COP27: What is it and why is it important?

Read Time: 6 minutes

• COP27, the largest global climate conference in the world, brings leaders and other stakeholders together to design and commit to climate solutions to limit global warming

• Financing loss and damage funds, adaptation, and emissions reduction are the main areas of focus this year

• UN Secretary-General aims to set standards for net-zero claims made by businesses to ensure actual emissions reductions and eliminate greenwashing

The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change – COP27 – is bringing leaders from across the globe to Sharm el-Sheikh, Egypt to discuss climate solutions from November 6-18. In addition to heads of State, activists, scientists, business leaders, and other stakeholders are in attendance. The overarching goal is to work toward ensuring the full implementation of the Paris Agreement. 

What is the Paris Agreement? 

It is a legally binding international treaty on climate change that has been adopted by 194 Parties (193 countries and the European Union). Its goal is to limit global warming to well below 2℃, preferably below 1.5℃, compared to pre-industrial levels. In order to achieve this goal, countries aim to reach the peak of their emissions as soon as possible and reach neutrality by 2050.

The UN Environmental Programme (UNEP) released a report stating that there is “no credible pathway to 1.5℃ in place” today, despite the promises in the Paris Agreement. With the current Nationally Determined Contributions (NDC) pledged by COP Parties, the globe is on track to experience 2.4°C and 2.6°C of warming. NDCs are plans countries create to cut emissions and adapt to climate change. 

Last year’s summit, COP26 in Glasgow, Scotland, produced a lot of commitments. This year the main goal is to turn those commitments into actions. Financing, adaptation and emissions reductions are three main areas of focus.

Financing loss and damage funds

One of the areas in the spotlight this year is a concept called “loss and damage.” While every country on the planet is being affected by climate change, developing countries that produce smaller amounts of emissions are usually disproportionately affected by the negative impacts. For example, Pakistan experienced a deadly heatwave and then devastating flooding this year, with both events tied closely to climate change. The country is responsible for less than 1% of global emissions, but is being severely affected.

Countries like Pakistan want nations that have historically produced the most emissions to pay into loss and damage funds to help low-emitting countries deal with the consequences of climate change. Larger, more wealthy countries, like the US, are afraid that paying into these funds will open them up to future legal liability and potential lawsuits.

Emissions reductions

Parties were asked at COP26 to “revisit and strengthen” their NDCs for the year 2030 by the end of this year. So far, only 23 countries have done so, but some may release their new NDCs in the month after COP27. 

Creating funding for renewable energy projects in order to reduce global reliance on fossil fuels is key in reducing global emissions. There have been talks for years about establishing a global carbon market which would allow the buying and selling of credits that represent carbon emissions. Proponents argue that this system would create revenue to invest in the transition to renewable energy. Opponents believe that a market scheme like this won’t deliver meaningful emissions reductions and will allow polluters to evade responsibility.

As of November 9, the US has introduced a new voluntary carbon trading market scheme that aims to fund renewable energy projects in developing countries. A group of African countries also announced the Africa carbon markets initiative, which would create 300 million carbon credits annually by 2030. This number would then increase to 1.5 billion credits by 2050. Supporters say this program which proponents claim will unlock $120 billion and 110 million jobs by 2050. 

At COP26, leaders made promises to reduce use of coal and other fossil fuels, but didn’t really get into how they’re going to make that happen. The ongoing Russian invasion of Ukraine has caused countries that have relied on Russian natural gas to scramble to create their own sources. This year the focus is on creating solutions and finding funding to support the clean energy transition.

Adaptation

Adapting to the reality that climate change is here is quickly becoming a major priority, especially for countries with vulnerable populations. The Sharm-El-Sheikh Adaptation Agenda outlines 30 Adaptation Outcomes to help 4 billion people in developing countries adapt to the impacts of climate change. These Outcomes include implementing climate-resilient agriculture, protecting and restoring 400 million hectares of land and freshwater systems, investing $4 billion to secure the future of 15 million hectares of mangroves, installing warning systems to protect 3 billion people, expanding access to clean cooking for 2.4 billion people, and mobilizing funding for these activities.

Impacts on Business

Net-zero commitments from businesses have become an important area of consideration for COP27 because true commitments like these can help countries, and consequently the world, reach the goals set in their NDCs. UN Secretary-General António Guterres announced he would create a High-Level Expert Group to address net-zero commitments by non-State actors. He aims to eliminate greenwashing and loopholes and set global standards that align with the Paris Agreement’s goal of limiting warming to 1.5°C.

The We Mean Business Coalition is a non-profit that works with influential businesses to take action on climate change and will be attending COP27. In a recently released statement, We Mean Business said they believe that businesses should be working with governments to help them meet the goals in their NDCs. If governments create the right incentives for businesses to reduce emissions, businesses can invest in net-zero solutions. 

In addition to setting net-zero standards, businesses should be ready for a potential marked increase in green projects such as renewable energy facilities. This change could be an opportunity to become involved in these projects, but it could also make renewable energy less expensive, making it more accessible to businesses looking to reduce their carbon footprint.

Final Thoughts

The commitments and actions that will come out of this conference will have a ripple effect that impacts every person on this planet. We’ll be following this blog up with a summary of the big things that come out of this conference after it has concluded. Seeing as this is the biggest climate summit in the world, we couldn’t cover anywhere near everything that could possibly come out of this conference. You can watch most of the COP27 events on a livestream if you’d like to have an inside look and learn more about global climate policies.