After lengthy and spirited negotiations, COP28 closed with an important signal: an agreement by all the world’s nations to, amongst other things, “transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050 in keeping with the science.”
This is an important, albeit imperfect, step forward, but the question remains: is it enough? In a world awash with hot takes, we don’t—and can’t—yet know. The ultimate success of this COP depends entirely on what happens next, and whether these words, which are not binding, are embraced fully by governments, businesses, investors, and all of us.
This COP produced the first response to the Global Stocktake as required under the Paris Agreement, and it is summarized this way: “Despite progress, global greenhouse gas emissions trajectories are not yet in line with the temperature goal of the Paris Agreement, and there is a rapidly narrowing window for raising ambition and implementing existing commitments in order to achieve it.”
There are certainly important steps forward in the outcome. First and foremost, this is the first time a COP has agreed to a shift—however worded—away from fossil fuels. The science tells us that this comes too late. In the context of the COP process, however, this marks a meaningful step forward, even if it is not as definitive as many called for, which is imperative in the face of rising temperatures.
There are four other significant steps put forward in the final statement:
- Just transition is firmly on the agenda: Both in the final text and in the Loss and Damage fund that was made operational, the question of equity is no longer on the sidelines. The question is now how to implement and fund the just transition.
- Tripling renewable energy capacity and doubling energy efficiency by the end of the decade: twin objectives that should unleash innovation and investment to build a resilient, inclusive, clean energy economy.
- Methane reduction commitments from the oil and gas sector, which included national oil companies for the first time, as well as food and agriculture companies. These steps have the potential to reduce warming by 0.2°C.
- Adaptation is now more firmly on the agenda. While large gaps in implementation and financing adaptation remain, it is now clear that governments, and businesses, should step up their work on building climate resilience.
What does this all add up to? The agreement is not a mandate: the COP system is not set up to create binding outcomes. But the words on the pages of COP decisions carry weight, and it has achieved several things that will catalyze change.
To start, this COP, for the first time, sends a clear signal that the shift to a clean energy economy must and will come. For businesses and investors, this is an unequivocal message to transition energy systems away from fossil fuels, and the need to plan to make it happen. Second, this also raises the stakes for governments, who are due to submit a new round of Nationally Determined Contributions (NDCs) by COP30 in 2025. Any NDC that fails to take account of the transition away from fossil fuels in a timely way aligned with science will not be deemed credible. Third, this agreement demonstrates positive momentum. On almost all the key items, there is higher ambition than what we saw in Glasgow at COP26. It is hard to agree that this is sufficient, but it indicates that there is a global commitment to make progress further and faster.
That is the glass half-full assessment. There is also much to be desired in the agreement.
The language on tackling fossil fuel subsidies remains notably weak and offers governments that don’t want to reduce or eliminate them a pretty wide-open door. We haven’t seen funds needed to achieve the stated objectives on Loss and Damage or Adaptation, and the world has already shown that it is not ready to honor past commitments on climate finance. The language on coal does not appear to be a meaningful improvement commensurate with the harmful impact of coal-generated power, which continues to increase in some countries. The text also leaves the door wide open on “transition fuels.” Many of the other elements of the final agreement will need to be pushed further: not only at COPs, but even more importantly, in the “real economy” the rest of the year.
Aside from the negotiations, the immense set of activities at COP provides room for cautious optimism. The business community continues to show up in greater numbers, and while that alone does not achieve impact, we see a seriousness of purpose, commitments to invest and innovate, and a focus on turning commitments into action that continues to increase every year. Coming out of COP28, our key message for business is to plan the energy transition for your company in line with science, gear up adaptation and nature efforts, and ensure justice and equity are central to your approach. The private sector also needs to wrestle with the fact that climate goals and business models that depend on endless growth are likely incompatible.
For BSR, we were proud to work at this COP to advance business action on core questions including Just Transition, Climate and Health Equity, Scope 3 emissions, Beyond Growth, Nature, Corporate Governance and Climate, Reporting and Disclosure, and other matters. Many of our 300+ member companies showed up at COP and showed up well.
Ultimately, this may be the most positive outcome that was realistic in a process that demands consensus amongst nearly 200 nation-states, who have wildly different circumstances, resources, and interests. While the agreement does not represent the ambition many had hoped for, there is something for everyone. The real question is whether it will be enough for all of us collectively. That depends not on the text, but on what we do with it.