Climate COP27 recap leading into what to expect at Biodiversity COP15

COP27 saw plenty of big announcements, funding commitments and accelerated climate action from governments, organizations, and companies – here is a brief recap – with some foreshadowing on what we can expect from Biodiversity COP15 starting next week in Montreal:

Countries delivered a package of decisions, with a heavy focus on climate resilience/adaptation and responding to climate impacts, but short on commitments to further reduce their emissions.

 Countries made limited progress on accelerating emission reductions other than reaffirming their commitments to limit global warming to 1.5°C. Fossil fuel phase-out was not central to discussions as many had hoped it would be.

Climate finance was key. The Adaptation Fund received $230 million in new pledges for increasing the climate resilience of vulnerable communities. Controversial “loss and damage” funding finally saw progress, with the historic decision to establish and operationalize a dedicated loss and damage fund to address funding gaps related to providing support to developing countries responding to loss and damage from the effects of climate change including extreme weather events and slow onset climate events.

An Adaptation Agenda of $4 billion by 2030 was launched to build climate resilience. First of its kind, this comprehensive global plan brings nations and private sector together on a shared set of adaptation actions across five systems: agriculture, water and nature, coastal and oceans, human settlements, and infrastructure. The Adaptation Agenda defines 30 adaptation outcomes, including planning and finance solutions to help vulnerable communities adapt to climate hazards. The Agenda includes 2030 targets relating to agriculture and ecosystems, including:

Protect and/or restore approximately 400 million hectares in critical land and freshwater ecosystems that support indigenous/local communities with the use of nature-based solutions

• A transition to a climate-resilient, sustainable agriculture that reduces GHG emissions by 21% and increases yields by 17% without expanding agricultural lands.
• Protect 15 million hectares of mangroves
• Expand access to clean cooking for 2.4 billion people through +$10 billion/year in innovative finance
• Mobilize 2,000 of the largest companies to integrate physical climate risk into their business plans and develop actionable adaption plans

Multilateral Development Banks (MDB) structural reform: COP27 published a draft decision calling on MDBs to expand lending, overhaul development funding, introduce non-debt instruments, and align their spending with climate goals.

COP27 announcements impacting corporates:

• UN and ISO launched net-zero guidelines to help organizations develop net-zero emissions plans. The ISO guidelines are similar to the Science Based Target initiative net zero standard requiring maximized decarbonization and use of removals offsets for residual emissions.
• ISSB’s climate-related disclosure standards (IFRS S2) will be incorporated into CDP’s global environmental disclosure platform. This is a major step towards developing a comprehensive global baseline for capital markets, as CDP 2021-2025 strategy sets out to incorporate all high-quality global and regional reporting standards in their disclosure system.  ISSB’s IFRS S2 climate-related disclosure will be merged into CDP’s existing questionnaires for the 2024 disclosure cycle. The ISSB standard focuses on sustainability-related disclosure for value creation.  ISSB confirmed that climate-related scenario analysis will require companies to report on climate resilience and identify climate-related risks and opportunities to support their disclosures. The International Sustainability Standards Board (ISSB) also agreed to support preparers on undertaking scenario analysis using the FSB Task Force on Climate-related Financial Disclosures (TCFD) guidance (TCFD is a set of guidelines, ISSB is a standard).
• Greenwashing addressed: An expert UN group set up earlier this year to address greenwashing of net-zero pledges by governments and companies (especially fossil fuel companies pledging net-zero while still planning new oil/gas developments) released a report at COP27 call for an overhaul of net-zero planning to address the overreliance on nature-based offset projects in the use of net-zero plans. The report calls for companies to report publicly every year and provide verifiable data to back up their plans, for regulated requirements to replace voluntary net-zero commitments for large carbon emitters and insists companies must address scope 3 emissions in addition to direct emissions.

 Big focus on nature – forests and agriculture. Nature and climate are increasingly being discussed together and nature played a big role at COP27.   In addition to the Adaption Agenda:

• The architects of the Paris agreement urged countries to step up to address nature loss by creating a “Paris moment for biodiversity” in Montreal.
• 26 countries and the EU committed to join the Forest and Climate Leaders’ Partnership (FLCP) – which aims to accelerate momentum to halt and reverse forest loss and land degradation by 2030.
• $8 billion was pledged by 42 countries to help farmers reduce emissions and adapt to climate change.
• The 14 major agri-commodity companies announced a plan to reduce land-use conversion emissions. The Agriculture Sector Roadmap to 1.5° acknowledges the critical role agri-commodity traders and processors play in the transition to 1.5° a commit to developing a supply chain roadmap for their farm-gate and ranch-gate producers in the value chain. The three Roadmap objectives are: 1) accelerate supply chain actions to reduce emissions stemming from land use conversion; 2) drive the transformation of commodity-producing landscapes through investment in initiatives that transform land use practices, support producers, and incentivize sustainable land use; and 3) support forest positive sector transformation by mainstreaming best practices and through collaboration with governments, finance sector and value chain actors.
• Emission reduction targets are expected to be completed for cattle, palm, and soy in 2025. Critics argue that the Roadmap contains too many loopholes and does not address the problem quickly enough.
• UN announced they will launch a plan in the next year to make the world’s food systems more sustainable
• Food and Agriculture for Sustainable Transformation (FAST) was launched to improve the quality and quantity of climate finance contributions to transform the agriculture system by 2030, support climate adaption, and maintain a 1.5° pathway.
•  The Climate TRACE coalition released the most detailed facility-level global inventory of GHG emissions – including 72,612 individual sources covering specific power plants, steel mills, urban roads, and oil and gas fields. These sources represent the top known sources of emissions in the power sector, oil and gas production and refining, shipping, aviation, mining, waste, agriculture, road transportation, and the production of steel, cement, and aluminum.

COP15 begins next week – the most significant biodiversity convening in a decade. Expect big announcements, calls for companies to increase their focus on nature-based impacts and risks, and land-intensive sectors. The standard-setting organizations will be highly visible interacting with corporates on climate and nature will attend despite an expected reduced corporate presence than COP27. We will hear a lot more on adaptation and resilience, nature-based solutions, land conversion and land management. And we expect a focus and reinforcement on the connection between climate and nature – around net-zero and beyond value chain climate mitigation. For those of us in the biodiversity space, it will be an exciting time.