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Cambridge Institute for Sustainability Leadership (CISL)

21 November 2022 - COP27 has agreed an historic breakthrough on a new fund for loss and damage to support countries most vulnerable to the devastating impacts of climate change. But the Sharm El-Sheikh talks made little headway on the high levels of ambition required to reduce emissions and reach the goals of the Paris and Glasgow agreements. 

Gains made during the climate talks in Egypt were boosted by business and civil society support for 1.5 and the outcomes from the G20 which reaffirmed commitment to the 1.5 degree warming limit. However, support for progress here failed to find its way into the final texts, which largely reiterate Glasgow wording but go no further. 

Businesses, NGOs and a large majority of Parties to the UNFCCC convention advocated to have strong language on the ‘phase out of all fossil fuels’ in the final COP27 decision – which is crucial to limit the global temperature rise to 1.5. Unfortunately, the final text did not include reference to ‘all fossil fuel phase out’ meaning the Sharm El-Sheikh Implementation Plan leaves the world on track for temperatures dangerously higher than the 1.5C safe limit for average global warming. There was good progress in other elements of the COP27 outcomes, including steps forward on the role of a global just transition to renewable energy, as well as the outlines of the Mitigation Work Programme. 

Eliot Whittington, Policy Director, CISL said: “The delivery of the loss and damage funding mechanism at COP27 is a major shift in the climate negotiations and is to be applauded. Loss and damage due to climate change has been a reality for a long time and it is inevitable and unignorable that vulnerable countries will need support in dealing with it. Ensuring countries experiencing devastating sudden and slow-build climate impacts receive meaningful support should not have taken the UN process so long to recognise.  

“Beyond this breakthrough and some incremental progress elsewhere, the Sharm El-Sheikh Implementation Plan fails to deliver the promise of its name. At a time when more action is required to deliver 1.5C, far too many countries came to the talks with the desire to water down ambitions and back away from their global commitments. Without significantly strengthening commitments to move away from fossil fuels and cut the carbon emissions that cause climate change, then loss and damage will be catastrophic and unmanageable in the mid to long term. 

“The small gains made to address climate change in Sharm El-Sheikh are inadequate in the face of a growing climate threat that is likely to worsen the multiple crises facing the world. Governments, businesses, investors and civil society now need to reflect on how we can urgently raise ambition and accelerate action further because every time we fall short, we open the door to increased unnecessary economic costs, human suffering and environmental destruction.” 


Finance is a key enabling factor for delivering the transition to a sustainable economy. Here, there have been some important breakthroughs, as well as frustrating standstills. The target agreed in Paris of $100bn-a-year in financing for adaptation and mitigation still remains unmet, although countries committed to meeting it next year – three years late. Talks on the new financing goal have also shown limited progress. However, the establishment of a new loss and damage financing facility is a major step forward on a contentious topic. While details and sources of funding for the facility still need to be agreed, it will complement the newly announced Global Shield initiative, which will provide quicker climate risk disaster financing for countries that need it most.  

Many governments and civil society organisations came to COP27 supporting the Bridgetown Agenda which calls for significant reform of policies and practices of multilateral development banks and international financial institutions, including the use of Special Drawing Rights to enable developing countries to respond to multiple crises and build resilience to climate change. The final COP27 decision creates space for the reform of Multilateral Development Banks and International Financial Institutions but falls short of explicitly supporting the Bridgetown agenda to deliver more funding towards mitigation and adaptation of developing countries.  

Nina Seega, Research Director, Sustainable Finance, CISL said: “COP27 has reiterated yet again that global leaders know what needs to be done to reduce emissions and secure the right trajectory on climate mitigation but we are still not doing it. While there are mitigation options across all sectors with the potential to at least halve global greenhouse gas emissions relative to the 2019 level by 2030, the actual impact of current NDCs is estimated to be 0.3% below 2019 levels - rather than the 43% below 2019 levels that’s needed. 

