COP 27; what’s loss got to do with it?

As the dust settles over an intense two-week period of negotiations, events and announcements in Sharm el-Sheikh – Phoebe Scott, Investment Associate at Climate Asset Management explores the outcomes of the ‘Implementation COP’, and how they link to natural capital.

“We are on a highway to climate hell, with our foot still on the accelerator”

This was how the UN Secretary General, Antonio Guterres, summed up the current state of affairs, when he addressed world leaders at the start of this year’s COP.

Whilst his language was intended to shock, he is not mistaken.

There lies a vast challenge ahead of us in seeking to achieve a just and equitable energy transition worldwide, whilst simultaneously conserving and restoring our natural environment. The scale of this challenge has not been materially lessened by the outcomes of COP27.

Plentiful headlines critiquing the lack of progress at this year’s summit have put the spotlight on the disappointing failure to reach agreement on the phasing out of fossil fuels, putting at risk the Paris Agreement’s goal to limit global warming to 1.5 degrees above pre-industrial levels.

Nevertheless, there were a few beacons of hope and significant breakthroughs, with a selection of these detailed below.

Elements of progress

1. Loss and Damage funding: In the final hours of COP27 an agreement was reached to set up a facility to provide Loss and Damage compensation to countries experiencing the severe physical and financial impacts of climate change. Yet to be outlined: timeline for  establishment, a target fund size, and sources and recipients for the funding package.
2. Indonesia’s Just Energy Transition Partnership (JETP): Following on from South Africa’s JETP launch at COP26, Indonesia announced its own JETP, with $20bn of commitments from public capital (USA, Japan, France, Germany, UK, EU, Canada, Italy, Norway & Denmark) and private capital (GFANZ) – demonstrating the importance of multilateral collaboration and solutions. A potential Vietnam JETP was also discussed, with a launch anticipated by the end of this year.
3. Natural Disaster Early Warning Systems: The UN announced a target of $3.1bn over the next 5 years, in order to develop early warning systems for natural disasters in collaboration with national governments. This initiative will be focused on assisting the most vulnerable countries with regards to climate change and natural catastrophes. Yet to be outlined: sources of funding.
4. Deforestation reversal commitment: The Forest and Climate Leaders Partnership (FCLP) was launched as an initiative by 26 countries. It is a continuation of ambitions announced at COP26 to counter and reverse deforestation and land degradation by 2030, with annual updates on progress. The initiative will be co-chaired by the USA and Ghana.
5. Article 6:  A timeline was agreed upon to operationalise the carbon trading market mechanisms and non-market mitigation approaches under Article 6 of the Paris Agreement, targeting 2024 at the earliest. Key implementation processes were also agreed, enabling countries to start to prepare to report and account for carbon trading.

Focus turns back to nature

This year’s COP centred around themes of implementation and counteracting loss and damage from climate change.

Reviewing these two themes through a nature lens, Climate Asset Management’s Caroline van Tilborg spoke at several events, showcasing the progress our Partnership with the Global EverGreening Alliance’s Restore Africa Programme has made since its announcement at COP26.

The programme has moved from ambition to implementation in three out of the six participating countries (Kenya, Uganda & Malawi). More broadly, Climate Asset Management’s mission to invest in nature can help alleviate loss and  damage caused by natural catastrophes such as flooding. Mangroves are one of the target focus areas within our Nature Based Carbon Strategy, which offers companies access to investments in nature based carbon projects, in return for high impact carbon credits.

There is increasing recognition that we are facing the twin and interlinked crises of climate change and biodiversity loss. Nature is integral in mitigating climate change – acknowledged at this year’s COP, with a reference to nature-based solutions included for the first time in the COP27 decision text.

Hopefully this momentum will continue as we approach COP15, the Biodiversity COP.  Climate Asset Management’s Megan Reilly Cayten and Leo Murphy will be on the ground in Montreal, assessing the key outcomes.

Decade of delivery

Like COP, I too was born in 1995. As our collective thirties wink menacingly at us from over the horizon, I am both fearful and hopeful, but mostly hopeful.

For my generation in many developing countries, who have grown up in the shadow of climate change, there is tangible frustration, over the lack of significant movement on climate equity and justice.

Whilst fully acknowledging at COP27 the sheer scale and urgency of the challenge ahead, it was equally inspiring to take stock of the momentum, ambition and passion in the room. A continuation of this spirit will be key as we look to address these issues and drive forward further action at COP28 in Dubai.

I feel privileged to be working for a company like Climate Asset Management, laser-focused on catalysing private capital into restoring and conserving our natural ecosystems at a landscape scale, and surrounded by colleagues who are all equally passionate about making a difference regarding the climate crisis.

The 2020s have been designated as the decade of delivery for action against climate change. I am sure that Climate Asset Management will play a significant part as we scale our Natural Capital and Nature Based Carbon Strategies, implementing as we grow.