COP28: Key takeaways from this year’s climate change summit

There were some historic moments in Dubai, but there is plenty of work still to be done.

FacebooktwitterlinkedinmailFacebooktwitterlinkedinmail   by Louisiana Salge, 14th December 2023

The annual conference of the parties on climate change (COP28) formally concluded this week. Nations debated a new common agreement on climate action while the urgency is ever rising, with the latest UNEP report claiming that current pledges will see us exceeding both 1.5- and 2-degree targets (and instead reach 2.5-2.9C above pre-industrial levels).

We want to share three takeaways:

1. A new Net Zero Tracker report found that 88% of global greenhouse gas emissions are covered by net zero targets, but only 7% are covered by a national commitment to phase-out fossil fuels. The controversial COP28 setting within the oil-rich nation of the UAE pathed the way for two weeks of negotiations, centred around agreeing language on the future of fossil fuels (coal, oil, and gas) if we are to meet the Paris Agreement targets. Saudi Arabia, Russia and OPEC heavily argued for losing any such reference, the final agreement managed to achieve a landmark deal to “transition away” from fossil fuels.

While it always could be more ambitious, this language does send the signal we need, highlighting that countries and companies need to move away from producing and relying on fossil energies. In this context, the fifty-five oil companies that formed a new coalition to reduce operational emissions, yet ignoring targets on production, may need to reconsider their rather unambitious plans. As sustainable investors we are reassured that the risks attached to fossil fuel extractors are increasingly materialising, with our portfolios well sheltered from these.

2. The final agreement also includes a global target to treble world renewable energy capacity by 2030, and double energy efficiency improvement rates. We believe this commitment will serve to strengthen the investment and policy tailwinds to clean technology sectors. All our portfolios invest in a variety of climate solutions, ranging from renewable energy to housing insulation, which should be well placed to capture new demands.

3. Lastly, one large criticism remains; of the average annual climate financing in 2021-21, just 2% went to developing countries according to the Climate Policy Initiative. A lot of the new commitments made require substantial new investment and financial incentives bridging the needs and sources of capital across the world.

However only a few developed countries were seen to meaningfully increase their climate financing share at this COP. Potentially helping to this gap, are international development banks. Through their issuance of ring-fenced green bonds, explicitly included in EQ’s portfolios, even retail-clients can contribute to climate change adaptation finance.

Watch our three key takeaways for sustainable investors from the COP28 climate talks below.

Contact Louisiana

    Louisiana Salge

    Louisiana is Head of Sustainability at EQ. She is responsible for innovating EQ’s approach to sustainable investing, oversees EQ’s ESG and impact integration strategy across all assets, EQ’s stewardship efforts and sustainability data reporting.

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