COP27: what to expect from the climate summit

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Alok Sharma, president of COP26: Distinguished delegates. Ladies and gentlemen, it gives me great pleasure to declare open the 27th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change.

Robin Pomeroy, Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them this week. As COP27 opens in Egypt, we look at what to expect and put a special focus on the role of business in combating climate change.

Antonia Gawel, head of climate action, World Economic Forum: We need, of course, governments to lead in setting the policy frameworks, but we also don't have the time in terms of where we're at on climate change to wait for governments to lead. So what we're seeing is increasingly businesses stepping up.

Robin Pomeroy: The head of climate action at the World Economic Forum tells us what to expect from Sharm El-Sheikh.

Antonia Gawel: The presidency is calling this the COP of implementation. How do you go from setting those targets to truly implementing those commitments?

Robin Pomeroy: And it's not all about greenhouse gas emissions: as the world faces the fact we have to adapt to live with the inevitable changes to the climate. And also the global South is demanding that the developed world pays for damage already caused.

Antonia Gawel: Adaptation and loss and damage are big issues that are addressed in Sharm El-Sheikh.

Robin Pomeroy: Subscribe to Radio Davos, where you get your podcasts and us a rating and a review and join us on the World Economic Forum Podcast Club on Facebook. I'm Robin Pomeroy at the World Economic Forum. And with this look at the 27th conference of the Parties to the Climate Change Convention.

Antonia Gawel: It's now the 27th COP. Ideally, we would have resolved this issue many COPs before.

Robin Pomeroy: This is Radio Davos.

So the latest COP has begun - over the next two weeks governments will be trying to inch the world closer to dealing with climate change in the knowledge that we are way behind in what we need to do.

So what can we expect? What do people want from this COP?

Let me read from an open letter published just before it started:

"Emissions under current policies are projected [to be ...] still 25 GtCO2e higher than what is essential to limit warming to 1.5 degrees Celsius. This gap is equivalent to the annual emissions of 5.4 billion cars. [...] Governments must raise their ambitions and enact policy changes to close this gap, otherwise we face a significant threat to the existence of human life and nature."

The letter calls on business and governments to act - scrapping subsidies for fossil fuels and incentivising low-carbon technologies and putting a price on carbon emissions.

Who was the letter from? Not a green group, but business itself - more than 100 chief executives of some of the world’s most important companies - the Alliance of CEO Climate Leaders.

In this episode of Radio Davos, we look at the role of the private sector in pushing through big changes this decade.

To do that, I talk to Antonia Gawel, who, as head of climate action at the World Economic Forum, plays a key role in bringing companies and governments - and civil society groups - together to find solutions to this immense problem.

Before we hear from Antonia, let’s listen in to the opening sessions at Sharm El-Sheikh. This is Alok Sharma, president of the last COP - COP26 in Glasgow - speaking before handing over to his Egyptian counterpart. Alok Sharma urges governments not to allow the war in Ukraine and global economic turmoil to divert them from the path of climate action.

Alok Sharma: We have been buffeted by global headwinds that have tested our ability to make progress. Putin's brutal and illegal war in Ukraine has precipitated multiple global crisis, energy and food insecurity, inflationary pressures and spiralling debt.

And these crises have compounded existing climate vulnerabilities and the scarring effects of the pandemic. And yet despite this context there has been some progress in implementing the commitments that we delivered in Glasgow. Over 90% of the global economy is not covered by net zero targets, up from less than 30% when the UK took on the COP26 role.

Friends, we are not currently on a pathway that keeps 1.5 in reach. And whilst I do understand that leaders around the world have faced competing priorities this year, we must be clear as challenging as our current moment is. Inaction is myopic and can only defer climate catastrophe.

Robin Pomeroy: Alok Sharma, who handed over the presidency of the COP to Egypt's foreign minister, Sameh Shoukry, who had this to say about the issue of richer countries paying poorer ones to cope with climate change.

Sameh Shoukry, president of COP27: I particularly welcome the agreement of the parties to include a new agenda item on funding arrangements to respond to loss and damage. This creates, for the first time, an institutionally stable space on the formal agenda of the COP and the Paris Agreement to discuss the pressing issue of funding arrangements needed to deal with existing gaps. Responding to loss and damage.

