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Understanding ESG
The good, the bad and the ambiguous at COP27
'Breakthrough’ loss and damage fund agreed to, but operational details scarce
Bayani S. Cruz 25 Nov 2022

At the end of the recently concluded COP27 in Sharm El Sheikh in Egypt, there was one good thing that happened, but there was another bad thing that did as well – and there was a lot of ambiguity in the air.

The one good thing that happened was the “breakthrough” agreement, as the COP’s official statement calls it, to provide a “loss and damage” fund for vulnerable countries hit hard by climate disasters.

This loss and damage fund, just to put things in context, is intended to be contributed to by the wealthy industrialized countries for the purpose of helping less developed countries mitigate the impact of climate change events, such as droughts, floods and other calamities.

This seems only fair as the wealthy industrialized countries are considered to be responsible for much of the global carbon emissions that negatively impact all countries, including the less developed ones, which have over time contributed relatively less to global carbon emissions.

The establishment of this loss and damage fund has been on the table for a long time and has drawn support from many countries. However, there hasn’t been much progress on bringing it to fruition, principally because of opposition from the developed world, particularly the US and EU.

But at the COP 27, the US and EU dropped their opposition to the fund’s establishment. And that’s a good thing. However, not many details have been publicized on how the fund will operate.

This could be a bad thing as, unless the details of the fund’s operation are transparent, it will be prone to inefficiency and corruption, particularly since it will involve the disbursement of huge amounts of money in crisis situations.

The COP 27 provides some hopeful, if somewhat ambiguous, direction in this aspect with a statement that reads: “Governments took the ground-breaking decision to establish new funding arrangements, as well as a dedicated fund, to assist developing countries in responding to loss and damage. Also, governments agreed to establish a transitional committee to make recommendations on how to operationalize both the new funding arrangements and the fund at COP28 next year.

“The first meeting of the transitional committee is expected to take place before the end of March 2023. Parties also agreed on the institutional arrangements to operationalize the Santiago Network for Loss and Damage to catalyze technical assistance to developing countries that are particularly vulnerable to the adverse effects of climate change.”

While this statement sounds good in theory, there are obviously still a lot of details that have to be worked out – or maybe they just haven’t been publicly released yet. In any case, there needs to be strong oversight of the fund, and there needs to be something to guarantee that this money is going to get to the people that are impacted by the adverse effects of climate change.

And this has to be done urgently as natural calamities stemming from climate change are becoming more numerous every year, and their adverse impacts are becoming increasingly severe.

The other good thing that has come out of COP27 is that all parties remain committed to the 1.5 degrees Celsius target, the goal of the Paris agreement, which calls for countries to take concerted climate action to reduce greenhouse gas emissions to limit global warming and reach net-zero emissions by 2050.

But the bad thing is that there was no substantial progress in terms of reaching an agreement to cut the use of fossil fuel, especially among the wealthier, industrialized economies.

To be fair the disruption stemming from Russia’s invasion of Ukraine and its impact on fossil fuel supply chains may have had something to do with this.

But the scientists that monitor the speed of global warming have already sounded alarm bells indicating how serious the need to cut emissions are and, by extension, how urgent it is for the industrialized countries to come to an agreement to cut fossil fuel consumption. At COP27, however, no headway at all was made on this issue.

To be fair, there may still be a lot of things that took place at the gathering that have yet to be threshed out and publicized.

The world will just have to wait and hope for the best.

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