By Dr. Adriana Kocornik-Mina, Research & Metrics Sr Manager, Global Alliance for Banking on Values (GABV). Head of Delegation of the GABV as an Observer NGO at COP27
As an observer representing an alliance of values-based banks, credit unions and microfinance institutions at COP27, the United Nations annual Climate Summit, we look back at numerous panel discussions to ask how many steps all of us took this year towards an inclusive, sustainable and resilient future.
The short answer is not enough. The long answer is somewhere around four important steps: one toward greater coherence, one toward integrity and accountability, one toward building trust and another toward stepping up in the pace of change.
The short answer: Not enough
We know what is happening. We know what needs to be done and yet, individually, we do not take responsibility. Collectively, we do not reward consistently ‘doing good’ and ‘avoiding harm.’
The universal laws of system failure, succinctly explained in Simons and Nijhof’s Changing the Game, make it easier, although no less disheartening, to understand why we find ourselves here. Every time the dominant culture is one in which actors serve their own interests, focusing mainly on short-term benefits and transferring the consequences to others or to a later point in time, the results are unsustainable, exclusionary and lead to greater vulnerability.
The agenda of the COP 27 (Conference of the Parties 27th session) was long. It included climate change-related impact and associated actions to address and/or adapt to its effects, development and transfer of technologies, matters related to finance, capacity building, loss and damage, implementation, stocktakes, and more; various and highly interrelated elements of the global systemic problem that is climate change. A sense of urgency notwithstanding, truly global, coherent and consistent collective action to address systemic failures continues to elude us. Questions around fairness in the distribution of costs and benefits, and differing views on possible solutions, remain difficult to tackle.
Still, coalitions have emerged to strengthen global climate action. The Network for Greening the Financial System (NGFS), established in 2017, is a prime example. More recently the Coalition of Finance Ministers for Climate Action, is another. It might represent a true catalyser of decarbonisation and resilience at scale while achieving macroeconomic and financial stability.
Delivery remains problematic, however. Developed countries’ promise to deliver $100 billion per year by 2020 for climate action has not been met. And even though countries agreed to set up a loss and damage fund to help poor countries (details pending), COP 27’s final agreement failed to deliver bolder action on climate change. Reduction of all fossil fuels (forget about phase out) and stepping up the pace of emission cuts are not in the agreement. Instead, carbon capture – that is, storing carbon dioxide before it is released into the atmosphere, an industry that remains very much in its infancy – has been highlighted as a component of low emission energy.
“Questions around fairness in the distribution of costs and benefits, and differing views on possible solutions remain difficult to tackle.”
Multilateral development banks, which accounted for 36 per cent of global climate flows in 2019/2020, will be key to scaling investments to deliver a just transition and sustainable development. With private sources accounting for 49% of climate flows in the same period, the steps taken to improve the robustness of net zero pledges by businesses and financial institutions are important.
Against the backdrop of multiple crises, the prioritisation of climate change by the more than 100 heads of country who attended is noteworthy. So are the agreements on loss and damage, on the more pivotal role for multilateral development banks and, importantly, no public backtracking on the political commitment on 1.5C. However, it is not enough either because practicalities have yet to be defined or commitments have yet to be met.
Now to the longer answer.
Step one: Toward Greater Coherence
Coherent behaviour is essential to change. The magnitude of climate change impacts and the associated sense of urgency notwithstanding, individual behaviour often has been in disconnect with action on both the sustainability and climate fronts. COP27 offers many examples of action to advance coherence as a principle, however. These actions often involved multiple actors. A little-known effort: consider that on average each attendee to COP27 left a 2.2-tonne carbon footprint. In partnership with UNDP’s Accelerator Lab team in Egypt, SEKEM and Zero Fund launched a pilot project ZeroCOP27 to encourage individuals and companies to offset their carbon footprint. The platform allows the purchase of Economy of Love agricultural carbon credits. Through this collaboration, attendees offset travel and invested in the green transition of smallholder farmers in Egypt.
This example is one of many proposed and as yet untested solutions that recognise the intersectionality of problems and their solutions. Coherence requires effort by both solution providers and agents who can implement those solutions; COP27 was a space where those efforts could be galvanised.
Step two: Toward Integrity and Accountability
Outcry followed the release of a progress report by the Glasgow Financial Alliance for Net Zero, a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy. Its relegation of the UN’s Race to Zero to one of many verification bodies for financial sector pledges illustrates the closer scrutiny of voluntary industry-led initiatives, as well as the importance of real change for success.
In March this year, the United Nations’ Secretary General established a High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities to develop stronger and clearer standards for net-zero emission pledges of non-State entities, and speed up implementation. This was a concrete step forward; integrity and accountability in the reduction of absolute emissions is a priority. Tasked with preparing recommendations on current standards and definitions for setting net zero targets, credibility criteria to assess objectives, measurement and reporting, verification processes and a roadmap to translate these standards and criteria into international and national level regulations, the report reflects extensive consultation and makes 10 recommendations. These recommendations constitute guardrails to prevent laggards from taking market share from leaders while enabling innovation.
To achieve the required progress on the implementation of commitments under the Paris Agreement, all actors must act with integrity and be accountable for decisions that work against the achievement of global climate goals. The Net Zero Asset Owners Alliance’s decision to welcome the recommendations in this report is a sign that important parts of the financial system are taking their commitments seriously. Other voluntary initiatives should follow, in particular, the Net Zero Bankers Alliance.
