A tale of two COPs

Why finance and business must engage and take action at COP27 and COP15.

by Darren Mckenzie

Communications Lead

The final two months of 2022 sees two environmental conferences taking place back to back, crucially at a time when the UN says current efforts to tackle emissions will lead to catastrophic levels of warming. COP27 in Egypt focuses on the climate crisis. CBD COP15 in Canada on the nature crisis. The science shows us that climate and nature are inextricably bound, and if business and finance are serious about reaching their net-zero targets, they have decisive roles to play in both.

Much of the focus of COP27 – the African COP – will be on world leaders and whether they can fulfill funding pledges for developing nations to tackle the loss and damage caused by climate change. At COP26 there were significant pledges to halt and reverse deforestation by 2030, because deforestation is responsible for 10% of our global gas emissions, and the Egyptian Presidency has also promised to build on this work

COP15 is the Convention on Biological Diversity (CBD). It was first due to be held in China in 2020, but the coronavirus has enforced delays and now a change in location. So in December, it comes to Montreal, with the Chinese government still leading on the agenda. Many are hoping for a “Paris moment” for nature with the adoption of the Global Biodiversity Framework – with specific targets for protecting nature and biodiversity.

The reality is, both conferences are pivotal steps along the path to driving essential change for our planet. And as Inger Anderson, the executive director of the UN Environment Programme, made clear last month the “time for incremental change is over”. In Sharm El-Sheik and Montreal, business and finance must join world leaders to move action forward.

Currently, our global financial system is destroying nature. Governments, through subsidies, spend five times more money harming nature than protecting it. Private finance provides $6.1 trillion dollars to companies at high risk of driving deforestation. This wall of public and private money is going in the wrong direction. 

Only a root-and-branch transformation of our economies and societies can save us from accelerating climate disaster.

Inger Anderson, Executive Director UN Environment Programme

Deforestation is crucial to achieving business net-zero pledges, but the majority are not on track.  Our research conducted with the UN High-Level Climate Action Champions in June showed over 90% of the companies most at risk of driving deforestation (according to our annual Forest 500) who have a net-zero target, won’t meet it. 

The Glasgow Financial Alliance for Net Zero was launched at COP26 but recent news of its split with the Race to Zero group has made headlines. However, both groups still expect their members to address deforestation as part of the transition to net zero. Our newly launched Deforestation Action Tracker provides a baseline assessment to show where these financial institutions are on this journey and will hold them accountable annually. We also provide tools, such as the finance sector roadmap – launched a year ago – to help guide their teams.

Since COP26 and the pledge by 140 governments to halt and reverse deforestation by 2030, we have seen due diligence laws published in the UK and EU. With the hoped for Global Biodiversity Framework to be released at COP15, and next year’s final TNFD framework expected, the landscape is changing rapidly for business and financial institutions.

Financial institutions and companies not engaging with COP27 and COP15 and acting on deforestation will increasingly be at odds with tightening legislative measures, and their own climate and net-zero commitments. 

In his final speech as COP President, Alok Sharma said the world is “on the precipice of climate catastrophe.” His words were backed up by last month’s UN report into countries’ National Determined Contributions which called for “a root and branch” transformation of our economies.

There is no fairytale ending to the climate crisis. But if business and the finance sector engage and take action at COP27 and COP15, we can perhaps prevent the tale of two COPs becoming a nightmare.