I’ll be honest – I was cynical of the heightened optimism and enthusiasm of last year’s COP26 gathering in Glasgow. I wanted to believe, but I had a sense that too many words were thrown out in the moment without thorough understanding of the practicality behind them. And now, with only 3 weeks until COP27, it seems words and actions are reflecting reality. I’m not the only one who is noticing this.
Bloomberg characterized it last week like this:
“For some bankers, net-zero is like a new year’s resolution—a pledge one makes and often breaks before a year has passed… A year on from COP26, some big banks seem worried they jumped on the bandwagon too soon, especially as oil and gas companies have experienced a market resurgence. “
European countries – severely jolted by the acute energy crisis caused by ending use of Russian oil and gas – are also backtracking. Euractive reported:
EU countries are considering watering down the European Commission’s plan to ditch Russian fossil fuels, known as REPowerEU, including scrapping a proposed 45% renewable energy target for 2030, according to a document seen by EURACTIV.
The amendments made by EU countries to the European Commission’s REPowerEU proposal, tabled in May, could impact the speed of renewable energy deployment, which is crucial to decrease reliance on Russian fossil fuels and lower energy prices.
The amendments remove the Commission’s push to increase the target for renewables in Europe’s energy mix to 45%, replacing it with the 40% target agreed by EU countries in June.
This is below both the European Parliament’s and the European Commission’s positions, which both support the 45% target.
More generally in corner offices globally, a new Protiviti survey indicates that:
… 39% of executives in North America view risk to their businesses posed by environmental factors over the next 10 years as “low,” and only 7% view such risk as “extreme.” This is surprising, considering the growing economic costs of extreme weather events caused by global warming, and the potential investment implications. By contrast, the percentages of concerned executives in Europe are 15% (low risk) and 23% (extreme risk) and in the Asia-Pacific region are 18% (low risk) and 34% (extreme risk). Likewise, just a quarter of North American executives think ESG will be extremely important to business success, while in Europe and Asia-Pacific the number is well over half — 58% and 71%, respectively.
What This Means
In my view, this means a few things:
- COP27 is likely to be more subdued than last year’s get-together. This year’s event may be more pro-forma.
- Realities of aggressive/sweeping climate committments and public statements may be a little more understood this year than last.
- Companies that factored COP26 enthusiasm and “commitments” into their climate risk assessments should seriously reconsider those assumptions.
It can be easy to get swept away by irrational exuberance prevalent at big events like COP. Yes, I think those events are important for information sharing but especially for a globally critical and unprecedented topic like climate change, a great deal of thought and deliberation should take place before making promises. Those promises have an ecosystem of their own.