Reasons to be optimistic for COP 28

December 05, 2023 09:46
Photo: Reuters

Last month, Hurricane Daniel showed The Middle East and North Africa is rapidly becoming one of the regions worst affected by extreme weather due to climate change. It claimed thousands of lives in Libya and proved storms and floods are just as much of a threat as excessive heat.

Temperatures in the Middle East can already exceed 50 degrees Celsius. With the Gulf region expected to be four degrees warmer by 2050, the Carnegie Endowment for International Peace says it risks becoming unhabitable.

This further elevates the importance of COP 28 this December – the UN summit created for nations to decide how they will tackle climate change.

Concrete action at the summit is essential. A key focus of this year’s COP will be the Global Stocktake (GST) of the 2015 Paris Agreement, whereby individual states must declare their progress against their stated commitments to reduce emissions.

Dr. Sultan Ahmed Al-Jaber, COP 28 President-Designate, recently issued a frank letter stating that “the global community knows the GST will show we are off track”.

Consequently, he has requested an “immediate response package… which will need substance to make it real.” He recognises that as each year passes and the climate crisis intensifies, COP’s credibility increasingly comes into question. He has therefore called on all COP 28 decisionmakers to “work together to renew trust… by delivering on previous promises”.

While policymakers need to show their willingness to act, a welcome change at this year’s COP is the focus on the role of business.

The Middle East is vital to the global transition

As a pivotal region in the oil sector, the Middle East has an important role to play in climate action.

As a global investor, we believe engagement with companies is the most effective way to bring about desirable change. This pragmatic approach should also be applied at COP 28, if we want to both tackle climate change and have a just transition.

Middle Eastern and North African countries need to be at the heart of the world’s transition to low carbon. Efforts to decarbonise elsewhere put pressure on oil and gas-producing nations to find an alternative source of income. So too, the phenomenon of extreme climate events is all too apparent in the region.

The UAE has an opportunity to lead by example and seems to recognise this. It has pledged to invest as much as $54 billion into renewables in the next seven years to help reach its goal of net zero emissions by 2050.

Should the Presidency succeed in securing commitments to triple renewable energy capacity, capture greenhouse gas emissions and double energy efficiency, then we have a hope of limiting the global temperature rise to 1.5 degrees Celsius as agreed at Paris in 2015.

Two other important aspects of the COP 28 programme are the focus on a Just Transition and nature respectively. A Just Transition Day is scheduled, with the topic being a key part of the summit. Governments and businesses must plan to support the world’s poorest through the transition, via reskilling and affordable energy. Without these steps, the green economy transition will otherwise likely fail.

Additionally, there are two days dedicated to ‘Nature, Land Use and Oceans’ and ‘Food, Agriculture and Water’. The world has recently come to realise biodiversity loss is as much of a threat as climate change.

At Federated Hermes, we engage with companies on this topic through our stewardship arm EOS. We see that strong partnership between governments, industry and investors is required to scale the capital needed to invest in mitigating nature loss.

Given that 44% of Earth’s tropical forests have been eliminated by agricultural activities in Latin America and the Caribbean, according to Forest Trends, and the world’s population could expand from eight billion now to between 10 and 12 billion by 2050, time is of the essence.

The good news is there are companies offering the requisite solutions. Thanks to the technologies they have developed, we can already enhance crop yields without needing more land and improve how we recycle.

COP 28 commits to advance an important biodiversity framework agreed to by 196 nations last December, to halt and reverse nature loss by 2030. This is much needed, as governments must plan to ensure there is enough food for everyone in years to come.

Dr. Al Jaber recognises we are in a critical decade for climate action and that COP 28 can mark the moment we implement it. He is right that this is both a moment of risk and opportunity, offering “vast economic potential”. By taking the right steps at COP 28, I believe we can still seize this moment to transition to a low carbon world and protect the future of our planet.

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CEO of Federated Hermes Ltd