Key takeaways
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.
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.
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.
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.
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.
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.
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.
We exclude:
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.
