COP28 – cop out or progress?

So it is goodbye to another COP meeting and, as usual, it is a mixed bag. It is perhaps inevitable that there will be compromise, meaning that everyone comes out of it feeling they have got something, however small, but also with the unpleasant sense that another opportunity has been missed.

So COP28 initially promised the “phasing out” of fossil fuels in a draft (hardly earth shattering, pardon the pun), then another draft replaced it with “reducing consumption and production of fossil fuels in a just, orderly and equitable manner”. It then apparently got its courage back with a potential draft stating “phase out of fossil fuels in line with best available science”. But in the end it ran scared of the word “phasing”, and finally ended up with “transitioning away” from coal, oil and gas.

It is worth mentioning at this point that November 2023 was the warmest November globally in recorded history. In fact, every month since June was its respective warmest, with the warmest boreal summer and autumn, making 2023 the warmest on record, according to Copernicus Climate Change Service.

Indeed, when the Paris Agreement was signed, in December 2015, the world was projected to reach the 1.5°C threshold by March 2045. Today, it is likely to be 2034, according to Copernicus Climate Change Service data. In 2015, the deadline was 30 years away. Now it is only 11 years away. Things are accelerating fast.

The World Economic Forum’s Net-Zero Industry Tracker 2023 Edition includes analysis showing that “emission-intensive sectors are not aligned with the trajectory to reach net zero by 2050 – as determined by the International Energy Agency and industry-specific scenarios and targets. Over the past three years, absolute emissions have grown on average by 8% due to increased activity and demand, and all sectors in scope depend on fossil fuels, most with over 90% reliance.”

The tracker reveals an encouraging, though variable, increase in awareness and action among industries towards achieving net-zero emissions. “The 2023 tracker report recognises that, despite the challenges, the global industrial community is making progress towards achieving net-zero emissions…Yet most of that momentum is seen in companies with easily abatable emissions, substantial financial resources to invest in decarbonisation, public accountability or those operating in advanced economies with supportive policies.”

It adds: “A gap remains between those abatement leaders and companies experiencing greater emission intensity, operating in emerging economies or lacking the financial means to embark on a substantial decarbonisation journey.”

There is also the impact on nature. Reflecting on the negotiations at COP28, Dr Nicola Ranger, director of the Resilient Planet Finance Lab at the Environmental Change Institute, said: “Protecting and restoring nature is essential for the functioning of our economies and a vital component of adaptation to climate change. Nature is not the elephant in the room, it’s the huge green scorpion running towards us. The sting in its tail will significantly amplify the impacts of climate change in ways that are difficult to predict. It’s not just about birds and butterflies, we are fundamentally eroding the natural capital upon which our societies and economies are built.”

It’s not particularly cheery news to end the year on. But then, major change rarely happens because people are doing their best, or because some progress is being made. It happens when things get desperate and look bad. Risk managers and insurers know this better than most. The loss prevention or risk mitigation message is easier to get across and is taken more seriously after a big loss has occurred. Insurers know that claims are the shop window for the industry.

In the light of relative political inaction and compromise, in the end there are two things that organisations have to fall back on. Risk adaption and resilience.