“Billed as an implementation COP, COP27 has succeeded in putting early warning systems, technology transfer, capacity building and just transition on the agenda with the hope of achieving decoupling of GDP and emissions in developing economies. We cannot solve the climate crisis without nature, and while we have seen some progress made here, the absence of refence to COP15 is a major disappointment.  

“Finance is a key driver to deliver on mitigation and adaptation commitments yet currently finance is insufficient even compared to expectations and current available opportunities. Urgent progress needs to be made on delivering existing financial commitments as well as setting new targets including separate mitigation and adaptation financing goals. The breakthrough on loss and damage, however, is absolutely key to building resilience to a quickly-warming world.  

“Although falling short of the full Bridgetown Initiative proposal, reforming the multilateral development bank and international financial institution space opens the door for more private finance to flow through to developing markets. And recommendations of the high-level expert group on the net zero emissions commitments of non-state entities, which were welcomed by COP27, shine a bright light on need for transparency and accountability around net zero targets, transition plans, alignment of lobbying efforts and voluntary carbon markets.” 

EU action 

The EU has played a key role in setting up the loss and damage finance mechanism and stepped forward in a number of areas. Firstly, the EU announced that they would be able to update their NDC to achieving “at least 57% net greenhouse gas emissions” by 2030, given the recent agreements on Fit for 55 package files (Effort Sharing Regulation and on CO2 emissions from cars). In addition, the EU convened a Ministerial with the US to continue to push for progress on the Global Methane Pledge. Besides proposing a breakthrough on Loss and Damage finance mechanism and making the deal possible for all Parties, the EU has also pushed for progress on the mitigation work programme and supported strong language on 1.5 degrees and the phase out of all fossil fuels, although with limited success.  

Finally, some EU Member States including Austria, Belgium, Denmark, France, Germany, Ireland and the European Commission made loss and damage finance pledges at COP27. 

Ursula Woodburn, Head of EU Relations said: “It has been heartening to see the efforts that the EU has made to push for progress at this COP and prevent backsliding. Specifically, continued support for 1.5, the support for a new Loss and Damage fund and to strengthen language on the phase down of fossil fuels. EU leadership on climate can be critical to building bridges and we look forward to continued leadership as we prepare for the Global Stocktake next year.  

“To show that the EU is walking the talk, the EU should continue to ensure that its own house is in order by adopting effective and ambitious agreements in the remaining Fit for 55 files, such as the European Emissions Trading System, Renewable Energy, Energy Efficiency and Energy Performance of Buildings Directives. These agreements need to put the EU on a path towards achieving its 2030 objectives. 

“European businesses support the EU both in its efforts to phase out fossil fuels and step up its climate action, as well as to show global climate leadership by ensuring our global net zero transition.” 

Business leadership 

COP27 has also seen some important business ambition announcements. The Science Based Targets initiative (SBTi) announced more than 4,000 companies now have science-based targets. During COP27, the UN high-level expert group on the net-zero emissions commitments of non-state entities launched its recommendations. Key red lines in this report were that non-state actors cannot claim to be net zero while building or investing in new fossil fuel supply, buy carbon credits that lack integrity, focus on reducing the intensity of emissions rather than absolute emissions, or lobby to undermine ambitious government climate policies. The UN Secretary General also called for all voluntary initiatives to align with these recommendations by COP28.  

The debate on business leadership and the role businesses play in climate negotiations therefore continued at COP27. It will be critical that both Parties and non-Party stakeholders participate in the global stocktake process ahead of COP28.  

Eliot Whittington, Policy Director, CISL said: “In many cases business and investor leadership has been far in excess of what global governments have been able to agree. However alongside private sector leadership there is also a fair degree of greenwashing. The recommendations of the High Level Expert Group and the language in the COP27 outcome around accountability are important signals about how global efforts to ensure non-state actors including business deliver on their promises and really contribute to the climate transition.” 


Zoe Kalus, Head of Media  

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