fuels
Lucie Pinson, director and founder of Reclaim Finance:
“We really need to see a clear commitment from developed countries – such as France – to phase out fossil fuels, and while initiatives on coal are very welcome, a COP taking place in Dubai cannot ignore oil and gas.
“At the moment, too much new oil and gas is in the pipeline – the UN’s most recent report says that by 2030, emissions from planned oil and gas will mean temperature rise exceeds 1.5 degrees. Banks and investors must immediately stop supporting fossil fuel expansion. Yet, despite net zero commitments, most of them are still supporting companies developing new projects.
“Take Credit Agricole for example, which is still supporting gigantic carbon bomb fossil fuel projects, such as Papua LNG and Mozambique LNG.
“These oil and gas expansion plans go way beyond the IEA’s scenario for net-zero emissions and yet banks continue to provide the finance. This failure to respect the red lines set by science could lead to stranded assets
“Getting out of fossil fuels also means investing in alternatives, including in those countries which currently depend on coal. Financial institutions need to commit to targets for sustainable power, with far more finance. And developed countries need to support coal dependent countries in the transition. This includes investments in both coal phaseouts and renewable capacity to ensure that coal is not replaced by false fossil solutions, such as gas.”
Loss and damage fund
Hortense Bioy, global director of sustainability research at Morningstar:
“In my view, there are two topics that will make or break COP28: the loss & damage fund, and an agreement on fossil fuels.
“The establishment of a loss and damage fund was, for many, the highlight of COP27. But that was just the beginning of more and tense negotiations. Governments recently drew up the blueprint for a new loss and damage fund, which will be administered at first by the World Bank and financed by the US, the EU, the UK and large developing countries. Still, much remains undecided, including how much money will be allocated to the fund, how it will be dispersed, and which countries will be prioritised.
“Moreover, the US and EU would also like to see wealthy and high-polluting nations like Saudi Arabia and China to contribute too. The blueprint must be formally adopted at COP28. The stakes are high. Failure to reach a final agreement could derail COP28.
“Another highly controversial topic relates to the future of fossil fuels. Last year at COP27, it was agreed to just phase down unabated coal power and phase-out inefficient fossil fuel subsidies.
“This year we need a better compromise, but it won’t be easy, given how much vested interest there will be at COP28. A phase-out of fossil fuels, even unabated fossil fuels, is strongly opposed by many oil and gas producers, which have never been so well represented at a COP before.”
Funding of oil and gas
Catherine Howarth OBE, chief executive at ShareAction:
“International scientific consensus has ruled out the expansion of oil and gas production and cast doubt on whether the net zero goal of a 1.5 degree temperature rise will be met.
“This COP, world leaders must tackle the thorny issue of the role banks, pension funds and asset managers are playing in increasing levels of fossil fuel exploitation.
“Regulation will prove crucial in directing the financial sector away from investments that are putting safe planetary boundaries at risk and help to prevent the worst impacts of the looming climate crisis.”
Decarbonising the fossil fuel sector
Alix Chosson, lead ESG analyst for environmental investments & research at Candriam:
“This year’s COP conference is extremely important, as the first global assessment of climate action is due to be drawn up and approved. Unfortunately, we already know the conclusions, and they are not good ones.
“Unfortunately, there are divergent views on how to respond to the lack of climate action. There are several stumbling blocks in the way of climate actions: the thorny issue of the role of fossil fuels, common but differentiated responsibilities, and the support that developed economies should be providing to developing countries. At COP28, the issue of loss and damage will have to be discussed, with the need to clarify the operation of the fund dedicated to loss and damage. This is much more a political issue than a methodological one.
“One potential success, which seems realistic even if not a foregone conclusion, could be a joint, quantified commitment to more rapid deployment of renewable energies. The facts are clear, as the IEA has pointed out: we need to triple the rate of deployment by 2030. While the deployment of solar power is almost in line with a net zero scenario, the deployment of wind power has had more difficulty in the context of inflation and rising interest rates.
“Any increased visibility that governments might provide on the acceleration of their commitments to renewable energy would be positive for the industry and for the transition. It is also crucial that these deployments take place more quickly in developing countries, which again raises the question of financing and responsibilities.
“Finally, it is clear that the fossil fuel sector will take centre stage in Dubai. We are hearing rumours that the focus could be more on decarbonising the sector (i.e. operational emissions, scope 1&2) rather than on the subject of emissions induced by the sector indirectly, in particular during the combustion of fossil fuels, i.e. the famous scope 3. It is absolutely essential that priority be given to credible alternatives to fossil fuels (renewable energies, electric mobility), rather than to a highly technological vision that focuses on capture and compensation solutions.
“The IPCC keeps repeating that “drastic changes” are needed if we are to achieve our climate objectives. It is high time for COP28 to serve as a beacon for this transition, and to show us a future that is no longer fossil-based. Otherwise, unfortunately, the window of opportunity for action on the +1.5°C target will close even before 2030.”