Robin Pomeroy: Sameh Shoukry, president of COP27, now under way in Egypt.

To discuss what to expect from that conference, COP27 and to look at the role of business. I'm joined now by Antonia Gavel, head of Climate Action at the World Economic Forum. Hi, Antonia, how are you?

Antonia Gawel: I'm great, thanks, Robin.

Robin Pomeroy: What is a COP, a conference of the parties? What's the significance of this huge annual event?

Antonia Gawel: Conference of the Parties. It's the members of the climate treaty coming together annually to really negotiate progress towards where we need to be in terms of tackling climate change. So it's now the 27th COP. Ideally, we would have resolved this issue many COPs before. But here we are in this in this conversation. And and we expect this COP to be slightly different than what we saw last year and in Glasgow, whereby there there was a big push for increase in country targets. This one is very much about moving towards implementation of those targets as well, of course, as closing that gap that we see in emissions.

Robin Pomeroy: So moving from talk to action in a way, or moving from targets to actually what how those targets will be achieved?

Antonia Gawel: Yes, exactly.

Robin Pomeroy: So the World Economic Forum, for which we both work, has a particular role in this because the Forum is the place for public-private cooperation, collaboration. You've worked closely with the private sector and with the public sector. And as I read out at the start of this episode, many companies, over 100 companies, have signed this letter calling for action from themselves and from their peers, but also from governments. Could you give us some background on what that letter is? Who were those chief executives and why they wrote that letter?

Antonia Gawel: Maybe maybe I can start with why why this type of partnership and collaboration is important. So the COP and the Conference of the Parties and and the U.N. climate accord is very much a governmental negotiation process. But what we know and what we see is that actually to implement the solutions to climate change, you really need all of society. You need businesses, of course, but you also need citizens and and all actors to play a role.

And in particular, when it comes to technology innovation, to financial flows, the expectation indeed is that this will ultimately come very much from the private sector. So on one hand, we need, of course, governments to lead in setting the policy frameworks, but we also don't have the time really at this point in terms of where we're at on climate change to wait for governments to lead.

So what we're seeing is increasingly businesses stepping up above and and in many cases ahead of government policy leadership to set a precedent for for that action. And that's really what we're seeing with this group of CEO climate leaders. These are companies who have set science based targets. They have clear decarbonisation plans in place. And really what they're saying is, 'look, we're ready to play our part. We are and we're demonstrating how we are. But in order for us to tackle this challenge as quickly as we need to see it tackled, we do really need governments to to increasingly step up when it comes to policy and and frameworks to accelerate things.'

Robin Pomeroy: Let's just have a quick look at this open letter. So it's from the Alliance of CEO Climate Leaders. And these are over 100 chief executives of pretty big companies now, and they're calling on companies themselves and others to set science-based targets, which would be in line with the Paris Agreement, which means effectively net zero emissions.

They're calling on governments and for regulatory institutions such as organisations that regulate stock markets and financial markets to set standards, to be able to measure companies' progress on climate action so that companies aren't just saying they're doing stuff, they're actually proving they're doing stuff.

And they're also asking for phasing out of fossil fuel subsidies and putting a price on carbon. I mean, if anyone has not been paying attention to the private sector on this for the last few years, it sounds a bit like turkeys voting for Christmas, doesn't it? They're basically saying, 'we produce carbon emissions, we should be paying for that'. And that's at least what these 100 CEOs are saying.

Antonia Gawel: Yes, exactly. And I mean, if you look at the CEO Climate Leaders as a group. So this is a group who actually was established around the time of the Paris Accord. So then that was really a time when the business and private sector was, let's say, less closely engaged and active and in really driving for change when it comes to policy action.

And, you know, we saw a landmark shift in in the climate negotiations in Paris, and this group continues, has continued since then to drive that message, but also expand and grow the coalition. So it's now over 120 global companies coming from 26 countries, 12 industries, and they represent almost 9 million employees. So these are sizeable economic players.

And, you know, this type of signal to governments is intended, again, really, just to make that case that they are they are acting, they're demonstrating. And we are careful about tracking this, that they are implementing plans that are consistent with their targets. But equally, as is noted in the letter and as you summarised, there are many systemic issues that need to be tackled in order to really address climate change. As you mentioned, things like fossil fuel subsidies. A golden ticket would be getting a price on carbon. That is politically challenging, but there are ways of putting implicit prices on carbon through different types of policy mechanisms. You know, even the the IRA [Inflation Reduction Act] that's come out in the U.S., the recent policy, will go a long way, actually, to putting incredible incentives on technologies that will support climate change progress.

