Cop27 predictions what to expect
31 October 2022
31 October 2022
The upcoming COP27 conference is a global climate change summit taking place on 6 to 18 November in Sharm El-Sheikh, Egypt. It will bring together the Parties to the UNFCCC to advance the climate talks and drive action toward preserving our planet.
The private sector played a key role at COP26 compared with previous COPs. One year on since COP26 – our key experts reflect on how far the private sector has come in driving net zero as a business imperative.
Each COP has its own unique challenges, COP26 in 2021 occurred in the wake of worldwide COVID travel restrictions but became the first COP where the private sector turned out in force. The frenzy of public announcements from COP26 may have died down but this is when the real work happens. Companies around the world have turned their attention to ESG for a variety of reasons from stakeholder interest and discussions of purpose to risk analysis and predictions about future availability of financing. ESG considerations are both risks and opportunities. COP27 is occurring in a shifting macroeconomic outlook where the multifaceted lens of ESG considerations need to be kept firmly in frame. We look forward to the outcomes of COP27, the Africa COP, as an opportunity to focus global attention on delivery of global transformation of the physical economy into a resilient and sustainable future.
Anna-Marie Slot, Global ESG and Sustainability Partner
Climate change is having a disproportionate impact on the African continent, threatening food and water supplies and socio-economic development. Despite its low contribution to greenhouse gas emissions, Africa remains the most vulnerable continent to climate change impacts, in part due to the large share of agriculture (and in particular rain-fed agriculture) in Africa's GDP. African states have played a major role in various COPs, including the COP21 Paris Agreement, and have high expectations for COP27, Africa's COP. I expect synergies and tension between energy access and climate leadership to be at the forefront of the discussions and resolutions that will be adopted.
Yann Alix, Projects Partner
COP26 put finance at the heart of climate efforts, with some important announcements made by Mark Carney and Rishi Sunak for financial services business at the time. This included climate transition plans being mandated by the UK government, marking a real change at putting climate at the heart of firms' businesses. However, this type of change hasn't been seen across every nation. COP27 acknowledges the need for finance to be one of the cornerstones of the efforts in the fight against climate change. Indeed, in Egypt, finance day will kick off COP27 making it very clear how important finance is to achieving the NDCs. Nevertheless we are still talking about 'making finance flows a reality'. It's this practical approach that COP27 will need to achieve to succeed. And for sustainable finance, the pledges need to start showing their impact.
Lorraine Johnston, Financial Regulation Partner
Organisations are increasingly understanding the need to create shared value to tackle climate change. While pro bono and social impact remain one key way to support those affected by climate and humanitarian crises, the "social" expertise of the professionals working in this space is becoming increasingly valued, and collaborations between community, corporate and government stakeholders, and between commercial and social justice/impact professionals, will continue to grow as we look to scale up joint action to prevent climate-related disasters, as well as climate crises preparedness, response and recovery.
Sarah Morton-Ramwell, Global Pro Bono and Social Impact Partner
What is clear is that the transformation required to achieve Net Zero touches every part of our global and local economies. Increasingly, we are seeing corporate and other stakeholders actively (and enthusiastically) setting and embracing trajectories to achieving Net Zero. State actors are making more robust commitments to Net Zero – enshrined in law. What is needed is greater clarity and transparency on the standards for measuring and managing these Net Zero commitments to ensure consistency in approach and, importantly, outcome.
Dan Brown, Energy and Infrastructure Projects Partner
The crucial interrelationship between biodiversity and climate change is going to be a key trend. Whilst natural capital solutions are not new, the flow of mainstream capital into projects is relatively undeveloped and will need collaboration and innovation to implement at scale.
Market-led initiatives such as the Taskforce for Nature-related Financial Disclosures will gain momentum, as well as an increased focus by corporates and communities alike on supply chain risk management, including anti-deforestation due diligence and offset projects.
