Sustainable investment Views and Ideas

COP28 : A Bittersweet Symphony

18 December 2023

COP28 was a rollercoaster ride marked by its president’s affirmation that there is ‘no science’ behind demands for the phase-out of fossil fuels to limit global warming to 1.5°C. For thirteen days, the world held its breath for as long as it took for a much-awaited final agreement to be negotiated. What ultimately came out is arguably bittersweet.

Beyond a renewed commitment to 1.5°C, the Global Stocktake (GST) text has the merit of standing out from previous UN climate conference outputs in that it calls upon a "transition away from fossil fuels”, which goes beyond just coal to include oil and gas for the first time. The failure to mention this during the previous twenty-seven summits was blatant, which is why the language chosen in this year’s text is so symbolic. The symbolism does not, however, make up for the vagueness of the text. Many countries, including EU nations and the Alliance of Small Island States, pushed for a commitment to “phase out” fossil fuels, but the term failed to make it into the final text. This, in addition to the absence of interim targets across the 2050-time horizon essentially means that countries are free to follow their own paths to net zero, and that we are unlikely to see much action from oil and gas companies in the short term.

The Loss & Damage (L&D) Fund, initially agreed at COP27 and intended to compensate countries which do not have the means to adapt to climate change, saw somewhat of a breakthrough in Dubai with the agreement of its “operationalisation” in 2024. However, important details regarding who should pay and who should benefit (with China’s status being a key point of disagreement) remain. Additionally, the Vulnerable 20 Group reported that its members (68) had lost USD 525bn over the last twenty years due to climate change2  whereas the initial amount of pledged funds was less than USD 1bn3 . Envisaged financing is grossly short of what is required. While compensating the relevant countries for their losses is long overdue, the level of uncertainty around the Fund’s functioning and therefore its efficiency remains significant in our opinion.

Eagerly anticipated by many were the negotiations around the Global Goal on Adaptation (GGA), a collective commitment under Article 7.1 of the Paris Agreement. Unfortunately, many developed countries were reluctant to discuss adaptation financing following their commitments to the L&D Fund. We find the final output of the GGA Framework to be anticlimactic. Parties were “urged” to reach goals which, in our view, are not sufficiently specific to actually meet the needs of the most vulnerable (e.g. “Attaining resilience against climate change-related impacts” or “Reducing climate impacts on ecosystems and biodiversity”). In parallel, COP28 decided to launch a two-year work programme on indicators for measuring progress achieved towards the above targets. We look forward the outputs.

While the lukewarm outcome of GGA negotiations was expected to some extent, some of the discussions around Article 6 of the Paris Agreement came as a surprise. Some Parties even called for the moratorium of carbon markets in the Agreement. The elements to consider for the “authorisation” of internationally transferred mitigation outcomes (ITMOs) (Art. 6.2) were watered down with each new draft. The final text merely “encourages” Parties to include the elements… at their discretion. We believe this puts the credibility of ITMOs under question. Furthermore, the absence of a decision regarding emissions avoidance (Art. 6.4) further emphasises the lack of necessary consensus to find a clear path towards Net Zero.

Amidst the frustration, there are some glimmers of hope. For the first time, the final agreement refers to the objectives of ‘tripling renewable energy’ and ‘doubling the global average annual rate of energy efficiency’ by 2030. Initially endorsed by the G20 in September, these targets were adopted by a coalition of 130 countries under the COP28 Global Renewable and Energy Efficiency Pledge. Around 50 oil and gas producers and 29 other national oil companies have signed an agreement to “zero-out” upstream methane emissions and to end routine flaring by 2030. As investors, it is crucial that we continue to engage with these companies in order to understand their associated action plans and hold them accountable for their implementation. We also warmly welcome the Declaration on Climate and Health, signed by 123 countries at the Summit, which highlights the importance of preparing healthcare systems to cope with ever-increasing climate-related health issues. Similarly, we welcome the UAE Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action, which was signed by 134 countries. It includes a landmark, new sustainable food systems pledge which has already mobilised USD 2.5bn.

While the debate around the success of COP28 seems to be ongoing, one evident and critical concern looms: to support transition and adaptation and to compensate damages, it remains unclear where the necessary capital, especially for developing countries, will come from in the medium to long term. Of the ca. USD 83bn mobilised at the Summit (including USD 30bn pledged by the UAE in an investment vehicle which, it claims, could mobilise USD 250bn in investment by 20304), it remains to be seen what will be channelled where. The past two weeks have shown that the true challenge lies not only in raising capital, but also in ensuring its just and efficient allocation. Furthermore, a 2022 OECD report5  revealed that between 2013 and 2020, overall climate finance consistently fell short of the USD 100bn annual goal defined at COP156 , with a >45% gap at its worst. Hence, COP28 ends with a deal on fossil fuels, but the hardest part is not behind us. As the world grapples with the escalating impacts of climate change, the ability of the international climate summit to bridge the gap between promise and practice will be crucial in determining the global community’s capacity to mitigate and adapt to these challenges.

By Océane BALBINOT-VIALE, Senior ESG Analyst, La Française AM

1 Cop28 president says there is ‘no science’ behind demands for phase-out of fossil fuels | Cop28 | The Guardian

2 NEW: Climate Vulnerable Economies Loss Report - CVF (

3 Estimated USD 792 million. The World Bank will host the Fund for an interim period of four years.

4 UAE commits US$30 billion in catalytic capital to launch landmark climate-focused investment vehicle at COP28

5 Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020 | en | OECD

6 It was later reiterated at COP21 and extended to 2025.

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