Reflecting on COP28 and our ESG investing approach

Rice fields shot from above

Key takeaways


  • At COP28 global leaders have taken an important step forward by making three significant energy pledges on oil and gas emissions, renewables, and energy efficiency.
  • Outcome of COP28 had no immediate impact on financial markets, but yielded several key commitments and agreements with potential long-term implications.
  • As active investors, we aim to use our seat at the table to ensure we are part of shaping the future.

In December 2023, negotiators and leaders from across the globe gathered in Dubai for the 28th COP to deliberate on the world's climate agenda. It marked the largest COP thus far, with 100,000 attendees representing leaders from governments, civil society, and the private sector. Last year’s COP also saw the culmination of the world’s first “global stocktake” through which countries and other stakeholders reflected on the global progress made since the Paris agreement of 2015 1 and identified the gaps, with the goal of establishing a clear plan of action to reach net zero carbon emissions by 2050.

What are some notable outcomes?

1. Agreement on Loss and Damage Fund

COP28's opening session formalized a fund to support developing countries dealing with the impacts of climate change. With pledges from over 10 countries, the fund now stands at nearly $800 million and is governed by a board of 26 members, primarily leaders of developing nations.

2. Transition away from fossil fuels

After prolonged debates and a day-long postponement, participants at the COP28 summit reached consensus on a ground-breaking concluding statement advocating the shift away from fossil fuels. Despite steering clear of divisive language concerning the gradual elimination of fossil fuels, the consensus from the UAE represented an unparalleled acknowledgment of a worldwide pledge to move away from the utilization of oil and gas. Additionally, it calls for an accelerated effort in this decade to attain net zero by 2050. A notable inclusion in the agreement is a specific commitment to triple the use of renewables and double energy efficiency by the year 2030.

3. Major Methane Commitment

About 50 oil and gas-producing countries and companies pledged to achieve near-zero methane emissions by 2030, recognizing the potency of methane in contributing to global warming. This commitment was accompanied by a $1 billion grant funding announcement from some of the world's highest emitting countries.

4. Renewable Energy Expansion

In an effort to incorporate transition fuels into the energy mix, 22 countries, including the US, Canada, the United Arab Emirates, and Sweden, committed to tripling their nuclear capacity by 2050. Signatories also agreed to triple the deployment of renewable energy sources like wind and solar power and double the rate of energy efficiency improvement by 2030.

Financial markets and climate change

While the immediate impact of the conference's results on financial markets was not significant, COP28 yielded several key commitments and agreements with potential long-term implications for sectors such as energy, finance, and industry. Notably, discussions centred around the transition to renewable energy, decarbonization efforts, and the establishment of the Loss and Damage Fund. These developments may significantly influence market trends and investment decisions, particularly within the renewable energy and sustainable technologies sectors.

COP28 emphasized the crucial role of private capital in achieving net-zero emissions, acknowledging a substantial funding gap that must be addressed to meet climate goals, and highlighted the importance of mobilizing private investment and the role of financial institutions in supporting climate action.


How do we contribute on behalf of our clients?

At Rothschild & Co, we recognize the profound impact of Climate Change on capital flows and investments. Consequently, we have positioned climate change and the imperative to decarbonize the global economy at the core of our sustainability approach. Our objectives are twofold: we support our clients to reduce risks and enhance opportunities for their investments, and we help them contribute to the decarbonization of the real economy through the companies we invest in.

Our approach to sustainable investment

We avoid investing in companies substantially contributing to climate warming

We exclude:

  • Mining companies with a turnover of over 20% in the mining of thermal coal, the most carbon and pollution intensive fossil fuel.
  • Utility companies generating more than 20% of electricity from thermal coal.
  • Companies labelled as stranded assets due to substantial unextracted fossil fuel reserves, e.g. coal, oil and gas.

We place climate change mitigation and adaptation at the centre of our sustainable investment definition

  • Companies are considered sustainable if their carbon emission plans align with a global warming target of no more than 2°C. To assess this, we use the Implied Temperature Rise (ITR) metric developed by MSCI ESG Research (in case you want to find out more, please read our article "How hot is your portfolio?").
  • Alternatively, a company is deemed sustainable if over 20% of its sales come from products and services that positively impact the environment and society.

We favour sustainable investments in our portfolios

  • Almost all our discretionary portfolios and funds are classified as Article 8 2 according to the EU Sustainable Finance Disclosure Regulation meaning that they promote sustainability factors.
  • Typically, our portfolios will include a higher proportion of sustainable investments compared to the corresponding market benchmarks.
  • Our portfolios will exhibit a lower Implied Temperature Rise ('ITR') and a reduced carbon footprint* when compared to the corresponding market benchmarks.

We engage with companies through Proxy Voting

  • When we vote on behalf of our clients at annual general meetings of the companies we invest in, we will vote in favour of resolutions promoting transparency in carbon reporting and governance, as well as ambitious carbon reduction plans.

Rothschild & Co's Green Shield Portfolio: Our commitment to a more sustainable world

  • Launched in December 2023, our new strategy focuses on the transition to a low-carbon economy.
  • Hence, we target companies which actively reduce carbon emissions across their value chain and those directly contributing to the transition with their products or services.

As we turn our attention to COP29 in November 2024 in Baku, Azerbaijan, we are presented with an unparalleled opportunity to not only build upon the landmark agreements achieved in Dubai but also to strengthen our collective commitment to a sustainable and carbon-neutral future.

[1] The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015. It entered into force on 4 November 2016.

[2] Products that have an ESG integration approach and, in addition, have binding environmental and/or social characteristics in their process.

At Rothschild & Co, we aim to provide our clients with opportunities to participate in the global effort to tackle climate change across a wide range of sectors and issues.

Join us as we embark on this journey!

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