ESG: As COP27 highlights climate urgency, notions of “sustainability” fracture
Author: Greg Hotaling, Regulatory Content Manager, Confluence
COP27, the UN’s annual climate change conference held this year in Egypt from 6 to 18 November with about 100 heads of state in attendance, can be seen as a microcosm of the challenges and debates that have plagued the concept of “ESG” or “sustainability” since those terms came into vogue several years ago. The COP27 host nation Egypt, ruled by a former general who took power in a 2014 military coup, severely punishes political dissent. A COP27 sponsor, Coca-Cola, is one of the world’s largest producers of disposable plastic. Such apparent contradictions have led to criticism from environmental and human rights organizations.
Others, like UN Secretary-General António Guterres, would point out that the urgency of the climate crisis requires the world to welcome all stakeholders and find common ground as quickly as possible. Recently on 27 October, following the release of the UN Environment Programme’s Emissions Gap Report 2022, he stated that “we are headed for a global catastrophe”. While the Paris Agreement of 2015 had set a goal of limiting the global temperature rise to 1.5 degrees Celsius above pre-industrial levels by the end of the century, and while governments have updated their national pledges to climate action since last year’s COP26, the world is nevertheless on track to experience a rise of 2.8 degrees under current policies according to the Report.
Despite this urgency, prioritizing climate change has proven vulnerable to domestic politics in some countries. Prime Minister Rishi Sunak of the UK, which hosted COP26 in Glasgow, announced through a spokesperson on 27 October that he would not attend COP27 because he had domestic priorities, before changing his mind a few days later after heavy criticism. In the US, President Biden’s commitment to the Paris Agreement and COP27 comes only after his predecessor, Donald Trump, had orchestrated a US withdrawal from the Paris Agreement (rejoined when Biden took office). Meanwhile, some major G20 economies such as India, China, Australia and Canada are not sending their heads of state to COP27, as of this writing.
Additionally, a major topic and source of tension at COP27 is proposed global, climate-related financial contributions to developing countries, which are facing the serious effects of climate change while developed countries produce far more emissions. As possible donors scrutinize the potential for corruption and mismanaged funds, leaders of developing countries argue that this issue should not be used as an excuse for inaction. Namibian president Hage Geingob, for example, is in attendance but declined to speak at the conference because of this issue, suggesting to a BBC interviewer that developed countries are “criminal” for their treatment of the third world on climate. And yet events can unfold quickly: shortly thereafter on 8 November, Namibia announced that it had secured more than EUR $540 million in climate finance from the Dutch government and the European Investment Bank.
Serious global economic and geopolitical developments also loom over the conference, as inflation and Russia’s war in Ukraine have sharply impacted the cost of and access to vital European energy supplies with winter approaching. These events have sparked a reassessment of near-term energy demands, as well as longer term energy production, across Europe. Such considerations further illustrate that broad terms like “ESG” or “sustainability” may no longer prove meaningful, and may need to give way to more clearly defined notions of societal benefit.
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