Step three: Toward Trust
COP27 is a prime example of the importance of reinforcing loops between actors and their initiatives. Parties and observers alike came together to address the problem of climate change and its effects. That the outcome is far from ideal should not be seen as proof that the initiative should be shelved. Rather, it is an opportunity to facilitate and strengthen the complementary roles of attendees and their stakeholders. Already, many such collaborations have been initiated or continue as part of, or in parallel to, COP27. These engagements constitute stepping stones from mistrust to trust. As Adam Kahane reminds us in Collaborating with the enemy, trust is a result and not a precondition. It arises from human connection and is built through doing things together.
“Mutual understanding of priorities is necessary for trust to pave the way for effective action.”
Doing things together requires that we understand each other and our priorities. Mutual understanding is not simply something ‘good to have’; it is essential to climate action. The value of global voluntary alliances lies, among other things, in the opportunity for members to exchange and advance common views on shared objectives and best practices. The UK Transition Plan Taskforce Disclosure Framework reflects the importance of a shared and consistent understanding of what is needed to deliver a net zero future by all actors – from government to industry to academia to civil society. The premise of the framework is that every participant is committed to successfully transitioning to net zero and to climate resilience. It is also premised on a shared definition of what the transition journey looks like.
The opportunity to work together to solve common problems embodied by COP27 is one worth expanding so that all voices are heard, and the costs and benefits of the transition are shared fairly. Mutual understanding of priorities is necessary for trust to pave the way for effective action.
Step four: Toward Stepping Up in the Pace of Change
The common, global view of what is needed to address climate change is articulated in the Paris Agreement, adopted at COP21 in 2015 with the goal to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. Unfortunately, there are multiple views on how to realise these objectives. An important number of actors are committed to the idea that absolute emissions must be reduced and emitting sectors must be scaled down and, in some cases, phased out. At the same time, other actors support – for a variety of reasons – greater reliance on carbon capture technologies.
From a global community perspective, the availability of advanced technologies to safely capture and store emissions from fossil-intensive development should be closely examined. Similarly, the distribution of benefits and costs associated with a high reliance on such technologies should be well understood. The more likely it is that the benefits to governments in the form of tax revenue, domestic investments, employment and increased chances of re-election are directly and explicitly linked to progress in climate action, the greater the chances of success. Beyond governments, the more the business case for sustainability in finance is examined in terms of its contributions to resilience and stability of the financial system, the easier it will be to restate concerns regarding the fiduciary duty of financial institutions to do good.
Governments and financial institutions aside, civil society organisations and, especially, highly informed youth representatives were driving an acceleration in climate action at COP27. To illustrate, Fridays for Future Uganda with support from the French Embassy in Uganda and the National Association of Professional Environmentalists (NAPE) organised a Mock COP27 meeting before the real thing under the theme “Youth, Gender, and Future Generations.” The meeting resulted in a report articulating actions and steps to be taken by world leaders during COP27. The report adopted ten key recommendations for the Uganda government and world leaders. These were related to empowering more girls and youth to lead the way in the fight against climate change.
It is a big step forward when people from all over the world connect, exchange and search for ways to collaborate. Under the COP27 umbrella and after many formal and informal dialogues, stories of ambitious transformation of people, companies, sectors, abound. The many accounts of progress or lack thereof in media outlets do no justice to the range of solutions deployed by individuals and organisations, often with the support of government agencies.
“It is a big step forward when people from all over the world connect, exchange and search for ways to collaborate.”
COP27 brought together low emission technology solutions, ranging from electric transport and shipping to hydrogen energy generation, as well as carbon capture sequestration and utilisation technologies. It also brought together providers of finance, including asset owners and those in support of voluntary carbon markets. And it brought together developers of standards and taxonomies with users.
Stepping up the change is possible the more these solutions are seen as part of a coherent whole. That is why we must bind action on adaptation, mitigation, resilience and development together. There are many actors working with this holistic approach in mind.
Where to next? How to bring it all together?
Looking ahead to COP28, we must advance a common understanding of sustainability and human dignity as values that are common to all of us. Some elements I consider essential to focus on:
- A common agreement of what doing good means. The Universal Declaration of Human Rights and the SDGs enshrine what ought to be and what we must work to realise. Our efforts on adaptation and mitigation and a just transition should be seen not only as a response to the global challenge of climate change but as steps in the broader plan to build a future informed by these universal frameworks.
- Building a global culture centred around common values. Alongside the concrete solutions being worked on by multiple actors, we must find ways to nurture common values and their practice.
- Clear definitions of sustainability, models and tools contextualised to localities. To communicate these understandings, we need to emphasise how to do things, rather than what to do. Just as the Paris Agreement is a legally binding international treaty with a clear 1.5C target at its centre, so must we work to further develop meaningful commitments around sustainability and human dignity.
- Coherence, integrity and trust underpin the potential to accelerate climate action and protect natural resources and biodiversity. The alternative will always lead to unsustainable outcomes.
Markets rewarding unsustainable practices, formal institutions reinforcing unsustainable practices, mismatches in benefits and costs and a lack of alternatives might have explained inaction in the past. But we have now reached momentum in building global scaffolding to structure our engagements. Now it is up to all actors to act with coherence and integrity, to cultivate trust and to step up change.