Looking ahead to COP27 and why it's important for businesses

9 minute read
03 November 2022


With COP26 in Glasgow a year ago, attention is now turning to COP27, the 27th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm el-Sheikh, Egypt, which will run from 6 to 18 November 2022.

Despite taking place against an unsettled backdrop, COP27 offers the possibility to foster greater co-operation in achieving the net zero carbon emissions ambition and limiting global warming to well below 2 degrees Celsius. Here, we look back at the outcomes from last year's conference and highlight the issues being discussed at COP27 that will be relevant to businesses and individuals alike.

What did COP26 achieve?

1. Nationally Determined Contributions

COP26 was billed as a landmark conference. It marked the deadline for nations to set updated Nationally Determined Contributions (NDCs). These are commitments to cutting greenhouse gas emissions in order to reach the target set out in the Paris Agreement of holding global temperature rises to "well below" 2 degrees Celsius, which scientists say is required to prevent a "climate catastrophe".

2. The Glasgow Climate Pact

At COP26, the nations agreed a Glasgow Climate Pact, a "series of decisions and resolutions that build on the Paris accord". This agreement sets out what needs to be done to tackle climate change, while allowing nations to formulate their own action plans to achieve the changes needed.

3. The Paris Rulebook

The COP26 conference delegates also agreed on a "Paris Rulebook", which gives guidelines as to how the goals of the Paris Agreement are delivered. The main elements of the rulebook were an enhanced transparency framework for reporting emissions, common timeframes for emissions reductions targets and mechanisms and standards for international carbon markets.

4. Other agreements

Various other commitments in a range of areas such as deforestation, methane and finance were made. These included commitments from leaders of more than 100 countries (with about 85% of the world's forests) to "halt and reverse loss and land degradation" by 2030. Commitments were also made by leaders of over 100 countries to cut methane emissions by 30% by 2030.

What are the key issues to look out for at COP27?

The COP27 slogan "Together for implementation" indicates the intended focus of this year's conference. While the full agenda contains more information on the planned sessions and thematic days, COP27 will largely focus on the issues of finance, loss and damage, climate change and adaptation.

1. Creating and formalising a financing mechanism for addressing loss and damage

Providing support to vulnerable nations is an area expected to be looked at more closely. Some impacts of natural disasters are so devastating that they go beyond what people can adapt to – for example, droughts that turn ground barren, or rising water levels that permanently flood land. This year has seen many more natural disasters caused or contributed to by the effects of climate change, such as the flooding in Pakistan (in which it is estimated that over 1,500 people died), widespread drought and heatwaves across Europe and hurricane Ian in Florida. It is these vulnerable nations that need finance to fight climate change the most. It is anticipated that COP27 will provide countries with the chance to properly establish a mechanism to address this need.

2. Honouring climate finance contributions

Official UNFCCC reports show that developed countries are consistently missing their annual target of mobilising $100 billion in climate finance to developing countries to support their climate action. In 2020, developed countries only delivered £83.3 billion. Many island nations who are particularly at risk of flooding and coastal erosion have also been critical of the failure of developed nations to agree upon a financing package. Efforts will re-surface at COP27 to find ways of implementing strategies to support poorer nations in the fight against climate change. An updated delivery plan is expected to be released ahead of COP27.

3. Strengthening national emissions-reduction targets

At COP26, countries were asked to revisit and strengthen their 2030 emissions-reduction targets by the end of 2022 as part of the Glasgow Climate Pact. The intention here was to better align their targets with the Paris Agreement's goal of limiting the rise of global temperature to 1.5 degrees Celsius. Since COP26, only 23 countries have produced updated targets. COP27 is going to be an opportunity for global leaders to regain momentum on climate change and "make the necessary pivot from negotiations to implementation". Simon Stiell, Executive Secretary of UN Climate Change has urged national governments to come to COP27 with plans of how they will make the Paris Agreement work in their home countries.

4. Scaling up and support for adaptation

A reduction in emissions cannot fight climate change alone, adaptation is needed. Developed countries pledged to double adaptation finance at COP26 and will need to show how they plan to achieve this and ensure that the finance reaches the communities it needs to at COP27.

5. Biodiversity

Following COP27, attention will turn to the COP15 biodiversity conference, being held in Montreal in December. Climate change and nature go hand in hand. A strong and healthy natural environment will support the storage of carbon and prevent its release into the atmosphere. One of the main targets of COP15 will be to restore 3 billion hectares of land and 3 billion hectares of oceans by 2030, especially those areas that are valuable for biodiversity and ecosystem services. Biodiversity will also be discussed at COP27. At last year's COP26, world leaders signed a Pledge for Nature to reverse biodiversity loss and ecosystem degradation; in part, because it recognises that biodiversity loss is exacerbating climate change "by debilitating nature's ability to sequester or store carbon".

6. Demonstration of progress on commitments made at COP26

COP27 will focus on demonstrable progress and details of implemented plans for the numerous new climate action commitments made at COP26, such as:

  • The Glasgow Leaders' Declaration on Forests and Land Use, where 145 countries pledged to halt and reverse forest loss and land degradation by 2030;
  • The Global Methane Pledge, where more than 100 nations committed to collectively cut emissions of methane by 30% by 2030;
  • The Cities Race to Zero, where more than 1,000 cities said they would reduce their emissions to net zero by the 2040s or sooner;
  • A commitment from 10 major agricultural companies to come to COP27 with a detailed plan for ridding deforestation from their supply chains; and
  • The Glasgow Financial Alliance for Net Zero, where more than 500 financial firms controlling more than $130 trillion pledged to achieve net zero emissions by 2050.

Why is COP27 important for businesses?

As always, business will have a presence at this year's conference, alongside world leaders and representatives from different nations and interested groups. When we talk about shaping the green industrial revolution – collaboration is key, involving the co-ordinated energy, skills and funds of investors, inventors, employers, consumers, employees and regulators to deliver change.

Against a changing landscape of how we live and work, organisations are mindful of the ethical importance around creating a better environment for both now and the future. Many will be at different stages in their ESG journey and will be balancing the various interests of shareholders, regulators, employees and customers. COP27 will provide valuable insight into innovative technologies and action plans nations are delivering to tackle climate change that will be relevant to the interests of all these groups.

The conference is also likely to influence consumer behaviour and so understanding what trends may follow will help companies to evolve their ESG strategies. As our new report Tomorrow's World highlights, tuning into the attitudes of Gen Z and working collaboratively to create a meaningful ESG response will help to deliver a brighter future for everyone.

For more insight, visit our visual summary of the Tomorrow's World report and look out for further commentary from our experts on some of the key topics at COP27 via our LoupedIn blog.

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