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COP 27 preview: regaining momentum

Matt Christensen, November 2022

COP 27 preview: regaining momentum November 2022 COP 27 (The UN Climate Change Conference) takes place in Egypt in November, providing a check-in on global progress towards net zero in a year dominated by economic and geopolitical pressures. There are reasons to be optimistic. In November 2022, the world’s attention will be drawn to Egypt and COP 27, the global climate Key takeaways Matt Christensen summit. Whereas last year’s conference slogan – The focus of this year’s COP 27 is on Global Head of was Uniting the world to tackle climate change, “delivery” after an eventful year that Sustainability and this year the focus is on Delivering for people Impact Investing has also revealed the flaws in our and the planet. This shift underscores the sense existing energy mix of urgency around implementation, especially – The financial sector will be in the after an eventful 12 months. At last year’s summit, spotlight, including an update on the I ended my panel by asking what it would take Climate Finance Delivery plan that for climate to be taken seriously by the financial aims to mobilise climate finance for services sector – 2022 demonstrated how much developing countries we still need to evolve the wiring of the modern – In a year of geopolitical upheavals, economy. severe weather events have COP 27 will seek to achieve the right balance emphasised the need to stay focused of optimism and realism required to renew the on climate and the biodiversity topics solidarity between nations, and the agenda aims with which it is closely connected to achieve this through a more explicit reach into biodiversity and social factors. It is only through a coherent and collaborative interplay of climate, cleaner energy transition and a phasing-out planet and people that we can reclaim any of coal. momentum lost in 2022. On the other hand, the opportunity relates Conference priorities to the recognition of the flaws in our existing What do we expect to be the key talking points energy mix, major high-profile initiatives like of the conference? Let’s start with the elephant the US Inflation Reduction Act, and the fact in the room – how economic and geopolitical that twice as many companies joined the events are impacting the 1.5 degree-trajectory. Science Based Targets initiative this year The risk is that the political mission of ensuring compared with 2021. A key area of optimism energy security, access and affordability in the is the significant progress being made on very near term decelerates a transition to a renewables in China, Europe, India and the Value. Shared.

COP27 preview: regaining momentum US – renewable capacity is expected to pass the 300GW a leaf out of Denmark’s book, whose direct and indirect market for the first time this year. The Science and commitments have risen significantly, reminding us of Solutions Days of COP 27 will capture the spectrum of the key role of public-private initiatives, especially for climate risk and opportunities. adaptation. But as well as reaching a USD 100 billion The first priority of last year’s COP 26 summit was to threshold, perhaps the conference will consider the raise pledges to keep the 1.5-degree-target alive. The recent IMF climate note and how we can ensure that pledges were significant – phasing out coal, reducing funds are being directed effectively at lower-income and methane, stopping deforestation, and accelerating higher-risk sovereigns. electric vehicle adoption – but these only lowered Role of biodiversity projected global warming from 2.2 to 1.8°C. Interest in Last year, we expected biodiversity to start receiving additional pledges or nationally determined contribution equal billing to the climate topic in 2022. While we are (NDC) upgrades is likely to be replaced by execution of not there yet, having three separate thematic days for current NDCs, evidence of climate mitigation action, and Adaptation and Agriculture, Water, and Biodiversity is adaptation strategies. significant. The rising frequency and severity of weather Progress by the financial sector events continues, contrasting the worst European COP 27 starts with Finance Day, and the Glasgow drought in centuries along with the floods in Pakistan. Financial Alliance for Net Zero (GFANZ) initiative – which From clean water needed to sustain life through to was proudly launched ahead of last year’s event – will significant disruption risks from drought or flood events, be in the limelight. The financial sector has faced several the role biodiversity plays in protecting welfare and challenges including achieving a common approach climate change is becoming clear. December will see to financed emissions and making progress on coal the UN COP 15 Biodiversity Conference in Montreal, financing and regional policy and priorities. GFANZ where governments will convene to agree on a Global published a consultation on net-zero transition planning Biodiversity Framework for the coming decade – COP 27 guidelines by financial institutions in June, with a final could lay the ground perfectly. report expected ahead of the conference. It remains a voluntary initiative: perhaps we need regulation and In summary, despite the near-term headwinds presented formal public policies to overcome limitations as well as by 2022, the need and desire to develop climate a tighter alignment with public financing. solutions remains. As with emissions, the agenda was Staying on the finance theme, just transition and the unlikely to move linearly, but if we seize the progress on Climate Finance Delivery plan will come back into focus. renewables, finance has an integral role in being part of The latter aims to mobilise USD 100 billion per year in the solution to scale up the ingenuity and collectivity of climate finance to support developing countries – this a global economy. Both the public and private sectors year’s report made clear that we were still short in have a critical role to play in innovating around climate 2020 and any mobilisation was concentrated in middle- finance to develop solutions for our economies and income and lower-risk profile countries. We should take societies. 2

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