COP27: Expectations and reflection by Luanne Sieh
Written by Luanne Sieh, Head, Group Sustainability of CIMB Group, highlighting her prior expectations of COP27 and comments after the event.
What do you hope to see from COP27? (Question posed during Day 2 of the Annual Banking Conference.)
Many of us, myself included, walked away from COP26 last year (at least a tad more) optimistic about the future. Bold commitments were made from multiple fronts: We had countries announcing Net Zero commitments, the private sector coming out strongly as part of the Race to Zero, and pledges made to provide more funding to help developing nations in the climate transition.
Fast forward to COP27, and looking at how much progress has actually been made, it is clear that commitments on all fronts need to be ratcheted up further, and that we need to accelerate on implementation. Even if all current national pledges are met, we could still be looking at global temperature rising between 2.4 and 2.6 degrees, far exceeding the target of limiting temperature rise to 1.5 or even 2 degrees above pre-industrial temperatures. In order for us to prevent a climate catastrophe (or more realistically at this late stage, reducing the impacts of it), all parties need to not only step up on their commitments but also quickly move from ‘starting on the journey’ to decisively executing on the most significant changes that would move the greenhouse gas needle.
One of the major hurdles to climate action, especially in the developing world, is the timely access to affordable climate finance. A huge amount of money, to the tune of 100 billion dollars annually, has been committed by rich nations to help developing countries mitigate and adapt to climate change. However, the sheer amount of effort required, as well as the duration needed to jump the hurdles just to be considered and be given access to the funding is proving to be a significant challenge.
Access to transition finance is another critical enabler that would accelerate investment in sustainable development in developing regions such as ASEAN. What is generally accepted to be ‘green’ is usually based on developed country standards, and often does not consider the developing country’s nuances and limitations. For example, many of the 17,000 islands in Indonesia struggle to properly manage household waste, with marine litter a perennial problem. A waste collection and management system would be a significant improvement from the current situation, improving recycling rates and reducing marine litter and open burning. However, from our discussions with independent Second Party Opinion providers, only waste management systems with separation at source can be considered green and therefore eligible for green financing leaving other projects, with vast improvements from the current state but ‘not green enough’, unfunded and consequently, stuck.
I believe that while standards and taxonomies must be in place to prevent greenwashing, the application of standards must take into consideration affordability and local circumstances. At the recent COP27, there were a lot of discussions on the need for transition finance taxonomies, with general agreement among participants that it will be a critical enabler towards meeting the 2030 Sustainable Development Goals.
Did COP27 fulfil your expectations?
There was much discussion and anticipation at COP27 around Article 6, which deals with the international transfer of voluntary carbon credits, loss and damage for poorer nations and technological solutions to the climate crisis. However, what is clear is that the existing nationally determined contributions, as well as their implementation will still result in both the 1.5 and 2-degree temperature rise limits being missed by a significant margin.
Personally, I was disappointed with the insufficient emphasis around the key cause of the climate crisis: the sheer rate of consumption of everything, from energy, electronics to food globally, especially among the richer countries. Instead, debates were around who should pay for what, and discussions focused on how we can ‘innovate’ ourselves out of our environmental and social problems.
However, the launch of the Indonesia Just Energy Transition Partnership at the G20 summit in Bali was a highly encouraging development, building on the work from the earlier COP26, where USD20 billion will be mobilised over the next 3 to 5 years to accelerate Indonesia’s transition towards low-emissions energy and a phase down of coal, with funding supported by the US, Japan, the UK, Germany and the EU, among others.