Against the backdrop of another year of extreme weather, coupled with an ongoing energy crisis, we are less than one week away from Parties meeting in Sharm El-Sheikh for COP27.
The first since the finalizing of the Paris Agreement Rulebook, and hosted by Egypt as an African COP, COP27 will bring the critical issues of implementation, resilience and adaptation to the fore. To secure a 1.5°C, resilient, globally equitable future, we need a whole economy transformation with non-state actors playing an increasingly vital role.
Accountability is paramount
One year on from the commitment COP in Glasgow, it is critical that both governments and non-state actors are held to account for progress against their own, as well as national and international, commitments and targets. After a swathe of commitments were made by big business last year, it’s essential we ensure commitments are being implemented, have led to tangible action and that we hold all actors to account for their progress (or lack thereof).
Over 90% of global emissions are now covered by climate targets, making it more important than ever to ensure that action is being taken to achieve progress. COP27 must deliver results that improve transparency, tracking and accountability mechanisms, which are essential to ensuring that governments and non-state actors actually deliver on their commitments.
While it would seem that the issue of climate has been somewhat mainstreamed, and targets are gaining increasing traction, impact seems limited. With a fragmented regulatory landscape, a complicated subject matter and mushrooming standards, the space for greenwashing or just ineffective focus has grown dangerously. Not only must targets, the actions needed and the plans toward them be robustly thought out, but for global action to be coordinated and effective, they must be transparently disclosed. It is only through this whole-entity-disclosure that accountability is created and action tracked.
In the last year, even more countries have announced their intention to mandate disclosure, including a landmark moment in the US, when the Securities and Exchange Commission (SEC) published its proposed climate disclosure rule. As encouraging as the wave of support for mandatory disclosure is, we are urging governments to strive for high-quality mandatory disclosure regulation as set out in our policy brief, and include broader environmental impacts.
Continuing at COP27, the Global Stocktake (GST) will be another key mechanism to hold actors to account, as well as identifying gaps in current action and increasing ambition. It is therefore critical that the GST is purpose-driven, inclusive, coherent and evidence-focused, with non-state actors being an integral part of this process. To ensure that non-state actor action and data are adequately fed into the GST, there needs to be clear processes for all non-Party stakeholders, including businesses, cities, states, and regions to showcase evidence and data. The second technical dialogues at COP27 must continue to take into account the perspectives of non-state actors and focus on identifying concrete solutions that will enable Parties to increase their ambition in the next round of Nationally Determined Contributions (NDCs). To this end, CDP published a series of recommendations for policymakers earlier this year.
The net-zero transition must accelerate
The net-zero transition is underway across the economy, but with only seven years left to halve emissions, all actors must ensure they are well on the way along their transition journey. COP26 succeeded in keeping the prospect of limiting global warming to 1.5°C alive – but only just. Disclosure is the bedrock of action, but it is just the first step of this journey. Disclosure drives transparency, however, setting credible, science-based targets guides the orientation towards a 1.5°C trajectory. All governments, companies, cities, states and regions should set ambitious environmental targets and take bold, transformative action to achieve them.
There has been positive progress. In 2022 more than 18,700 companies disclosed environmental information through CDP worth half of global market capitalization. Alongside more than 1,100 cities, states and regions. Combined, nearly 20,000 organizations have disclosed through CDP in 2022, a 38% increase on last year. More than 3,800 companies have set or are committed to setting a science-based target through the Science Based Targets initiative (SBTi).
After setting a science-based target, every company and financial institution must develop and publish a climate transition plan, with clear timelines and indicators explaining the ‘when’ and ‘how’ they will reach net-zero emissions. Environmental leadership does not end there. Organizations should continue assessing their performance as outlined in their transition plan and continue raising ambition.
Governments should take note of this increase in corporate progress, using the momentum to advance ambitious, net-zero-aligned policies that tackle the broader environmental impact and provide companies and financial institutions with further clarity and confidence. This in turn strengthens the Ambition Loop: a positive feedback loop where private sector and government action reinforce each other in building a truly resilient and sustainable future.
Net-zero must be accompanied by nature positive
There is a general acceptance that the drivers of the climate and environmental crises are interconnected, but we must now accept the same for their solutions. Addressing deforestation and land use issues, as well as water security, considerably enhance economic and societal resilience in any context and are at the forefront of action for adaptation. All three themes cannot be separated and feed into the challenges society faces from their combination– the collapse of biodiversity-supporting ecosystems.
Policies must now be integrated into new NDCs, Long Term Strategies and policy planning at all levels, with coherent, measurable, ambitious and far-reaching targets that can boost confidence and trigger bold actions across all levels of society, especially at subnational level and in private sector.
COP15, set to take place in December in Montreal, will see corporate disclosure discussed in the context of multilateral biodiversity policy for the first time. This is sure to move governments even closer towards mandatory disclosure regimes that incorporate more than just climate.
This means that COP27, especially during the Biodiversity Day (November 16), must provide a platform to deliver a clear message about the importance of an ambitious outcome. COP15 is the next critical moment in the international calendar to act, as we cannot deliver the Paris Agreement and achieve 1.5°C without protecting and restoring nature.
Private finance is critical to any transition
Underpinning the corporate and cities, states and regions transition is the financial system that supports them and incentivizes (or disincentivizes) a global transition. Private finance is not only needed but is vastly greater than any philanthropic and public finance. Helping private finance alignment with the Paris Agreement goals must happen faster. Net-zero initiatives and commitments have created a foundation for action and the alignment of capital flows with a 1.5°C future. Implementation is the crucial part. Where disclosure is largely a summary of historic actions, finance is an indication of future direction. Defining and harmonising sustainable financial flows is the key to unlocking a successful transition across all sectors.
Beyond defining sustainable finance, the issue of disclosure to allow for financial action is critical. The disclosure of robust information is integral to ensuring commitments are translating to action and progress, alongside science-based targets and 1.5°C transition. The standardization of data collection is extremely promising but remaining at the level of simple standardized data would allow for significant ‘playing of the system’.
CDP will continue to go beyond the baseline to ensure financial actors disclose annually and extensively on progress against commitments, and that they do so using the most robust description available. We will begin to assess financial institutions as we already do financial services; and further expand the world’s largest database of corporate environmental action.
Finally, it is critical that at COP27, developed countries keep their promises – they committed to $100billion annually for developing countries many years ago and this is still not being met (as highlighted in last week’s UNEP Emissions Gap report). Those most vulnerable to, and least responsible for, climate change are often least able to mobilise the finance needed to adapt to its impacts.
With increased focus on adaptation at COP27, sustainable finance can be used to bridge the gaps between mitigation, adaptation and finance. According to the IPCC, just 4–8% of climate finance has gone to adaptation efforts in recent years. Aligning finance flows with nature-related objectives, both in terms of preservation and restoration, will allow us to close the existing USD$4.1 trillion financing gap by 2050.
CDP will continue to engage with policymakers and non-state actors globally to drive forward these much-needed outcomes. Throughout COP27 we will be hosting a programme of events, both virtually and in the Blue Zone to raise ambition and accelerate environmental action. We hope to see you there.