On November 20, the United Nations concluded its 27th annual Climate Change Conference of the Parties (COP27) in Sharm el-Sheikh, Egypt. The conference had gone into overtime as negotiators from roughly 200 countries reached a deal to set up a “loss and damage” fund for vulnerable countries, but failed to agree on phasing out all fossil fuels.
The latter left many leaders and climate advocates disappointed and frustrated, especially after weeks-long negotiations. Nevertheless, COP27 yielded several significant breakthroughs in terms of geopolitical progress and help for climate victims.
Key Takeaways from COP27
Here are five highlights from the COP27 summit, from greenwashing crackdowns to ambitious pledges.
1. Delegates agree to establish a “loss and damage” fund
In the final hours of the conference, delegates finally reached a deal on the proposed “loss and damage” fund, which would help low- and middle-income countries cover the costs of climate-related damage, including floods and droughts.
The US initially opposed such a fund, with US climate envoy John Kerry claiming that existing funds could pay for damages, while other US negotiators argued that claims could quickly reach trillions of dollars.
Still, after the EU officially changed its position to move in favor of the fund, the US soon followed. The details of the agreement, however — including how much will go into the fund and who will contribute — will not be decided until next year’s conference in Dubai.
The remarkably slow progress that characterized the conference in general left many researchers and experts frustrated.
For example, calls to phase out fossil fuels in order to limit global warming to 1.5°C above pre-industrial levels were blocked by several oil-producing states. Instead, the revised wording now calls for the accelerated development of “low-emission” energy systems, which could present a significant loophole.
“What we have in front of us is not enough of a step forward for people and planet … we should have done much more,” said Frans Timmermans, the European Union’s Climate Chief.
2. UN experts demand a crackdown on greenwashing
UN Secretary-General António Guterres called out companies that attempt to greenwash their emissions data and camouflage the damage they cause, stating that “their sham must end.”
“Using bogus ‘net zero’ pledges to cover up massive fossil fuel expansion is reprehensible,” said Guterres. “It is rank deception. This toxic cover-up could push our world over the climate cliff.”
On the third day of COP27, UN experts released new guidelines in an attempt to prevent greenwashing in net zero pledges.
Currently, to issue a voluntary pledge, companies are not required to account for the polluting activities of the suppliers and other third parties they do business with.
The new UN guidelines seek to make pledges more credible and transparent by urging businesses, banks and local authorities to make their plans for reaching net zero publicly available, and to “publicly advocate for climate action and disclose all lobbying activity.”
Just this month, the EU voted to officially pass its own anti-greenwashing legislation, the Corporate Sustainability Reporting Directive (CSRD). The directive will require impacted companies to have their annual sustainability reports independently audited.
3. Leaders seek short-term solutions to the energy crisis
Russia’s invasion of Ukraine and the resulting energy crisis were of course major topics of discussion at COP27.
High natural gas prices have pushed some European countries to temporarily fall back on coal while they search for alternative sources of natural gas.
In order to avoid overreliance on coal, Germany signed a deal with Egypt to advance green hydrogen and the export of liquified natural gas, while other governments and businesses are considering projects in Senegal, Tanzania and Algeria.
European leaders insist that these initiatives are intended to be short-term fixes until solutions that better align with their long-term climate commitments are available, but even the temporary funding of fossil fuel projects in developing countries will certainly raise some eyebrows.
4. Formal climate talks between the US and China resume
During the last week of the summit, Kerry confirmed that formal climate talks had resumed between China and the US. China had halted negotiations in August after House speaker Nancy Pelosi’s visit to Taiwan.
As the world’s largest polluters, cooperation between the two countries is essential when it comes to making progress against climate change.
Meanwhile, President Biden vowed the US would do its part to avert a “climate hell,” and also emphasized the need for a diversified energy future, especially in light of Russia’s war on Ukraine.
“No action… can be taken without a nation understanding that it can use energy as a weapon and hold the global economy hostage. It must stop. And so, this gathering must be the moment to recommit our future and our shared capacity to write a better story for the world,” Biden said.
5. Brazil makes an ambitious deforestation pledge
Brazilian President-elect Luiz Inácio Lula da Silva, who is set to take office in less than six weeks, arrived at COP27 with a declaration that “Brazil is back” and the promise of a “big fight” against deforestation.
During his two previous terms between 2003 and 2010, da Silva oversaw a large reduction in deforestation of the Brazilian rainforest.
However, when President Jair Bolsonaro took the reins in 2018, Brazil’s agencies that regulate the Amazon were weakened, and the deforested area in Brazil’s Amazon reached a 15-year high.
Da Silva’s return and his promise to once again fight deforestation offer hope for the world’s largest rainforest, as well as for reduced carbon emissions.
Preparing for the Energy Transition
COP27 may not have ended with a global plan for phasing out fossil fuels, but thousands of large businesses are already being held accountable for their emissions.
From the EU's CSRD and other numerous frameworks to the U.S. Securities and Exchange Commission’s proposed rule on climate disclosures, many companies around the world could soon find themselves subject to increased regulations.
Modern solutions, including the Diligent Carbon Accounting Software, are designed to make sustainability reporting easier by automating calculations and reports.
Such technology can save your business valuable time, whether you want to stay compliant with the latest regulations or simply reaffirm your commitment to cutting back on emissions.