Bold Climate Action Promised by Countries Attending COP28

Associate Director of ESG and Sustainable Investment, Caleb Adams, recently attended COP28, the annual United Nations climate conference held in Dubai. Throughout an intensive two weeks, our engagement at COP28 involved interactions with ministers, policymakers, philanthropists, investment managers and industry. Below are the key takeaways. 

The global economy has a clear heading

The world is currently in a critical decade for climate action. The Intergovernmental Panel on Climate Change (IPCC) says limiting warming to 1.5°C requires global greenhouse gas emissions to peak before 2025, be reduced by 43% by 2030 and 60% by 2035 and achieve net-zero CO2 emissions by 2050. COP28 was critical to charting this path via the first global stocktake (GST). 

The final GST text was both groundbreaking and contentious. Among other things, countries agreed to “transitioning away” from fossil fuels, working “toward the phasedown” of unabated coal and to “achieve net zero by 2050 in keeping with the science”. While this language was not as strong as some negotiators pushed for, these explicit references to timeframes and fuel sources is unprecedented. It is the first time a COP has resulted in a formal agreement among all Paris Agreement signatories to take action on fossil fuels. However, the journey to reaching this commitment is arguably more significant than the destination itself.

Industry and Australia are engaged 

With a record-breaking assembly of nearly half a million policy makers, professionals, civil society and investment leaders participating in COP28, it is clear influence has extended beyond traditional activist echo-chambers. Climate, and sustainability more broadly, has become a core skillset of the modern executive. It is also noticeable that petro-states and heavy industry are now actively engaged, recognising the necessity to transition (or at least be seen to be doing so) to appease the increasingly stringent requirements of investors and policymakers.  

This increase in engagement was also evidenced closer to home. Minister Chris Bowen, lead negotiator for the Umbrella Group (including Australia, US, UK, Norway, Canada, Japan and others) was clear in both private and public conversations that Australia wants to drive a broader decarbonisation agenda. For investors, the scale of participation across industry and policymakers indicates a clear sense of unstoppable momentum. It is clear decarbonisation is now a question of ‘when’ not ‘if’. 

The world will need to double energy efficiency and triple renewable energy 

COP28 secured a groundbreaking commitment to triple global renewable energy capacity by 2030. Some countries have already made meaningful progress, with renewable energy meeting 80% of new power demand globally. This ambitious goal seeks to continue this trend, shifting the world’s energy mix away from fossil fuels, towards wind, solar, geothermal and other renewable sources.  

Nations also pledged to double the annual rate of energy efficiency improvements, aiming to push it from 2% to 4% each year. Energy efficiency is a key enabler in the IEA Net Zero Emissions by 2050 Scenario analysis. In the IEA scenario modelling, the world needs to become one-third more energy-efficient, with energy intensity falling by ~34%. This is equivalent to improvements of 4% p.a. to 2030.  

We are beginning to focus on the complex nature of a ‘just’ transition

The global community is increasingly leaning into complicated and nuanced areas of climate. These dialogues allow wholistic policy, targeted philanthropy and unique investment opportunities. Participants are understanding decarbonisation and will impact a host of industries and sectors including:  

• Food and agriculture: The event marked a significant moment for food and agriculture, with 134 world leaders signing the “UAE Declaration for COP28 on Sustainable Agriculture, Resilient Food Systems and Climate Action.” This declaration aims to mobilise over US$2.5 billion in funding to strengthen food systems, reduce emissions, and combat global hunger.  
• Health: Health Day, a first for the conference, emphasised the direct and indirect impacts of climate on health, including the rise in infectious diseases and health emergencies due to changing weather patterns. The UAE and various charities committed US$777 million to combat neglected tropical diseases exacerbated by climate change. 
• Indigenous Peoples: The conference highlighted the vital role of Indigenous Peoples in climate solutions. As custodians of over 80% of the world’s biodiversity, Indigenous people are crucial in leading a just transition and nature-based solutions.  
• Gender: Gender Day at COP28 brought attention to the disproportionate impact of climate change on women, especially those in poverty – calling for more gender-responsive climate finance and policies. 

The finance COP 

The crucial role of climate finance as a catalyst for action was underscored by numerous funding announcements. The UAE announced a US$30 billion fund for global climate-friendly projects, including US$5 billion for the Global South and an allocation to catalytic capital. This seeks to mobilize a total of US$250 billion for global climate action by 2030, a small but meaningful start to what the International Monetary Fund (IMF) expects to be a US$2 trillion annual investment by 2030 for emerging economies alone.  

Other notable commitments included the World Bank increasing climate funding to 45% of total lending, containing an additional US$9 billion annually. Multiple commitments were also made towards the Least Developed Countries Fund, the Special Climate Change Fund, the Adaptation Fund, and the Loss and Damage Fund. 

A way forward 

Overall, COP28 witnessed a growing sense of pragmatism from industry, with climate now deeply embedded in the business-as-usual practices of mainstream investors. The focus is now on how to unlock the full potential for accelerating climate action in the crucial decade ahead.