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The Future of the Planet

The Future of the Planet
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ARTICLE TYPE
Sustainability Soapbox
TOPIC
Responsible Investing
PUBLISHED
November 11,2022
READ TIME
8 mins
AUTHOR
Georgina Laird
SHARE
Back
ARTICLE TYPE Sustainability Soapbox
TOPIC Responsible Investing
PUBLISHED November 11,2022
READ TIME 8 mins read
AUTHOR Georgina Laird
SHARE

It may feel like COP26 was only yesterday, but a year has passed and COP27 is already upon us. For 27 years (or 28 years, but we skipped a year due to Covid), world governments have convened to negotiate a global response to the climate crisis. In recent years, the conversation has been dominated by discussion on progress towards the 2015 Paris Agreement, signed by 196 countries at COP21.

Increasingly, COP summits provide a platform for many more than just government and country leaders. It provides a platform for different areas of the public and private sectors to announce ambitious projects and targets, and to form cross-sectoral collaborations and partnerships. COP26 culminated in the Glasgow Climate Pact, and we saw many pledges made inside and outside the negotiation rooms regarding net-zero commitments, forests protection and climate finance, among many other issues. This kept the goal of curbing global warming to 1.5 degrees Celsius alive, but “with a weak pulse”, as the then UK Presidency declared.

 

COP26 penned as a little more talk and a little less action, COP27 has been dubbed the year for implementation.

 

Typically, COP is also a platform for protest on climate action (or the lack of). While a feature of COP26 in Glasgow, we are seeing less of this in Egypt, not known for its tolerance to activism. Protesters have been limited to a specific area, reportedly a 25-minute walk from the negotiations.

 

Dubious about the location and the choice of Coca-Cola, one of the world’s top polluters, as sponsor, interest in this year’s COP has waned. Many companies had reservations about attending, not least because of the associated carbon emissions. We include ourselves, so like others Aegon Asset Management chose to attend virtually.

But leaders and experts have been ringing alarm bells that time is fast running out to avert catastrophic rises in temperature, the ‘COP for implementation’ must live up to its name.

 

There are three principal areas of focus: mitigation, adaptation and climate finance. We look at each in turn.

 

Mitigation: How countries are reducing their emissions

Countries will be expected to show how they are implementing the Glasgow Climate Pact, and to review the ambition of their Nationally Determined Contributions (NDCs).

 

The COP26 summit concluded with a resolution from governments to review and update their targets ahead of COP27. In our discussions following COP26 we expressed our disappointment that this commitment remained voluntary. Our dismay was justified, as it appears only 21 countries out of the 197 have updated their NDCs ahead of COP27.

 

We remain significantly off where we need to be to deal with the worst impacts of climate change, with no current credible pathway to 1.5.

 

Figure 1 shows projections of greenhouse gas emissions under different scenarios to 2050 and indications of the emissions gap and global warming implications over this century (based on medians).


Figure 1: Projections of greenhouse gas emissions under different scenarios

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Adaptation: How will countries adapt and help others do the same?

 

Climate change is already here. Adaptation is the field of adapting to the climate change that we are already experiencing, and that which we can now expect. It is essentially insurance for mitigation, however with insurance one usually hopes never to have to call up and cash in.

Unfortunately, we already know that we will need adaptation, even at 1.5. The higher the emissions over the coming years, the more severe the impacts of climate change, the more adaptation we will need, and the more this will cost. Developed countries committed to doubling adaptation finance at COP26 form 2019 levels, however the 2021 Adaptation Gap Report concluded that the finance gap continues to widen. 

 

With this has been dubbed the ‘COP for Africa’, we are seeing adaptation rise on the agenda given the impact that climate change has on livelihoods across the continent. The impact is two-fold, not only more likely than most countries to experience the direct impacts of increasing temperatures, Africa also lacks appropriate finance for adaptation.

 

These images, acquired by the Copernicus Sentinel-2 satellites on 17 May 2021 (left) and 22 May 2022 (right), show the effects of water scarcity in the Gode area, in the Somali Region of Ethiopia. The country experienced the worst drought since 1981: many crops failed and over a million livestock died, two-thirds of which in the Somali Region.

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Climate finance: the elephant that never leaves the negotiation room

Climate finance is a top theme again this year, and we are likely to hear a lot about the yearly $100 billion promise by developed nations that has not yet been delivered. Loss and damage is looking to be the defining issue of this year’s COP. Developing nations are calling for specific funding to help them cope with the impacts of climate change, which they increasingly bear the brunt of but contribute to less than developed nations. They want this to be additional to already agreed climate finance, and in the form of grants and not loans. This is likely to be a contentious subject between nations, developed nations are already not providing enough as per the Paris Agreement. Further, paying for loss and damage could translate as an admission of liability and potentially trigger legal battles.

 

Following a deadly heat wave earlier in the year, Pakistan saw significant flooding which took the lives of over 1,100 people and impacted 33 million others in one of the country’s worst monsoon seasons. Pakistan is responsible for less than 1% of global CO2 emissions but is paying a heavy price. A clear example of why a loss and damage finance is desperately needed.

 

Over the 27 years since COP began, climate change has gone from a fringe issue to a global priority. This year will be pivotal, held against a backdrop of compounding scientific data showing that the world is not doing enough to tackle carbon emissions, an energy crisis propelled by the war in Ukraine, and extreme weather events worldwide, there is no time for complacency.

Important disclosures

More about the authors

Georgina Laird Senior Responsible Investment Associate

Georgina Laird is a senior responsible investment associate responsible for analyzing and monitoring environmental, social and governance factors within the firm’s sustainability-themed equity and multi-asset mandates, and engaging with investee companies on a regular basis.

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