The road to COP28
28th UN Climate Change Conference, Dubai, United Arab Emirates
Race against time: Was COP28 the transition moment?
The Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) in Dubai this year generated headlines throughout 2023, as business, government and financial institutions continue to seek solutions to climate change amid dozens of competing pressures. In a year which saw 1.5°C global warming breached and extreme weather in all continents, COP28 saw the first ‘global stocktake’ of the Paris Agreement and, for the first time, encouraged governments to transition away from fossil fuels.
COP28’s final statement calls on countries to “take actions towards achieving, at a global scale, a tripling of renewable energy capacity and doubling energy efficiency improvements by 2030.” Importantly, it also directs countries to “accelerate efforts towards the phase-down of unabated coal power, phasing out inefficient fossil fuel subsidies, and other measures that drive the transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, with developed countries continuing to take the lead.”
In COP28 president Dr Al Jaber’s words, “the world needed to find a new way. By following our North Star, we have found that path.” If he is correct, we have started a journey towards a ‘new normal’ for business, building on the consensus achieved at COP28. The legal implications for companies of a sure-footed transition are significant, from disclosure to litigation, antitrust to M&A.
Our analysis of the key takeaways for business across energy transition, climate finance and nature is here.
The finance industry has a vital role to play in transitioning the economy to a low carbon future and COP28 focussed on the question of not just where the necessary capital will come from, but how it will be released. Mobilising climate finance will require coordinated and determined action, utilising the growing market of sustainable finance instruments as well as directing private investment flows towards more sustainable economic activities. Investors and businesses alike need to prioritise the assessment and management of climate related financial risks and opportunities as the regulated frameworks continue to grow.
Read more about what we expect to see next in sustainable finance and the evolution of capital markets.
Public policy and regulation are some of the key levers available to governments to accelerate climate action, whether in the form of disclosure rules, enabling infrastructure, subsidies and state aid, planning, tax and trading policy, or outright bans on certain technologies, compounds or processes. Over the past year following COP28, COP27 and the parallel biodiversity conference (COP15), huge public investments and policy initiatives have kicked off in both the USA and EU, for example, as well as efforts to streamline disclosures across the sustainability domain such as the International Sustainability Standards Board (ISSB), the TNFD focusing on nature dependency and impact, and the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDD) within the EU.
Following COP28, explore further aspects of climate-related regulation, including our work to advance thinking around corporate sustainability reporting.
Climate change has brought the environmental performance of companies into sharp focus, including in the courts. Strategies used by plaintiffs are broadening in scope, with directors coming under fire for supposed lack of ambition on emissions reduction, to allegations of greenwashing over claims made by companies on products, targets and offsets. While litigation alleging greenwashing or under reporting represents the sharp end of stakeholder pressure, expectations on companies from governments, regulators, consumers and investors continue to grow. Over the last year we have seen an increase in scrutiny of corporate sustainability performance, a trend we expect to continue following COP28.
Our teams share their insights on trends in climate-related litigation and how businesses are navigating this increasingly complex legal landscape.
Industries globally are gearing up for climate transition. The deliberate process of reimagining and rewiring economic activities such that they are environmentally, socially and commercially sustainable is not just about fixing the climate: it is crucial to maintaining a competitive edge in a decarbonising world. As a result, understanding these issues in the context of corporate transactions is a vital component of robust due diligence, and goes to the heart of the value deals can deliver.
We help our clients assess the physical, people, regulatory and litigation risks facing their investments and seize opportunities in low carbon solutions and the energy transition. Our global teams share their insights on key climate-related transactional issues in the resources below.