- Climate COPs have become more of a trade fair than international negotiation. They are a key annual opportunity for the sustainability profession to meet in person.
- Just transition and nature will be major themes through to COP28. Climate justice will mainstream into corporate sustainability.
- Businesses will face increasing stakeholder pressure even as they expand climate action. Preparing for this turbulence will build resilience for the long road to net zero.
The substantial business presence at COP27 in Sharm el-Sheikh, Egypt, where governments focused on public finance to address loss and damage, showed how climate has become a mainstream business concern. Key outcomes suggest that an energy transition—from a fossil-based economy to a low-carbon or decarbonized world—is inevitable and that climate justice will mainstream into corporate sustainability.
COP27 continued the evolution of UN climate conferences into trade fairs. Momentum for business action was noticeably stronger than for strengthened national targets.
With nearly 150 pavilions in the official venue, a proliferation of events reduced the average value of any one stage. At COP27, they began to look like extensions of networking and dialogue in the climate community. This proliferation will likely continue at COP28 in Dubai next year with an announced attendance of 80,000 delegates. Climate COPs are now a key annual opportunity for the sustainability profession to meet in person and are certainly the most global opportunity to do so.
COP27 also made clear that the just transition and nature will be two major themes through to COP28 in Dubai. A new section on Energy in the Sharm el-Sheikh Implementation Plan speaks to “low-emission energy,” triggering a debate on the role of non-renewable energy, such as blue hydrogen, nuclear, and carbon capture and storage, in a just transition. A new work program and Ministerial table on just transition may well be where this debate is fought.
As for nature, COP27 recognized the “interlinked global crises of climate change and biodiversity loss” and the “importance of protecting, conserving and restoring nature and ecosystems to achieve the Paris Agreement goal,” encouraging countries to consider “nature-based solutions or ecosystem-based approaches.” Three strong tailwinds for nature will arrive in the coming year, including new global biodiversity goals at Biodiversity COP15 in Montreal, guidance for companies on science-based targets for nature in early 2023, and the recommendations of the Taskforce on Nature-related Financial Disclosures in Q3 2023. These tailwinds will reinforce that companies are uniquely positioned to protect the ecosystems on which their businesses depend.
The major UN outcome at COP27, a new “loss and damage” fund, will address harm from climate impacts that is neither prevented by emissions reductions, nor adapted to on the ground. The fund will support countries particularly vulnerable to climate impacts. This emphasis on loss and damage tells companies that climate justice will be a part of corporate sustainability in the years to come. Companies have an opportunity to work with civil society organizations to support communities affected both by climate impacts and by the just transition.
While 29 countries updated their national climate targets this year, this did not materially change the global emissions trajectory, which heads toward a median of 2.4°C of warming by the end of the century. Positive signals included the new Biden-Harris administration proposed rule requiring the US federal government’s largest 1,000 suppliers to disclose scopes 1, 2, and 3 emissions and undertake science-based targets; the announcement of the Indonesia Just Energy Transition Partnership (JET-P) with US$20 billion in public and private financing; and the restart of US-China bilateral cooperation on climate.
Intensifying climate impacts through the end of this decade are already baked into the atmosphere. Anti-greenwashing sentiment will grow, as evidenced by the Integrity Matters report from the UN High-Level Expert Group on non-state net-zero commitments. These will generate increasing stakeholder pressure on businesses, even as they expand climate action.
So in the future, typical company emissions reductions will be seen as increasingly insufficient. A science-based target will become a floor and not a sign of leadership. By preparing for this turbulence—working on climate justice, supporting local communities, seizing synergies with nature, and transforming business models—companies will build resilience for the long road to net zero.