Our hopes for COP27

From November 6th, governments, businesses, and NGOs around the world will gather in Sharm el-Sheikh for COP27, the annual event held by the decision-making body of the United Nations Framework Convention on Climate Change. “Africa’s COP,” promises to drive home the consequences of continued inaction and increase the pressure on developed countries to provide resources for the countries most vulnerable to and least responsible for climate change. Given the urgent need for climate action before us and the formidable challenges to global cooperation, what do we need to see for success at this year’s COP?

At last year’s COP, agreements were negotiated to begin phasing down coal use and to reverse deforestation, and countries reaffirmed their intentions to scale up climate finance. But this year has bought its own increasingly difficult challenges with rising energy prices and geopolitical tension. COP27 is a time to build on the promises of last year and take the actions that are needed to secure our economic, social and environmental resilience. We need coordinated, cooperative action informed by comparable, shareable, actionable insight to enable everyone to turn commitments into action.

Here, we look back at progress since COP26 and outline three things we’ll be watching for in Egypt next week.

Reaching Net Zero is necessary, but it does not protect us from the immediate impacts of climate change. The realities of these physical risks have been felt across the globe. Floods, droughts, and heatwaves were regular headlines in 2022 - and with each new disaster, the links to climate change and the extent of direct and indirect impacts on economies and communities are becoming clearer. During July and August this year, wildfires devastated large areas in Tunisia and Algeria amid extreme heat waves of nearly 50˚C, destroying grain crops and displacing thousands. In recent weeks, devastating floods in Nigeria have displaced over a million people, destroying farms and infrastructure.

And yet, the world has continued to fall far short in its efforts to find the funds and support for climate adaptation. Rapidly accelerating volatility and sky-rocketing economic losses from climate change mean we need these adaptive solutions faster than we previously anticipated. This in turn, requires the support and provision of the knowledge and tools to take action.

Climate adaptation also has implications for decarbonization plans. In the U.S, the Inflation Reduction Act incentivizes massive buildout of clean energy infrastructure over the next decade. The EU green Deal and REPowerEU are accelerating infrastructure plans for climate and energy security reasons. As this infrastructure is planned, an important factor will be integrating resilience into the decision-making process - future-proofing these investments to their own climate risk.

Regulatory action on mandated climate-related financial disclosures has also been moving forward this year. Proposals or rules emerged in Australia, Brazil, Canada, Egypt, the EU, Hong Kong, India, Japan, Malaysia, New Zealand, Switzerland, Thailand, the UK, and the U.S. Almost all of the rules and proposals use the Task Force on Climate-Related Financial Disclosures as a basis.

One of the major outcomes from COP26 was the creation of a new standard-setting body called the International Sustainability Standards Board (ISSB), which consolidated various climate disclosure standards under one umbrella. Since its launch, the ISSB has released a draft framework for climate-related disclosures to help standardize and harmonize regulations across jurisdictions. The final ISSB standards are expected early next year.

Standardization is one of the key mechanisms we need to move from ambition to action. At COP27, we hope to see further support for standardizing climate-related disclosures and improving their completeness, quality, and decision-usefulness. This will give market participants the information they need to integrate climate-related risk into strategic and financial decisions across all sectors and company functions.

Last year, the COP26 Deforestation Pledge demonstrated the increased global focus on the role of nature in climate mitigation and adaptation. Human activities interact with climate change to drive the rising consequences of biodiversity loss and land degradation. This has consequences for climate mitigation and adaptation, but it also exacerbates food insecurity, health, and livelihoods.

Nature-based solutions are cost-effective win-wins, and a greater focus on these opportunities also opens up avenues of compensation for countries and regions that manage these resources–many of which disproportionately face the burdens of climate change such as Africa. However, they come with their own inherent risks.

Many companies invest in forest-based carbon offset projects - and these have been heavily impacted by climate hazards. Forestry loss due to wildfire has been steadily increasing over the last two decades. In 2021 alone, we lost 9.3 million hectares of forests to wildfires, which works out as roughly 16 football pitches a minute, releasing tonnes of CO2 back into the atmosphere. We need to recognize that nature-based solutions themselves are vulnerable to climate change, and build adaptation planning into financing and decision-making processes. Having risk-adjusted adaptation plans in place will be a necessary part of taking this action and ensuring transparency and accountability on calculating carbon offsets.

The past year has brought the world complex and daunting challenges and COP27 negotiations won’t be easy. However, now, more than ever before, we have experienced why climate action is so necessary and urgent. Climate action is not just about reducing global emissions, it is about building resilience and supporting adaptation. As the myriad of climate-related events this year have made clear, we need to equip the world with the knowledge and tools to be better prepared for extreme climate-related disasters. Climate change is a reality that’s already here; let’s hope COP27 can fulfill its role by turning ambition into action.

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