Every year until 2030, the developing world requires over $2.4 trillion to tackle climate change. A separate estimate shows that to cap global temperatures at 1.5 degrees Celsius and achieve net zero emissions by 2050, a $4 trillion investment is needed annually. The challenge to mobilize climate finance is clear. And the upcoming COP28 serves as a vital catalyst that could bring forth concrete results. But, first, what is climate finance? And what is COP28?
What is climate finance?
According to the United Nations Framework Convention on Climate Change (UNFCCC) Standing Committee on Finance, the goal of climate finance is to reduce emissions, bolster greenhouse gas sinks and mitigate the vulnerability of human and ecological systems. Simply put, it refers to funds that are channeled into addressing adverse climate change impacts.
In the Middle East and North Africa (MENA) region, governments are actively promoting climate finance through innovative financial instruments. Initiatives include Egypt’s $750 million green sovereign bond and Saudi Electric Company’s $1.3 billion green sukuk. In the United Arab Emirates, the host of COP28, leading banks have collectively dedicated $51.6 billion to green financing in 2022.
What is COP28?
The Conference of the Parties (COP) is the UNFCCC’s principal decision-making body. It comprises 198 parties, which include 197 nations and the European Union. Since 1995, when the first COP gathering was held, parties have been convening annually. The goal is to deliberate and reach a consensus on strategies to address climate change, lower emissions and curb global warming.
In 2015, COP21 saw approval from over 190 countries for the Paris Agreement. They aimed to limit global warming to below 2 degrees Celsius, and ideally, 1.5 degrees. The upcoming COP28 is particularly pivotal as it concludes the inaugural Global Stocktake (GST). Article 14 of the Paris Agreement outlines the GST, a systematic process for nations and stakeholders to assess progress toward the Agreement’s objectives. At COP28, governments will decide on the GST. In particular, it will be an opportunity for countries to boost their efforts in the fight against global warming accordingly.
COP28 will take place at Expo City Dubai from November 30 to December 12, 2023. Moreover, it will welcome about 70,000 attendees, including heads of state and key government officials from 190 countries. These include the UK, Germany, France and Japan.
The COP28 momentum
Simon Stiell, the executive secretary of UN Climate Change, has previously stated that the COP28 is a turning point. He said, “Governments must not only agree on what stronger climate actions will be taken but also start showing exactly how to deliver them.”
During the conference, over 20 events will specifically tackle finance. Collectively, they underscore what is COP28 all about and how pivotal it is in growing climate finance. Here are five of the most notable ones.
Leaders’ event: Transforming climate finance (December 1, 2:45 p.m. to 3:45 p.m.)
This event will gather countries and financial leaders to propose ideas for a future climate finance system. It aims to set out a new vision for an international climate finance structure, emphasizing equity, scalability and inclusivity. The focus is to scale capital in emerging and developing countries while fostering innovations, partnerships, policy incentives and tools to maximize the potential of the private sector.
Family offices: Unlocking the next wave of capital (December 4, 6:30 p.m. to 7:30 p.m.)
Family offices play a huge part in shaping a greener future by helping realize the objectives of the Paris Agreements. This specific event will be a platform for prominent family offices and industry experts to explore strategies for channeling the next wave of capital into sustainable sectors. There will be insightful panels and keynote speeches whose goal is to call on family offices worldwide to contribute to advancing sustainable initiatives.
Harnessing data to drive sustainable finance (December 4, 3:00 p.m. to 4:00 p.m.)
As with any segment in the broad financial landscape, sustainable finance is heavily reliant on data. Entities need various essential information to make investment decisions, manage risks, evaluate performance and assess impacts. In this roundtable, key stakeholders will address challenges, determine common concerns and highlight emerging solutions at the intersection of data and sustainable finance. The primary emphasis will be on the green capital market, the main source for funding sustainable projects.
Abu Dhabi Sustainable Finance Forum (December 4, 3:00 p.m. to 7 p.m.)
Organized by the Abu Dhabi Global Market (ADGM), this forum will host a cutting-edge decarbonization finance platform featuring keynotes, panels, interviews and workshops. It will convene top executives from global markets and reiterate the need to unlock capital at the necessary scale. The focus will be particularly on de-risking sustainable finance, understanding decarbonization deal structures and products and measuring ESG impact securely. ESG stands for environmental, social and governance.
IHLEG: New finance framework launch (December 4, 1 p.m. to 2 p.m.)
This event will showcase the findings of the IHLEG report, commissioned by the COP27 and COP28 presidencies, assessing the climate finance gap. It aims to bring the public and private sectors together to outline critical actions necessary for mobilizing the investment needed to fulfill the goals of the Paris Agreement.
Earlier in August, the COP28 presidency convened world-leading economists and finance leaders in Abu Dhabi to help reform international climate finance. It built on the momentum of the Bridgetown Initiative and Paris Summit for a New Global Financial Pact that will guide progress not only at COP28 but also at COP29 and COP30.
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