This year’s Conference of the Parties (COP) to the UN Framework Convention on Climate Change (COP 28) hosted a record number of business executives and investors in Dubai. For almost 30 years, government representatives from nearly 200 countries have gathered annually to discuss how to limit the impacts of climate change and transition towards a just, low-carbon economy.
COP 28’s growing participation of private sector actors is a sign that climate change is of ever-increasing strategic importance. Below are five key takeaways from the conference:
- National Commitments are Raising the Bar on Corporate Decarbonization
The COP 28 Agreement is the first of its kind to explicitly reference fossil fuel phase out, a key component for achieving the objectives of the Paris Agreement. Additionally, the new Agreement calls for accelerating the development of zero and low-emission solutions e.g. carbon capture, utilization and storage. These can help compensate for residual greenhouse gas (GHG) emissions that cannot be eliminated. Like Canada, countries are expected to issue regulations to reflect these new commitments, potentially impacting companies – and their investors – who are not actively managing their climate transition.
- Just Transition Needs to be Integrated into Climate Transition Plans
The United Nations Environment Program Finance Initiative (UNEP FI) and the International Labor Organization (ILO) published the Just Transition Finance: Pathways for Banking and Insurance report, which outlines how these industry actors can play a role in building low-carbon economies and climate-resilient societies. It includes nine recommendations and examples of emerging practices on how to embed Just Transition considerations in financial products and business operations. Integrating social equity into climate transition planning is key for organizations looking to effectively manage the risks and opportunities of the low-carbon transition. Socializing senior leaders and team members with emerging Just Transition guidance is a good place to start.
- Biodiversity is the Next Frontier of Climate Action
There is increasing acknowledgement that we cannot limit global warming to 1.5˚C without protecting and restoring nature, land and the ocean. Notably, over 150 businesses and financial institutions announced their plans to set science-based targets for climate and nature under the Science-Based Target Network and begin managing nature-related impacts in alignment with the Taskforce on Nature-related Financial Disclosures (TNFD). Addressing biodiversity provides several co-benefits, including reducing climate-related physical risks (resource availability, flood hazards) and creating new business opportunities (product innovation, ESG goal advancement). It starts with understanding an organization’s interaction with natural ecosystems.
- Data Democratization Will Provide Transparency on Net-Zero Progress
The Net-Zero Data Public Utility (NZDPU) was launched to help investors and companies track climate transition-related information. This open, centralized repository currently aggregates the greenhouse gas (GHG) emissions data of nearly 400 companies. In parallel, the Climate Policy Initiative introduced the Net-Zero Finance Tracker (NZFT), a publicly accessible database that analyzes how the financial sector is supporting the transition to a net-zero economy. It gathers data from over 500 public and private organizations from various sources such as the CDP, Principles for Responsible Investment and InfluenceMap. The NZDPU and NZFT provide increased access to transparent data and can help inform climate decision-making.
- IFRS Sustainability Disclosure Standards are Becoming Ubiquitous
Nearly 400 organizations globally, including OMERS, Manulife and Addenda Capital, have pledged their commitments to reporting climate risks and opportunities in accordance with standards issued by the International Financial Reporting Standards (IFRS). This is another milestone for standardizing transparent climate-related disclosures across several jurisdictions. Last month, the IFRS took over the Task Force on Climate-related Financial Disclosures (TCFD) mandate to monitor companies’ climate disclosures. When crafting climate roadmaps and reports next year, companies should assess existing gaps against the IFRS S2 Standard and develop a roadmap to further align.
To achieve the Paris Agreement’s objectives and meet disclosure requirements, investors and corporations need to scale climate action urgently. With over a decade of experience in the market, Quinn+Partners is well-positioned to help you design and advance your net-zero journey. Get in touch to accelerate your climate action.