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Spotlight On Climate Change, ESG Investing – COP 28 Preview
Amanda Cheesley
29 December 2023
Alignment between the world's two largest carbon emitters is key to ensuring a meaningful consensus to the 28th United Nations Climate Change conference. And private banking and wealth management groups have their views on what to expect - and what to hope for. As the need to address climate risks intensifies, along with other sustainability issues, (UBP), its impact investing team is less optimistic about the outcome, highlighting the need to bolster current commitments to change. “Governments need to be reminded of the importance of adopting sustainable practices globally, creating a network of interconnected protected areas to serve as a global shield against the impacts of climate change,” the Swiss private bank said in a note. “Intensified efforts are necessary to develop and embrace new technologies for restoring degraded ecosystems, such as reforestation, rewilding, and soil regeneration. Moreover, there should be a radical shift in agricultural practices toward regenerative agriculture, aiming to restore soil health and biodiversity, which reduce reliance on chemical inputs, and enhance carbon sequestration thus having positive impact on climate,” UBP continued. The firm would also like to see concrete details emerge at COP 28 of a loss and damage fund that was agreed last year but no details were decided upon as to the financing and operation of such a facility. Energy transition An IMF update from earlier this year shows that subsidies to the sector have risen substantially over the last few years, although some of that is due to be temporary as energy prices have spiked in 2022 due to the war in Ukraine and its implications for energy markets. “Making an objective of removing those subsidies would double the advantage of creating fiscal room for many countries and accelerate the energy transition at the same time,” UBP. UBP is not alone in its views. Rebecca Craddock-Taylor, director of sustainable investment at alternative asset manager also believes that there will be a stronger focus on climate-related matters in the future, and that there are good returns to be had from ESG-focused investments. See more here.
UBP said it had put “the end of fossil fuel subsidies” as an item on its COP 27 wish list. “It would be ambitious to repeat the same wish in COP chaired by the CEO of an oil company, but given the implementation gap we are facing, we think it could be helpful to move to specific targets or, at least, include stronger language around the needed decline in fossil fuels and the counter-productive nature of existing subsidies schemes,” it said.