As COP27 gets underway, Rathbone Greenbank Investments said short-term crises must not detract from long-term commitments and the event will need to focus on how to ensure countries don’t renege on their climate promises.
Nicola Day, deputy head of Rathbone Greenbank Investments, said: “Last year’s COP26 saw some impressive commitments and pledges made from world leaders. However, the UN’s latest analysis paints a bleak picture of global climate action. The ambition gap between current pledges and the rate of decarbonisation needed to keep the Paris Agreement alive needs to narrow rapidly.
“While we are hopeful of increased commitments, the core focus of COP27 will be on the implementation of existing pledges, ensuring countries do not slide backwards but continue to focus on their long-term commitments.”
According to Rathbone, investors need to see a clear, consistent and long-term policy framework in order to unlock climate investment at scale, and has called on governments not to allow short-term crises to distract from tackling long-term challenges.
Day said: “The economic backdrop to COP27 is very different to what we saw at COP26 and policymakers are coming into the talks having grappled with rising geopolitical risk, energy supply challenges and rapid increases in the cost of living. If we are to make headway on climate pledges COP27 will need to focus on the longer term and how countries can make good on their promises and not slide backwards.”
Rathbone has called upon governments, financiers and businesses to use COP27 as an opportunity to collaborate and develop ways to support more ambitious nationally determined contributions.
In addition, the firm would like to see attendees focus on building a robust global market for carbon pricing.
According to Day, carbon credits and ensuring companies are paying for the actual cost of carbon they create are “essential elements” of meeting credible net zero pathways.
“While there are some regional carbon trading systems in place, the lack of a global framework means companies can relocate operations to avoid paying a price for carbon rather than the desired outcome of them reducing emissions,” she explained.
Furthermore, Day said attendees should use COP27 to place the Just Transition central to decarbonisation and climate finance plans.
Day said: “Developing nations are some of the most vulnerable and least resilient to the physical impacts of climate change, yet these same countries have contributed far less to the problem. With a focus this year on ‘loss and damage’, COP27 will need to carefully balance the needs and responsibilities of the various parties and ensure an equitable share of costs and benefits. Many countries are facing catastrophic impacts already and the question of who bears the cost for climate mitigation and adaptation cannot be kicked down the road again.”
Finally, Rathbone says countries must do more to recognise the link between climate and biodiversity. With the COP15 UN Biodiversity Conference set to take place in December and data increasingly highlighting the need for greater biodiversity protection, Day said the firm expects to see agreements which impact climate and nature happening at both conferences with strong overlap in participation from both private and public actors.
