As we edge closer to COP28 in Dubai there is rising stakeholder tension. Not solely owing to the location in the oil-spewing Persian Gulf, but also due to the mounting pressure of the fast approaching deadline set in the Paris Agreement. The Agreement, signed in 2015, is a legally binding international treaty that requires the 196 Parties who signed it to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels by 2030 and net zero by 2050.”
With the COP circus soon to get underway in Dubai, businesses and society will reflect on progress (or lack of it) against key goals, with the familiar questions being raised: can the promises made by businesses to lower their emissions be honoured? Will net zero be possible by 2030? Can scope three emissions, an indirect emission to which a company still holds responsibility, be realistically be eradicated?
This year, Dubai will hope to set the seal on a greener image in an attempt to shift away from its position as the site of the fifth-largest oil and gas reserve in the world. It would like to become known as a “global hub for logistics, transportation and green technology and is at the crossroads of business, commerce and tourism.”
As COP28 seeks to address the climate crisis, three talking points will take centre stage:
- Transitioning to clean energy
- Finding solutions to protect nature, people, lives and livelihoods
- Delivering on financial solutions to drive change
With the COP circus soon to get underway in Dubai, businesses and society will reflect on progress (or lack of it) against key goals, with the familiar questions being raised: can the promises made by businesses to lower their emissions be honoured? Will net zero be possible by 2030? Can scope three emissions be realistically be eradicated?
Decarbonisation across whole industries
The race to reach net zero is rapidly approaching its 2050 deadline to achieve a reduction of 45% of global emissions. A theme set to arise at this year’s COP28 is around the possible pathways to rapidly decarbonise entire industries, particularly oil, gas and steel production.
A solution upon which much depends is the potential of carbon capture and storage. In particular, if it can be effectively scaled and deployed globally. The UK has already hinted at its interest in carbon capture with just last week the Energy Security and Net Zero Minister, Graham Stuart saying in an Environmental Audit Committee: “What is the UK seeking to achieve from COP28?” that there is “nothing fundamentally wrong with oil and gas” so long as carbon capture is used. It is also worth mentioning that the UK holds a whopping third of Europe’s potential sub-surface real estate for storage of CO2. Over 70 billion tonnes that could be deposited under the UK seabed.
The role of legal strategy to drive behavioural change
This year it was revealed by the UN Environment Programme that the total number of climate litigation court cases have more than doubled since 2017. A number of these cases have challenged government decisions on projects that do not align with the goals set out in the Paris Agreement or net zero policies. Speakers at the Economist Impact event pinpointed the importance of litigation to hold businesses, governments and society to account on their net zero promises.
This year, countries will need to agree on a new finance goal post-2025 to succeed the $100 billion goal set at the COP held in 2021. This will undoubtedly see a call for greater action at December’s gathering with a significant focus on the role of the private sector within financial innovation.
The role of finance and business within the transition to net zero
Each year at COP there is a focus on finance. This year will be no different. COP26 saw countries agreeing to at least “double adaptation finance from 2019 levels by 2025”. This year, countries will need to agree on a new finance goal post-2025 to succeed the $100 billion goal set at the COP held in 2021. This will undoubtedly see a call for greater action at December’s gathering with a significant focus on the role of the private sector within financial innovation.
What to watch
These themes will need to be monitored closely. In particular, if there is a chance that an outcome either way could affect you operationally, it is essential, from a reputational standpoint, to not just appear to comply but also walk the walk and talk the talk.
However, as we near even closer to kick-off, we are met with the news that the loss and damage fund has not laid out what was expected. What was previously a hopeful agreement signed at COP27 that promised to fund poor countries hit hard by the climate crisis, has now become a disappointment owing to the nature of the requirements being voluntary, “requiring almost nothing of developing countries”. Therefore, as we roll into December, questions are raised whether this is going to be another theme of COP? Or whether the agreement’s made will be honoured and fulfilled to the extent that they were set out to be?
At DRD we advise clients on a variety of issues relating to the non-financial impact of ESG on their organisations or climate litigation. Alongside one leading law firm we have brought an OECD complaint against a leading UK power company and are representing shareholders in another action over alleged misrepresentation of green credentials in the defendant’s prospectus. So whilst there will be much talk in Dubai, actions will be under ever greater scrutiny from an ever more sceptical and challenging group of stakeholders.