COP27: not a lost COP after all – Amundi

ESG Thema: special COP27.

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... Only 0.1°C, but a symbolic victory on compensation and momentum in financial system overhaul.

On 6-20 November 2022, Heads of State, Ministers, and negotiators with representatives from business, civil society, mayors, and environmental organisations met in Sharm el-Sheikh in Egypt for the largest annual gathering on climate change. At the 27th Conference of the Parties (COP27) of the United Nations Framework Convention on Climate Change (UNFCCC), countries came together to take action towards achieving the world’s collective climate goals as agreed under the Paris Agreement.

This is the fifth time a COP is hosted in Africa, a continent responsible for only 3% of global emissions, yet disproportionately exposed to the negative impacts of climate change. In a pre-COP27 letter to parties and observers, the Egyptian COP27 President-designate stressed the need “to restore the ‘grand bargain’ at the centre of the Paris Agreement and our collective multilateral climate process – whereby developing countries agreed to increase their efforts to tackle a crisis for which they are far less responsible, in return for appropriate financial support and other means of implementation.”

This letter came a few months after Barbados’ Prime Minister Mia Mottley launched the Bridgetown Initiative, a call to overhaul global financial system, with a focus on reforming the World Bank and the International Monetary Fund (IMF).

Following a year of increasing extreme weather events, broken temperature records, and a growing energy crisis worldwide, COP27 was meant to be both the COP of implementation, and the COP of emerging markets: held in Egypt, it offered a chance to bring in more typically marginalised viewpoints during discussions and to forge close ties of collaboration between developed and developing nations.

Nations were also required to show how they are putting their COP26 promises into practice, including urgently cutting greenhouse gas emissions, boosting resilience, preparing for unavoidable climate change impacts, and funding climate action in developing nations. Pledges by governments ahead and through the COP27 improved the announced stated scenarios from 1.8°C to 1.7°C (compared to 2.1°C ahead of COP26). However, implementing the necessary measures remains the most daunting task in a challenging macroeconomic environment.

The key outcomes of COP27 in putting the world on a Paris-aligned trajectory and assisting developing nations in combating climate change are presented in the following sections. The loss and damage fund, as well as the momentum gathered by the Bridgetown Initiative appear already as the most significant results from this COP.

During the COP, G20 leaders agreed to pursue efforts to limit the global temperature increase to 1.5°C, and confirmed they stood by the most ambitious temperature goal of the 2015 Paris Agreement on climate change. Important announcements such as the Indonesian Just Energy Transition Partnerships (JETP= also emerged from the Bali Sumit. Taking stock of both the G20 and COP27 announcements, we are still a long way of placing the world on a well below 2°C trajectory. But the JETP focus on coal phase out represents hope as starting by seriously addressing the issue of 9,000 or more coal power plants is the most sensible thing to do.

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