Hot Topics at COP27 — United Nation’s Climate Talks
As COP27 kicks off in Egypt this week, below is a quick summary of some ESG topics being discussed.
E (environmental):
Before the Paris Agreement in 2015, the average global temperature was expected to rise by 4 degrees Celsius above pre-industrial levels by 2100. Our current global temperatures have risen by about 1.1 degrees, with projections that we will reach 2.1 to 2.9. While this is significant progress, we need to make bigger changes to get “well below 2.0”. The new mantra is “every fraction of a degree counts” (the climate impact of 1.7 degrees is less than 1.8 degrees).
S (social):
Despite the fact that developed countries are the biggest emitters, developing countries often feel the biggest impacts of climate change. This year, “loss and damage” is on the agenda. The idea is that developed countries should financially cover the loss and damage they have caused to developing countries. However, there is a lot of pushback here, especially with the many other competing economic agendas happening in the world today. Many say that focusing the discussions around a positive collaboration vs a repayment for damages is the key to moving this agenda forward.
G (governance):
A big outstanding question is how we will ensure that countries will actually meet the goals they set. At a company-level, we are starting to see ESG goals tied to executive pay, and we are seeing pressure from regulators like the SEC (who will likely mandate that public companies disclose their emissions alongside their financials every year). How does idea of governance translate to countries setting goals at a global scale? We will see.
