World leaders and business leaders gathered in Glasgow last year declaring the annual UN Climate Change Conference COP 26 the “last and best chance” to avert climate catastrophe. More than 450 companies have pledged to mobilize billions of dollars in climate finance alongside the world’s largest economies, to accelerate the transition to net zero emissions.
A year later, climate ambitions in Egypt’s Sharm el-Sheikh are set to be much more subdued as COP 27 kicks off its two-week event. This is mainly due to a protracted war in Europe and fears of a global economic downturn testing the resolve of the world’s largest greenhouse gas emitters and their commitment to climate action.
Since the summit in Scotland last November, only 24 of the 193 countries that have agreed to step up climate action have followed through on their plans, according to the UN. Meanwhile, financial companies that have joined the Glasgow Financial Alliance for Net Zero, pledging to cut emissions and put pressure on companies that rely on their funding to follow, have been slow to implement their ambitions.
A recent study by Accenture found that only 34% of the world’s top 2,000 publicly traded companies had publicly declared net zero targets, while only 7% are on track to meet their own targets for direct emissions. and of scope 1 and 2.
“We have experienced many shocks that impact business priorities,” Claus Aagaard, chief financial officer of Mars, a leading sustainability advocate, said in a conversation earlier this fall.
“At some level, it’s pretty easy to stay focused on climate, if you make it part of how you think about the sustainability of your business and the planet, and put it in the context that at least 80% of consumers tell us it’s important to them.
Companies are “fighting” against decarbonization
These priorities around climate action have been upended by the disruption caused by the war between Ukraine and Russia. The fighting that began in late February has prompted major economies, especially European ones, to turn to fossil fuels to fill Russian gas shortages. Global coal-fired power generation is on course to set a record for the second year in a row, according to Bloomberg, despite a promise from world leaders to “phase out” coal in Scotland.
In the United States, President Biden’s ambitions to accelerate the transition to clean energy, in part through the Cut Inflation Act, have been complicated by high gas prices and falling polls, so that he publicly calls on the oil companies to increase production and refining. Federal energy data shows the United States has produced more crude oil since Biden took office than during the same period under former President Donald Trump, according to Politico.
The macroeconomic fallout from the pandemic and soaring costs caused by supply chain disruptions and energy costs have complicated the task of decarbonizing businesses. Accenture’s research found that 93% of G2000 companies that set net-zero goals are unlikely to meet them within the set time frame, while a separate report by Bain and Company found that the rise of global inflation has clouded the outlook for corporate action. on the climate.
“As they develop their slowdown strategy, many companies setting ambitious decarbonization goals are grappling with what they can now afford to do to accelerate decarbonization and monetize it with customers,” the report says.
COP27 priorities
The COP27 agenda is expected to largely focus on four key areas: mitigation, loss and damage, adaptation and finance. Leaders of developing countries hardest hit by climate change should push for reparations, paid for by the world’s wealthiest countries, to meet the cost of ‘loss and damage’ caused by extreme weather events .
In the past year alone, 37 million people faced hunger and starvation in the Greater Horn of Africa following record drought, while a third of Pakistan was inundated by waters following record rainfall.
The biggest emitters of greenhouse gases, including the United States, have long resisted the idea of a reparations fund.
“This is a fundamental issue of climate justice, international solidarity and trust,” said Amina Mohammed, UN deputy secretary-general, in a statement ahead of COP27. “Those who have contributed the least to the crisis are the hardest hit. According to the Intergovernmental Panel on Climate Change, if you live in one of the hotspots of the climate crisis in the South, you are 15 times more likely to die from a climate catastrophe.
“No Time to Delay”
New data shows that the window to avoid the worst of the climate crisis is closing fast. The latest report from the UN’s Intergovernmental Panel on Climate Change (IPCC) found that emissions “unequivocally caused by human activities” have already warmed global temperatures by 1.1°C.
Temperatures will rise until mid-century under all considered emissions scenarios, with warming expected to exceed 1.5°C to 2°C, increasing the intensity and frequency of extreme weather events.
According to the UN, only drastic reductions in emissions over the next few decades are likely to keep warming from spiraling out of control.
“The science is unequivocal, the changes are unprecedented, and there is no time to wait,” the report says.
Akiko Fujita is a presenter and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita
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