What You Need to Know.
- After a year of preparation and months of anticipation, the twenty-eighth annual United Nations Conference of Parties to the United Nations Framework Convention on Climate Change (COP28) opened in Dubai on November 30, 2023. Live and recorded coverage of the plenary sessions can be found on the UNFCCC COP28 website.
- UN Climate Change Executive Secretary Simon Stiell opened the conference with a powerful call to action and reminder of what is at stake at COP28. “Remember this. Behind every line you work on. Every word or comma you wrestle with here at COP. There is a human being, a family, a community, that depends on you. Turn the badge around your necks into a badge of honour, and a life belt for the millions of people you are working for. Accelerate climate action. Teach it to run.”
- With a standing ovation from attendees, delegates approved the operationalization of a fund to assist developing countries in responding to economic and non-economic loss and damage associated with the adverse effects of climate change. COP28 President Dr. Sultan Ahmed Al Jaber praised the approval of the loss and damage fund—the first time a decision has been adopted on the first day of any COP—as setting “a clear ambition for [delegates] to agree [to] a comprehensive, ambitious GST [Global Stocktake] decision over the next twelve days.”
- The fund will initially be hosted by the World Bank for an interim period of four years, at which time an independent assessment of the World Bank’s performance as a host will be conducted. World leaders must now nominate and appoint a board to operationalize the fund. The UNFCCC also must formulate and post a final decision reflecting today’s approval.
- Funding commitments for the loss and damage fund are mounting, with contributing countries facing a mix of peer pressure and political constraints. National contribution pledges to date include: UAE ($100 million); UK ($51 million); US ($17.5 million); Japan ($10 million); European Union ($245 million, including $100 million pledged by Germany).
Why This Matters for Businesses.
- COP28 is anticipated to have the largest private sector presence of any of the previous climate conferences. Participation and engagement by business leaders in global climate goals and initiatives is key; as noted by the Intergovernmental Panel on Climate Change in its latest synthesis report, the private sector, along with governments and civil society, “play[s] a crucial role in enabling and accelerating shifts in development pathways towards sustainability and climate resilient development.”
- The draft agreement on the loss and damage fund (the Fund) lays out several methods for how countries can access funds, including direct access by national governments and small grants to support vulnerable communities. The potential uses for these funds—subject to restrictions that may be imposed by the Board of the Fund—are equally expansive, including humanitarian relief and reconstruction after extreme weather events and funding for climate adaptation actions that address slow onset events such as desertification and sea level rise. Countries will need to rely on global businesses to implement these climate relief, resilience, and adaptation projects, creating an opportunity to grow markets and protect and expand supply chains in developing countries that have traditionally lacked financing for such projects.
- In terms of how the Fund will be financed, the agreement provides that the Fund will be able to “to receive contributions from a wide variety of sources of funding, including grants and concessional loans from public, private and innovative sources, as appropriate.” This suggests that businesses will be able to contribute to the Fund along with national-level contributions.
“The welcome early success on loss and damage has restored some confidence in the process and gone some way towards avoiding a loss of trust between the Global South and the West. The acid test will be how (and how quickly) it is funded. The pledges by the UAE, US, EU, UK, and Japan have given early impetus to this effort. There have been a number of proposals on how to raise the rest of the funding needed—including a levy on frequent fliers and on countries heavily dependent on hydrocarbons—but it is clear that to meet the funding requirements, the private sector is likely to face pressures from governments and incentives from corresponding business opportunities.”
—Thomas Reilly, Senior Advisor, Head of UK Public Policy
More News and Developments.
- Angela Dewan, Ella Nilsen, and Rachel Ramirez, Nations Pledge Millions to New Climate Damage Fund at COP28, US Criticized for Its Small Contribution, CNN (Nov. 30, 2023), https://www.cnn.com/2023/11/30/climate/loss-damage-fund-adopted-cop28/index.html.
- Jamey Keaten, A Look at What to Expect as Latest UN Climate Talks Get Under Way in Oil-Rich UAE, The Associated Press (Nov. 30, 2023), https://apnews.com/article/cop28-climate-global-warming-dubai-oil-df60c0f31eda51aed0cc7fbc88ff2447.
- Deepa Shivaram and Elena Moore, Harris Plans to Attend the COP28 Climate Summit, NPR (Nov. 29, 2023), https://www.npr.org/2023/11/29/1215821954/vice-president-kamala-harris-cop28-climate-summit-uae.
- Jon Gambrell and Malak Harb, Emirati-designated COP28 Leader Forcefully Denies Report UAE Wanted to Seek Oil Deals in Summit, The Associated Press (Nov. 29, 2023), https://apnews.com/article/cop28-dubai-sultan-aljaber-oil-gas-f943abb672a3f3f88b0cede1dfb26ba8.
- Justin Rowlatt, COP28: UAE Planned to Use Climate Talks to Make Oil Deals, BBC (Nov. 27, 2023), https://www.bbc.com/news/science-environment-67508331.
Covington’s multidisciplinary COP28 delegation includes leaders of Covington’s ESG, Environment, Energy, Project Development and Finance, Corporate, and Public Policy practices, as well as our unique Climate Mitigation and Carbon Management (CM2) initiative. Our comprehensive and integrated global team is ready to assist clients as they prepare for COP28, engage with key stakeholders while there, and then strategize about and successfully implement ESG corporate policies aligned with COP28 goals. Follow our Climate Hub for Businesses to stay up to date on the latest developments from COP28.”