Thankful

FULL DISCLOSURE

THANKFUL

We have had a days-long Thanksgiving celebration here. Our house was filled with kids (young adults) home for their first Thanksgiving since starting college/ boarding school. The place came to life, animated by music, food, love, laughter, and a happy dog. We progressed from a quiet family Thanksgiving Thursday to a couple of days of Friendsgiving with these wonderful kids back home from school, sharing stories of their new friends, new adventures, and enduring love for each other.?

My heart is full. I am thankful.

MY TAKEAWAYS FROM COP27

I am also thankful for the opportunity to attend COP27 in Sharm el-Sheikh, Egypt. The holiday weekend has given me some time to reflect on the many people I met and discussions I had. It focused me ever more on the next generation coming up - so full of promise and hope - and so deserving of a world that can support their dreams. I am talking about my own kids of course. But also the extraordinary people of Egypt and young people around the world who were very much present in Egypt. I left COP27 feeling hopeful. Of course, there is so much work to do and there were some disappointments - including the continuing sense that we are not acting fast enough to meet the Paris conference’s 1.5C commitment, and the failure of the developed world to meet its $100 billion annual climate finance pledge by 2020. But, progress was made at both the macro and micro levels that indicates we are indeed moving in the right direction.

Implementation

COP27 was billed, among other things, as the “implementation COP.” The feeling on the ground bore that out. Particularly in the Innovation Zone, where I spent most of my time, the sense was one of quiet resolve and a determined march forward. Crying from the rooftops about the urgency to address the climate crisis has been done before. It has already been well established that countries, financial institutions, and companies must build carbon reduction plans, and last year’s COP in Glasgow established the path to harmonized global reporting standards. This year was marked by quiet conversations and rolling up our sleeves to make tangible progress and map concrete transition plans.

Innovation

Much of the discussion I heard and engaged in was around innovation. This goes hand in hand with implementation. Innovation was discussed in the context of finance and the urgency to bring financial support to the developing world as it faces the compounding challenges of (1) fostering growth and infrastructure development, (2) while mitigating their impact on the climate through low carbon development powered by clean energy, (3) in a manner that is resilient to the growing climate impacts, and (4) while also dealing with climate-related losses and damage that has already occurred and continues to occur. No small feat, and not one the developing world can or should face on its own.?

Blended finance, bringing public finance and development bank loan guarantees together with private sector loans can foster the flow of private sector funds to emerging economies at lower risk and associated lower interest rates. There were interesting discussions around the development of innovative agricultural practices, including customized, lower carbon fertilizers that promote enhanced crop yields with reduced environmental impact. Green hydrogen and green ammonia were included in many discussions. One roundtable focused on the need to build climate expertise and the opportunity to do so in a manner that fosters diversity, equity and inclusion as we fill the hundreds of thousands of new jobs being created. Other discussions focused on processes and business models that help to scale implementation of low carbon technologies.?

Technology

Squarely in focus was the role of technology in fostering connection and transparency across the global economy. Technology was discussed in virtually every session I attended, whether related to the development of new energy systems, lower carbon products, more efficient processes, connected cities, monitoring technology, or technology to enable transparency and accuracy in emissions reporting. Technology facilitates the scaling of other innovations and the decision making critical to accelerating the transition to a lower carbon economy. It is the link that optimizes capital flows to reduce exposure to climate risk and optimize exposure to transition opportunities.?

Transition planning

The UK’s Transition Plan Taskforce (TPT) was announced at COP26 in Glasgow as part of the UK’s plan to become the world’s first net zero financial center. At COP27, the TPT published a draft transition plan framework ?to develop the “gold standard” for climate transition plans. The framework includes draft recommendations for a disclosure framework and implementation guidance, which are open to public comment until February 28, 2023. The TPT framework exemplifies the theme of rolling up our sleeves and getting to work on implementation. The TPT’s implementation guidance notes that, as of June 2022, more than 700 of the Fortune 2000 had announced a net zero target. Yet the plans these companies produced to explain how they were going to meet these goals varied widely in quality and detail.

The TPT framework will help companies to map and execute their transition plans, in line with the framing of the Task Force on Climate-related Financial Disclosures and the International Sustainability Standards Board.? The implementation guidance will help companies as they prepare their transition plans. These companies will serve as examples for other companies working to develop their transition plans. The TPT has also created a sandbox that will enable companies and investors to test the TPT guidance and provide feedback that will be incorporated into the TPT’s final disclosure framework and implementation guidance. One of the great delights of my time at COP27 was the opportunity to have dinner on my first night with my good friend and co-leader of the TPT, the UK FCA’s Mark Manning. He and his team have worked incredibly hard following the announcement of the TPT in Glasgow, and have created a framework that stands to advance concrete climate transition planning not only in the UK but around the world.?

Loss and Damage Funding

A significant win at COP27 was the last minute agreement on the establishment of a “loss and damage fund” to provide assistance to poor nations that have suffered climate disasters. The loss and damage fund differs from the already existing mitigation and adaptation funds, which are designed to help poor countries mitigate their impact on the climate (e.g., by transitioning to renewable sources of energy), and to adapt to growing climate risks (e.g., by strengthening their infrastructure to withstand heavy storms, or building greater capacity to divert flood waters). By contrast, the loss and damage funding will provide financial assistance to poorer countries that have suffered climate-related losses. The agreement was reached after an all-night negotiation session that extended beyond the initially planned end date for the conference. Sherry Rehman, the climate change minister of Pakistan is quoted saying “this is a down payment on investment in our futures, and in climate justice.”