The 23rd session of the Conference of the Parties (COP23) to the UN Convention on Climate Change (UNFCCC) takes place from 6 - 17 November in Bonn, Germany. Presided over by Fiji, COP23 has a technical agenda: negotiators and delegates from almost 200 countries will focus on making progress in developing the rulebook for the Paris Agreement, to be approved in 2018. Thus this conference presents itself more as a working fortnight than a defining summit.
COP23 - an opportunity for developing countries
However, the dramatic shift in the US position on climate change together with the worrying climate news provide an unique opportunity for developing countries to shift the politics of climate change towards their needs and adaptation. Not least because this COP is, for the very first time, presided by a small island nation located on the frontline of climate vulnerability.
Adaptation - anticipating the adverse effects of climate change and taking action
Fiji’s presidency provides adaptation advocates with reassurance on the promenence that a readiness to deal with the impact of climate change will have in the discussions.
Fiji’s primary concern is working towards a common adaptation goal and its implementation. As for mitigating climate change, more ambitious targets are not expected to be announced. Some countries might share publicly their newly set 2050 targets.
In both areas, the poorest countries have called for increasing technical and financial support. We might see progress in defining how developed countries will contribute to building the necessary capabilities, not least to meet the future reporting guidelines, in the poorest regions of the world as well as raising rich countries’ commitment and transparency on climate finance.
COP23 - laying foundations for the rulebook to govern the Paris Agreement
The Paris Agreement does not foresee penalties for countries failing to meet their targets. Yet, there was consensus over the necessity to create a mechanism that will monitor compliance and denounce non-compliance. The sort of mechanism that should be put in place and how it will work has yet to be decided. While no final decisions are expected at this meeting, progess may be made in this area.
The main task of this climate summit is to lay the foundations for the operating guidelines or rulebook that will govern the Paris Agreement and ought to be approved in 2018.
Non-state actors are increasingly exercising pressure for change
Over 20 000 participants are expected to attend COP23 at the UNFCCC headquarters in Bonn. A non-negligible number of these participants do not form part of a delegation, but represent the voices of non-state actors (NSAs) such as cities, businesses and civil society.
Increasingly, they are putting pressure on governments and international negotiators. Many lead real change within their regions. Twenty global cities have committed to carbon reductions of at least 80% by 2050, while 111 of the most influential companies in the world committed to 100% renewable power.
Many financial institutions have publicly pledged to take action and registered their commitment in the UN’s NAZCA (Non-State Actor Zone for Climate Action) portal at COP21.
We at BNP Paribas Asset Management committed to disclose the carbon footprint of our portfolios by signing the Montreal Pledge and to progressively reducing our exposure to carbon risks through the Portfolio Decarbonisation Coalition.
One year on, we have published the carbon footprint of 94 of our equity funds. In the next couple of weeks we will be publishing an update of the carbon footprint of these funds, plus for the first time, the carbon footprint of all our equity funds[i].
We have since doubled our decarbonisation efforts, which today exceed the landmark of EUR 30 billion in assets under management. In addition, we launched a well-diversified green bonds fund this September thanks to the improved liquidity of the green bond market.
Our work over the past two years has centred on the analysis and identification of carbon risks within our portfolios and very much focused on the most carbon-intensive sectors. We joined forces with the Transition Pathway Initiative, an asset-owner initiative in partnership with the Grantham Institute of London School of Economics and Political Science. So far, the analysis of companies’ carbon performance and quality of management includes the 20 largest publicly-listed companies in the coal mining, electric utilities, oil & gas, steel and cement sectors.
Further, in the next five years, BNPP AM, alongside investors across the world, will engage with more than 100 of the world’s largest corporate greenhouse gas emitters to curb emissions, strengthen climate-related financial disclosures and improve governance on climate change. This global initiative is built on our previous engagement work within the European investor network on climate change, IIGCC. This initiative will be presented at COP23. It demonstrates the level of commitment and ambition of a non-negligible part of the investment community.
Leadership in the fight against climate change
From a political perspective, COP23 ought to demonstrate how committed and united in the fight against climate change the world is despite the regrettable exit of the US from the Climate Accord. It will be interesting to see the extent to which developing countries fill the leadership void left by the US. Will a climate-united China and European Union take over?
Written on 06/11/2017 [i] We include all our equity open-ended funds for which the calculation is feasible. For methodological reasons, we are unable to calculate the carbon footprint of financial derivatives, futures contracts and funds-of-funds. Also read these articles on COP and climate change on Investors’ Corner: