A central goal of the summit in Dubai this year has been the publishing of the global stock take. The aim here is to assess the progress on collective implementation of the Paris Agreement and identifying solutions to fill the gaps. Big decisions are still to be taken on the crucial negotiation text between countries on the ‘phasing-out’ of fossil fuels – an area we are watching closely as negotiations come to a close.
Over the course of the summit, we saw encouraging steps to achieve the transition to net zero. Particularly an increase in announcements and commitments to renewable and climate solutions, which we view as essential if we are to move away from carbon-intensive approaches and maintain the availability of energy and other essential consumer goods and services. The business case is becoming clearer for companies to better mitigate and seize the opportunities presented by the climate transition – something we emphasise through our investor engagement.
We are cautiously encouraged to see the loss and damage fund established on day one of the summit, with over US$700m in contributions to date. However, significantly greater backing is needed to support developing countries with the impacts of climate change. Estimates for the annual cost of loss and damage in developing countries vary from US$100bn to US$580bn and are expected to rise.
Significantly greater backing is needed to support developing countries with the impacts of climate change.
Further, for a just transition, we would like to see more from individual countries on how they are going to ensure energy and food security and affordability as well as job security. Unless these social challenges are addressed, an effective and just transition will be difficult to achieve.
A key commitment saw more than 50 oil and gas companies pledge to reach near-zero methane emissions by 2030 (with plans by 2025), eliminate flaring by 2030 and achieve net zero by 2050 in their own operations. While we understand the desire for this to have gone further to include Scope 3 emissions, it’s a significant step in the right direction which we hope will be echoed by others.
COP28 also presented an opportunity for countries to discuss the progress made since COP15 and focus on effectively integrating nature into the response to climate change. Many have pledged funding, such as the UK which announced more than £85m to tackle global deforestation, but there remains a large funding gap for nature-based solutions. This is something we at Federated Hermes Limited are championing through the development of our UK Nature Impact strategy to invest in nature-based solutions, and our partnership with the Global Alliance for a Sustainable Planet to explore the flowing of private capital towards climate- and nature-positive economic development.