Insights
COP27 drew to a close with uncertainty around negotiations, but for investors the conference offered many opportunities to demonstrate their commitment to net zero.
Once the World Leaders Summit closed, the thematic days began with a focus on Finance Day, allowing investors to tell their side of the story and highlighting the crucial role of private capital alongside public finances. That finance was the first of the thematic days demonstrates its importance.
Though the debate over loss and damage loomed large in the media there were a huge number of other important conversations taking place, including on adaptation and resilience, the concept of just transition, and a dedicated Buildings Pavilion to discuss the real estate sector’s emissions.
Speaking at the World Climate Summit side-event, IIGCC CEO, Stephanie Pfeifer explained that with the physical impacts of climate change already being felt around the world, many investors are now taking an active interest in how they can invest in adaptation and resilience efforts.
Stephanie also participated in a number of high profile panel discussions and events throughout the week, including a Presidency panel focused on mobilising finance for climate action, a Marrakech Partnership event highlighting successes and barriers to net zero implementation and an Investor Agenda event on scaling up investor climate action.
Here, she shares her reflections from Sharm El-Sheikh and highlights IIGCC’s ongoing work in this space, including a recent discussion paper on how best to create a Climate Resilience Investment Framework:
Mahesh Roy, IIGCC Investor Practices Programme Director and Marrakech Partnership finance focal point, organised and chaired a number of events, drawing attention to the importance of including investors early at the second Technical Dialogue of the UN Global Stocktake.
In the Buildings Pavilion, IIGCC’s Real Estate Senior Programme Manager, Hugh Garnett chaired a dedicated session on how best to finance a net-zero built environment in partnership with the World Green Buildings Council. A crucial topic when 40% of global carbon emissions are contributed by the built environment.
“Decarbonising the built environment is crucial for meeting the global decarbonisation targets. Whilst progress is being made by leaders towards financing net zero buildings, there is significant work to be undertaken,” Hugh told the audience.
“The market needs to better price the risk, and every investment decision should take into account not just cost, but the whole life carbon emissions of a building.”
The bigger picture
As COP27 progressed it was clear that the climate debate has moved beyond this one conference, now featuring highly in international negotiations from the G20 Summit to the Convention on Biodiversity (CBD) taking place in Montreal from 5 to 17 December.
Reflecting on her seventh conference of the parties in Sharm El Sheikh, Emily Murrell, IIGCC Policy Director explained that “it’s now not just about the climate COP, but how the COP interacts with other forums.”
IIGCC expects nature and biodiversity to play a larger role in the decarbonising portfolios conversation in 2023. It has also been selected as one of four founding organisations of a new collaborative investor engagement initiative, Nature Action 100.
The second week saw discussions reiterate the importance of investor action, with an International Development Finance Club (IDFC) panel demonstrating how voluntary action can provide policymakers with the information they need to make effective, industry-specific changes.
Danielle Boyd outlined the widely used Net Zero Investment Framework alongside speakers from the European Investment Bank, British International Investment, and the IDFC.
Involving investors in the design process was key, she explained, to create a framework that considers an investor’s fiduciary duty alongside climate transition needs.
Measuring success
On the topic of Just Transition opinion was mixed as to how well this concept has been defined and explored. A dedicated Just Transition Pavilion, hosted by the International Labour Organisation, aimed to elevate awareness and facilitate debate.
Speaking at a panel on ‘where next for delivering net zero and resilience through just transition,” Jim Skea, Professor of Sustainable Energy at Imperial College London raised the question of measuring success, “How do we know when we are succeeding?”
IIGCC delegate, Danielle Boyd agreed that investor net zero initiatives would benefit from extra guidance on net zero, but that regulation needs to match: “investors find it hard to go further than the policies.”
Jim also questioned the readiness of some campaigners to completely demonise oil and gas: “Carbon capture skills are in the industry… you can’t get to net zero unless you take some carbon dioxide out of the air.”
The next generation
Though it might not have grabbed headlines in quite the same way Glasgow did, the ‘implementation COP’ proved that the net zero transition of portfolios continues at pace.
It was also an event that officially brought the next generation to the table, with the first dedicated Youth Pavilion bringing new voices, debate and energy to the event alongside negotiation representation for YOUNGO, the official UNFCCC Youth Constituency.
The youth delegation reminded attendees them that they are the future voters and clients, and that mitigating the worst effects of climate change is crucial. Their closing remark at end one panel panel rung out:
“We’re out of time for this conversation, but we’re not out of time for climate action.”
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