So indeed, it is this, let's say, partnership effort where, yes, these businesses are acting, but they can only go so far on their own. And so that's where the partnership and the collaboration is so critical in order for us to speed up this action.

Robin Pomeroy: The IRA is the Inflation Reduction Act, the big climate change legislation recently passed the United States.

Okay, so that's the letter. People can read that on our website and probably many other places. I'll put a link to that in the show notes for this show and the blog accompanying it. Let's look at COP27 then. It's in Sharm El-Sheikh in Egypt. Can you give us an outline of what will be the main topics of discussion?

Antonia Gawel: Certainly. So if we look to Glasgow and COP26, this was seen very much, I think, as a landmark COP when it came to a moment to try to close the emission gap from the different economies. We didn't quite get there.

Of course the goal is to try to keep the world on path to 1.5 [degrees Celsius]. Estimates suggests that coming out of that COP, we were anywhere from 2.4 to 2.6 degrees of warming right now in terms of where the national commitments landed.

At the same time, there was probably greater momentum than ever seen before when it came to major public-private partnerships that had very clear impact objectives launched in Glasgow.

So a lot of commitment, a lot of announcements, not quite enough progress when it came to emission reduction commitments from countries.

So fast forward to Egypt, really, the presidency is is calling this the COP of implementation. So how do you go from on one hand, yes, setting those targets, closing that emission gap, obviously with still more work to do there in launching these commitments to truly implementing those commitments.

So one focus, of course, will be on finance. So we are still pushing and there is still a push that in particular the developed economies deliver on the financing that has been committed to developing economies in order for them to help tackle climate change and also adapt to climate change. So that will be a continued call that we expect to see at this at COP27.

Robin Pomeroy: In Glasgow it was agreed that there would be $100 billion a year to assist developing countries. So that was a target set. But again, implementation, it hasn't actually happened yet.

Antonia Gawel: Right. So that target had been set before Glasgow. It has been kind of on the table for a number of years and the challenge is actually delivering on that commitment. So I think there is a continued expectation for that to be seen through.

And equally the private sector made quite a bold commitment when it came to private sector financial deployment. So you saw major banks and financial institutions pledging to deploy a huge amount of capital in the trillions of dollars to support climate. And again, the challenge here now is to say, okay, let's actually not only see money committed, but actually see money invested on the ground in the markets that need it most.

And this is very much one of the the focuses that the Egyptian presidency is driving. So looking really at projects, looking at financial models and really looking to the private sector and the financial sector to not only commit but actually deploy capital. So that will be a significant focus that we expect to see.

Robin Pomeroy: So finance will be a big issue. And also it's a buzzword that we're hearing a lot about at the moment is adaptation. There was a thing called mitigation, which is reducing the greenhouse gases you're putting out, and then adaptation, adapting our ways of life, our cities, our coastlines, the ways of doing things to climate change, which is already under way. Why is adaptation such a big deal in Sharm El-Sheikh?

Antonia Gawel: Adaptation, and - I'll put another word on the table - loss and damage, are also going to be big issues that are addressed in in Sharm El-Sheikh.

Adaptation, essentially, is the reality that we are seeing incredible climate impacts happening already today. Just over 3 billion people live in highly vulnerable situations when it comes to potential climate impacts. And there are already millions of people that are being displaced from everything from floods to droughts to extreme weather events.

And so, you know, I think we've seen this ourselves in in Europe, China, in Pakistan. There is a long list, unfortunately, of events that we've really seen even over the past few months.

So the question really is, how are we going to adapt to the current realities of climate change and who is going to pay for that? And that is really the question that continues to really be challenging in the context of the negotiations, and that, of course, the expectation is that the rich world will support and finance the developing world in paying for adaptation, given the historical responsibility for the emissions that were created.

So adaptation will certainly be key.

I think an issue and in an area that we will be putting on the table is actually the role that business has to play in adaptation. And and really that comes at three levels. So first, it's building a recognition and understanding that businesses own operations that will be impacted by climate change and that companies will will in need to really pay attention to where that might be the case and understand their their risk portfolio.

