COP27 outcome: Dawn Agreement on Loss and Damage

    Stockholm (NordSIP) – As often seems to happen at COP events, delegates were required to work well beyond the official closing date of Friday November 18th, in a last-ditch attempt to reach some sort of positive outcome.  Was the final outcome worth the extra push, which ended as the sun came up on Sunday 20th November?

    The good news: a new loss and damage fund

    The stand-out achievement of COP27 is the agreement to establish a “loss and damage” fund to support developing nations that stand to be worst affected by climate change.  While this was welcomed as a move towards some form of climate justice, there are still significant loose ends to be tied up regarding its financing and a backdrop of a world still on course to far exceed two degrees of warming.  Nevertheless, “loss and damage” was one of the most contentious topics on the conference agenda, and the establishment of a fund will be of enormous benefit to vulnerable countries.  The European Unions had tried to get certain countries still considered as developing with the United Nations Framework Convention on Climate Change (UNFCCC) reclassified on the basis that since 1992 they had become wealthy enough to be classed as potential contributors to the fund rather than recipients.  This was ultimately rejected, with a compromise reached involving the prioritisation of the most vulnerable countries.

    The bad news: a persistent fossil fuel blind spot

    The loss and damage fund will go some way towards addressing the global north / south imbalance, but COP27 saw little progress on overall climate change mitigation efforts.  There was an attempt to introduce a commitment to phase down all fossil fuels, but this was rejected in favour of retaining the wording from COP26 that is limited to coal.  It was also alarming to see some countries seeking to abolish the 1.5-degree goal and its related “ratchet” system whereby commitments would be strengthened annually.  The best that can be said is that COP26 resolutions were largely protected, but little progress was made beyond them.  Given the scientific consensus it beggars belief that the primary cause of climate change is not yet properly addressed after 27 global conferences.  Many observers pointed to the presence at COP27 of 636 oil and gas industry lobbyists as a sign of a fundamental problems in the whole process.  This number was revealed through analysis conducted by campaign groups Global Witness, Corporate Accountability and Corporate Europe Observatory, and represents a 25% increase in this type of delegate compared to Glasgow’s conference last year.  The fossil fuel lobbyists also outnumbered the combined delegations from the 10 most climate-impacted countries.

    World Bank reform and climate finance

    Still on the climate crisis to-do-list is a radical reform of the World Bank, as proposed in Al Gore’s opening address and widely discussed at the conference, even though this was not a formal agenda topic.  Gore believes that the bank’s current president is a climate denier, and that its continued financing of fossil fuels needs to stop immediately.  Gore and many COP27 attendees believe that the World Bank should be repurposed to channel the trillions of dollars needed to help finance the transition to a global low-carbon economy.  This would address the problem of the much higher cost of capital faced by developing countries seeking to finance renewable energy projects.  Unfortunately, this results in many emerging nations turning instead to the exploitation of their own fossil fuel reserves.

    Other COP27 highlights included the presence of newly elected Brazilian president Luiz Ignacio Lula Da Silva, who promised to protect the Amazon and eliminate deforestation in his country by 2030.  There was also a reaffirmation of adaptation funding commitments from COP26, despite efforts by some countries to remove these even as they have not yet been fulfilled. The creation of a loss and damage fund while continuing with fossil fuel investment could be campared to vandals destroying a house pausing to hand the owner some cash, only to then carry on with the destruction.  COP28 is scheduled to take place from 30 November to 12 December 2023 in the United Arab Emirates, by which time one can hope that the fund is financed and operational, fossil fuel lobbyists have been excluded from the delegate list and the hard target of 1.5 degrees through decarbonisation is top of the agenda.

    Image courtesy of Arek Socha from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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