EG’s Head of ESG, Ian Lieblich, shares his insights on COP27, exploring the prevailing themes of ‘greenwashing’ and ‘Loss and Damage’.
Originally posted by Ian to his LinkedIn account.
#1. A Crackdown On Greenwashing
COP is on again and that means so is my blog boy hat.
One of the main themes emerging from the opening week has been ‘greenwashing’, with a newly formed UN High Level Expert Group seeking to crackdown on the integrity and improve the transparency of net zero commitments.
Carbon offsets are at the heart of this crackdown on greenwashing, with the High level Expert Group urging them “to be used sparingly” amidst concerns regarding additionality (would this carbon have been removed even without the investment?) and integrity (is the carbon actually being removed?). The issue being that companies are writing cheques (excuse this aged metaphor) to buy green credentials whilst continuing to burn carbon to run their businesses.
This follows local developments in Australia, with energy company Tlou the first company to face ASIC’s scrutiny over alleged false claims regarding it’s Lesedi gas power station. Turns out promoting gas – a fossil fuel – as “carbon neutral energy” will land you a $50,000 fine.
The built environment is not immune from this, with emissions from the sector – which represent ~40% of total global emissions – rising 2% above 2019’s pre-pandemic peak, despite more and more REITs setting, and even achieving, net zero carbon targets.
Given the relative ease at which carbon emissions in the built environment can be reduced via energy efficiency, electrification, demand management and renewable energy (generated on site and procured where it cannot be), there’s a valid question to be asked as to the appropriateness of offset use when meeting net zero carbon goals.
To fan boy for a second (as opposed to blog boy-ing), Laurence Tubiana – one of the architect’s of the Paris Agreement – got to the heart of it earlier in the week, making the case for “a clear line on true net zero – what it really means and requires, and what is simply greenwashing”. Or, in the words of UN Secretary General, Antonio Guterres – a man who’s never been one to mince words – “we must have zero tolerance for net zero greenwashing”
Increasingly, even companies in the built environment are going to have to ask themselves if a dependence on offsets to reach net zero meets this zero tolerance test.
#2. Addressing ‘Loss and Damage’
Another big theme emerging from this year’s COP is that of ‘Loss and Damage’
Loss and Damage is the oft forgotten third stream of the COP negotiations. It comes after Mitigation and Adaptation, because it occurs when the impacts of climate change are so severe, that Nations – the most vulnerable who haven’t contributed to this mess – cannot adapt to the irreversible social, environmental and economic loss caused by climate change.
It’s very inclusion in the text of the Paris Agreement was seen as a huge victory for climate justice. I remember being on the ground in Paris when the final text was released (weird flex, but sure) and celebrating with those who had worked so hard to have this crucial element embedded in the Agreement.
Seven years later and Loss and Damage is back on the radar, with US Climate Envoy John Kerry declaring the US was “totally supportive” and is “100% ready” to discuss the issue in detail.
Any agreed upon Loss and Damage facility would provide finance and support to those populations who suffer the most from climate change. The core idea here is one of “consequences for actions” – even if Countries are taking action on climate change today, what duty do they owe the world for past fossil fuel led industrialisation?
This idea of taking ownership for past actions is slowly seeping into corporates’ response to climate change. Google and Microsoft are leading the way, pledging to offset all historic emissions associated with their businesses since they were founded, in addition to present day ‘net zero’ operations. And whilst the action of offsetting today remains questionable, the core idea of accountability for historic actions remains pure.
We can internalise this idea of accountability to craft an interesting thought exercise today.
If we were to assess our actions today in response to the climate crisis with perspective hindsight, would we be proud of the steps taken? Or ought we be held accountable for the loss and damage caused by a 2°C or 3°C rise in temperatures?
So as discussions at COP progress – hopefully towards the establishment of a facility capable of addressing Loss and Damage – how will we assess our leaders posturing that they “doubt very much there’ll be a full agreement” (that’s curtesy of Australia’s own Minister for Climate Change and Energy) before the Conference’s conclusion?
How will we assess it today, and how might we assess it in the years to come?
#3. We Can Do Better, And We Must
Whilst COP27 was never going to be a golden bullet that solved the climate crisis overnight, there’s some good – and perhaps some more bad – to come from the two weeks in Egypt.
To steer positive first, the COP27 declaration has agreed that a new Loss and Damage Fund will be established to deliver funding for Countries experiencing social, environmental and economic loss due to climate change. There was more background on Loss and Damage in last week’s blog boy (how’s that for a self-serving plug?), but to put thing simply, this is a really significant milestone and one that we should absolutely celebrate, however briefly.
The brief exuberance (think party popper, rather than fireworks display) is due to the fact that the Fund is currently empty and may stay that way for some time. But it’s creation still represents a significant win for activists, the most vulnerable States, and of course, everybody.
As the final decision text says, delivering the required funding ‘will require a transformation of the financial system and its structures and processes’ involving governments, central banks, commercial banks, and institutional investors. Cool. Let’s go.
This creates a stick for the Developed World, giving them a reason to increase their ambition and mitigate their carbon footprints, lest they have to contribute too much to this fund in the future. Mitigation should have always been paramount, now economics will force it to be.
Speaking of the economics of things, talks concerning Article 6 (the section of the Paris Agreement which governs carbon trading and markets) progressed in a ‘onestep forward, two steps back’ kinda way, with frustratingly little progress made in Egypt.
The Final Agreement text gives Countries complete control over what information to report when trading carbon credits, including whether or not that carbon abatement is also being included within their own carbon reduction pledges. This is the dreaded ‘double-counting’ where Countries reduce carbon to meet their own goals, and then sell that carbon credit so that other Countries might use it to meet their’s. They’re having their cake and eating it too, yet another reason offsets suck.
With such a focus on trading mitigation outcomes, you’d be forgiven for thinking Parties are neglecting to simply do the mitigating itself. The level of ambition of their mitigation pledges (their carbon reduction targets) remains underwhelming, with the 1.5°C temperature goal of the Paris Agreement now “on life support” according to Lok Sharma, the President of last year’s COP26.
We just have to keep doing the work. Keep pushing for action, not delay. For renewable energy, not offsets. For meaningful change that can address other inequality and inequity. For a better future. (Look at me getting preachy towards the end in a desperate plea for validation in the form of the linkedin likes. No but really, we can do better, and we must).