Eleanor Reeves, Real Estate Planning Partner
Climate change litigation in EMEA has taken a number of forms, but claims against governments have been prominent. COP26 certainly influenced the arguments deployed by climate claimants – its emphasis on the need for governments to be ambitious in their pledges was reflected in litigation seeking to pressure governments to take significant steps to limit temperature rises. COP27 is likely to have a similar influence on courtroom activity.
Tom Cummins, Dispute Resolution Partner
With COP27 taking place in the MENA region later this year, it's a timely reminder of the important task of focusing the region's attention to the need to embrace the shift to green and sustainable transport and infrastructure development. In a region where infrastructure was historically developed off the back of petro-dollars, it's an exciting time and a meaningful opportunity in light of COP27 to take stock of the current state of change and regionally businesses are asking themselves what is the next step. Increasingly, green design and highest level standards of energy efficiency are being embraced by government and developers. Global businesses with a local presence are seeking to overhaul their regional offerings to meet their net zero commitments, resulting in opportunities, especially for the sustainable transport sectors.
Yvonne Cross, Projects Partner
The Paris Agreement underscores the key role for carbon markets to play in achieving emissions reductions at least cost, and to support clean investment towards a just transition for all. COP26 saw significant progress towards realising this vision with agreement being reached on the Article 6 rule book. However, implementation of Article 6 remains ad-hoc - and global co-operation towards emissions reduction is still not achieving its full potential. COP27 provides the perfect opportunity to build momentum and gather force behind Article 6. Globally, we need to ensure that carbon markets can support the efficient and verifiable delivery of decarbonisation in years to come.
Jeff Lynn, Projects and Real Estate Partner and Cassandra Wee, Energy and Resources Partner
Many more governments will introduce mandatory ESG-focused reporting in part in response to their own commitments and, in those countries where that has happened, boards will need to move from simply delivering on those requirements to viewing sustainability as a strategic imperative. We also expect an increased emphasis on integrating a 'purpose-led' approach throughout organisations' decision-making structures.
Will Chalk, Corporate Transactions Partner and
Rob Hanley, Legal Governance Advisory Partner
To use an analogy as to where we stand right now on global warming, imagine earth being the Titanic and the iceberg being climate change and the point in time we are at is that the iceberg has just started to tear the hull apart… Despite all the pledges, the new and upcoming regulations, reporting requirements and the last seven years being the warmest years on record, global emissions continue to rise (and were higher in the first half of 2022 than in the equivalent period in 2019 – i.e.: pre pandemic). Based on current policies (as opposed to promises) we are on course for a rise of 2.8°C by 2100 (and 2.5°C if all current pledges conditional or not are implemented).
According to the UN's most recent publication "United in Science 2022" to meet the 1.5°C goal, new emissions reduction pledges need to be SEVEN times higher. By those standards, and given world events, I expect COP27 to be disappointing. In order to have an understanding of the scale of challenge for a country like France, it means replicating the emissions reductions seen in 2020 (i.e.: -5% due to the pandemic) every year locking in the previous years' reductions. I expect to see growing investment in adaption and resilience programmes because 'summer is coming' if you get my drift.
Mark Barges, Projects Partner
Italian companies have been making important steps towards the energy transition and the Net Zero strategy and the market shows encouraging signs. Over the last decade, under EU legislation, Italy reduced its emissions by approx. 13 % and it is expected to reach the 2030 target of 33%. In order to meet the 2050 coal phase-out targets set by the European Green Deal, Italy adopted its National Integrated Energy and Climate Plan, which includes the goal of reducing emissions by 55% by 2040.
Renewable energy is expected to develop further in line with the ~EUR 60 billion that Italy was assigned from the NextGenerationEU funds for green initiatives. With an increase in energy production from renewable sources; hydrogen is anticipated to play an increasingly important role in the coming years. The Ukraine war has evidently created the need to diversify Italy's energy sources and we've seen an increase in LNG regasification projects/capacity.
Carloandrea Meacci, Energy & Infrastructure Partner