At the same time, businesses also have a positive potential to actually provide solutions to support adaptation as well. So if you look at things like early warning systems, different technological innovations, there are solutions that can really be put to work to to help here.

Now, the third area when it comes to tackling and managing adaptation is is very much actually about partnership and collaboration. So if you're a company, for example, who has an operation in a climate vulnerable area and you understandably do work to protect your assets, if you don't think about and work in collaboration with the communities around you, you are not going to actually have a successful outcome when it comes to on one hand, yes, sure, protecting your assets, but actually building resilience within the ecosystem within which you operate, which includes, of course, your employees and many of the the systems on which you rely.

And so the the point that we're making here is that you cannot adapt in isolation. You need to adapt in partnership and in collaboration and work with government, work with city officials, work with communities so that you can really build a resilient ecosystem in partnership and really draw in the intelligence and knowledge that can be built together in adapting to climate change.

So that is certainly an area that we are seeking to raise further understanding and awareness about, because I think it is safe to say that this adaptation hasn't really been at the forefront of the private sector's mind in this way.

Robin Pomeroy: Let's look at some of the public-private partnerships that you're involved with, that the World Economic Forum's involved with. I remember in Glasgow at COP26, I think that was the launch of the First Movers Coalition there. Could you remind us what that is, where we're at now with it and what we might see at COP27?

Antonia Gawel: Yes, absolutely. So the First Movers Coalition, as you said, was a partnership that we launched in collaboration with the State Department, US Secretary Kerry's team in the US.

And really what this seeks to tackle is industrial emissions. So industry is responsible for about 30% of global CO2 emissions and it faces a little bit of what I call a chicken and egg problem. There's large-scale, currently costly solutions that are necessary to decarbonise many of the industrial sectors. So things like green steel, which relies on hydrogen from green sources, to very advanced sustainable aviation fuels, which are currently only in a pilot stage. These are very costly solutions. And unless you have immediate, let's say, policy responses to bring down those costs, they are essentially remaining where they are. And so the First Movers Coalition is really about tackling that chicken and egg problem, and it's creating a major demand signal for those solutions by designing purchasing commitments for these zero emission technologies and services by 2030.

So we've taken seven sectors - aluminium, aviation, cement and concrete, chemicals, shipping, steel, and trucking and also carbon removals, designed specific demand commitments for solutions by 2030. And we've asked companies to make those commitments to purchase, for example, a certain percentage of green steel as part of their manufacturing process to really, again, try to unlock the stalemate, let's say that we see in these types of solutions.

Robin Pomeroy: And a year on from the launch then. Are you seeing progress?

Antonia Gawel: So we now have 58 companies who have joined the FMC. And this is a pretty, let's say, significant group. So they now represent over $8.5 trillion in market capitalisation. In Glasgow, we we launched with 35 companies. So one of our goals has been to grow that demand signal, but grow it quite carefully, really focusing on those companies who really will have a sizeable impact in terms of pulling those technologies forward.

Robin Pomeroy: So that's the First Movers Coalition, the FMS. There's lots about that on our website.

Now let's talk, Antonia, about how companies then are doing implementation. If this is the implementation COP, are you able to tell us anything about, how are big companies are implementing the promises they've made to cut greenhouse gas emissions?

Antonia Gawel: There tends to be, there has been a big focus on companies setting science based targets. This is this is a level of commitment that we ask our companies to make. They are focused on 2050. So one of the first things that we are driving the companies to do is to really set near-term commitments as well. So 2030 commitments because really the action needs to start now. It can't be something that future CEOs will have to manage in in a decade or so.

So a lot of the leading companies are very much focussed on that 2030 objective. But then even nearer term, actually starting to put in place operational practises and business practises that are shifting the needle.

The other specific thing to note is a focus on supply chains. So for many companies, a major proportion of their emissions actually don't sit in their what we call scope one and scope two emissions - the things that sit within their own operational control or managing their electricity consumption - it sits within their supply chains up to 90% in a number of cases.

Robin Pomeroy: This is stuff that they're buying and this is stuff they're selling. And then the impact, the products they have sold when they're being used by someone else, there's still this still having an impact on on emissions, that's scope three.

Antonia Gawel: You can think of scope three exactly in two ways. So either upstream, so the things that you're putting into your products, so everything that comes ahead of your product; and then everything that comes after you sell your product.

As you say, the way that consumers use that product or the way that it gets managed through its lifecycle are part of those scope three emissions. This is obviously a challenging area for companies to address. But again, those who are really leading this agenda are committed and setting targets really to tackle those scope three emissions and again, not by 2050 but really in the near term.

So maybe just a few examples of that, right. The circular economy, right - the circular economy is is very much a way of saying that companies are changing business models and practises to address waste in the system. So they're trying to address waste upstream and they're trying to address address waste downstream.

And Philips, for example, has been a real leader in this agenda, as well as IKEA, driving a shift to service-based business models, but also really setting targets to minimise the material impact through their value chains.

I think it's important to note that materials represent a huge proportion of CO2 emissions through the way that companies consume and use those.

IKEA has a famous, pretty famous example now, focusing on mattresses. So mattresses are a really challenging product to deal with when it comes to to waste. And so IKEA has created a whole new business line in order to deal with this and and bring mattresses back into circulation. And at first they perceived this to be something they were doing because it was the right thing to do. But actually they found that it is actually quite a profitable business model. So there's there's this shift in terms of, on one hand, tackling the problem, but also a recognition that actually this is offering new and interesting business lines as well.

Robin Pomeroy: Let's talk about nature-based solutions, Antonia. I know that's an important thing when it comes to tackling climate change. What is the World Economic Forum involved in on that?

Antonia Gawel: Last year in Glasgow, I would say we really saw a turning point when it came to a focus on nature. Many called it the Nature COP and I think the expectation and really the need is, is for that to continue as we move into the COP this year.

So last year, our Tropical Forest Alliance launched an incredibly important challenge, challenging some of the largest agri companies to commit to roadmaps to halt deforestation within their value chains. And the expectation at COP27 is that they will really present the roadmap that explains how they plan to progress that forward.

The other related piece here, of course, is food, land use and ocean systems as well. So we are in a situation where we're on the brink of a food crisis. And we will see, I think, and Egypt has very much put it on the agenda, a focus on food, the role of food and land use, transformation in on one hand contributing to climate change, but also potentially offering solutions to tackle climate change as well. But also the requirement that we do this in a way that really manages the impacts on individuals. So when we are faced with this crisis situation that we're in, we need to think carefully about the way that these solutions are deployed so that there is very much a positive win-win as well.

The point being that nature, food, land use, ocean systems on one hand are an incredible solution to tackling climate change. But we equally need to ensure that we don't exacerbate the challenges that these systems currently face through continuous destruction of those ecosystems as well.

Robin Pomeroy: Is it possible to say in advance of COP how you would judge whether it was a success or a failure? I got the impression after COP26 that it was a glass half full type situation. Even the chairman of the COP seemed to be putting it a bit like that. Are there benchmarks we'll be using or is it just a bit too complex and there's too many things for us to say globly, 'that went well, that was a success' or 'it didn't'?

Antonia Gawel: The expectation for COP27 is really one where it maintains momentum more than being one where we see a new breakthrough landmark deal necessarily. So the COPs go in in somewhat of cycles in that way. So there was a big expectation around Paris. There was quite a large expectation around Glasgow. This is a COP where it is really about continuing momentum, continuing to drive progress on some of the important issues and, again, tabling issues that perhaps were less prominent at the previous COP, like, as I said, adaptation issues like loss and damage financing, which are very much at the heart of of the focus for Egypt and Africa in general.

So I would say it's it's less one where it's easy to say whether it's a success or failure. I think a failure would be enhanced divides that are created through the dialogues rather than continued momentum and positive progress.

Robin Pomeroy: Antonia Gawel is head of climate action at the World Economic Forum.

There's lots more about COP27 and about climate change on our website weforum.org and several podcast episodes on the subject, on Radio Davos and on our sister podcast, Meet the Leader. Please subscribe to both of those wherever you get your podcasts and please give us a rating and a review. And join the conversation on the World Economic Forum Podcast Club that's on Facebook. This episode of Radio Davos was written and presented by me, Robin Pomeroy with studio production by Gareth Nolan. We'll be back next week. But for now, thanks to you for listening and goodbye.