As anticipated by Control Risks, the COP28 climate summit was not a gamechanger for climate agendas. This was a result of unfavourable geopolitical momentum amid growing global fragmentation and competition, coupled with the considerable financial difficulties facing economies worldwide. There were winners and losers from the summit, with our analysis putting both the climate and the oil producing states in the losers’ camp.
COP28’s main announcement on fossil fuels signalled positive but insufficient progress on climate solutions. Countries will be encouraged to “transition” their energy systems away from fossil fuels in a “just and orderly fashion”. This new language signals some progress by characterising fossil fuel emissions specifically as a priority, but still falls short of calls by scientists, who largely agree that a much more aggressive and concrete plan is needed to reduce and potentially eliminate fossil fuels from energy matrices.
COP28 also fell short in mobilising funds at a sufficient level to meet the scale of the challenge. For example, the “loss-and-damage fund” whose creation was announced at the COP27 summit in 2022 received USD 700m in pledges by wealthy countries during the conference. This represents 0.2% of the estimated irreversible economic and non-economic losses facing developing countries due to global warming each year, according to UN estimates.
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So, who were the winners, and who were the losers?
| Winners | Losers |
|---|---|
| US and EU. The key negotiators in promoting the last minute, face-saving agreement on fossil fuels transition. | Climate. Although COP28’s results represent a positive signalling for mitigation, it still fell short on calls by scientists for more aggressive action on decarbonisation. |
| UAE. Despite strong criticism over the country’s legitimacy to lead climate negotiations, the country managed to promote positive green credentials on the back of the conference’s record-high attendance levels. | Multilateralism. Limited results delivered by COP28 will fuel further scepticism among civil society and businesses over the capacity of international institutions to address global crises, including the climate emergency. |
| Renewable investments. These will continue to enjoy a broadly favourable reputation among governments and the private sector given their capacity to improve countries’ positions in the context of the energy trilemma (security, affordability and sustainability). | Oil producing states. Although a language providing for the phasing out of the fossil fuels was not included in the final agreement, an increasing focus in oil and gas-specific emissions by regulators and activists is likely for the coming year. Pressure over producing countries will be exacerbated by the ambitious goal established by over 100 countries during COP28 to triple renewable energy capacity by 2030. |
The summit produced three other noteworthy announcements in the areas of loss and damage funding, renewable energy and climate adaptation:
- An agreement on the implementation mechanisms for the loss and damage fund, providing financial support for more vulnerable countries.
- A commitment by more than 100 countries to triple renewable energy capacity by 2030.
- The adoption of a framework for the Global Goal on Adaptation (GGA), which was established under the 2015 Paris Agreement and is intended to promote investments in climate adaptation.
Business implications
Given limited mitigation and adaptation progress, the climate crisis and its impacts will intensify in the coming years. More frequent and severe extreme weather events will increasingly disrupt the operational environment across supply-chains. Meanwhile, regulatory action will remain largely concentrated at the domestic level, often lacking international coordination and therefore exposing multinationals to inconsistent regulatory burdens. Businesses will be increasingly required to align their approaches to those set by reputable international standards, such as the Task Force on Climate-Related Financial Disclosures (TCFD) and the International Financial Reporting Standards Foundation S2 Climate-related Disclosures (IFRS S2).
Insufficient climate progress globally will also lead to increased environmental activism, impacting brands and businesses that are perceived, even if indirectly, responsible for the climate crisis. More than ever, climate-related risks will be at the top of corporate risk management agendas.
Political implications
Although the outcome ultimately represents a symbolic political win for the UAE, uncertainty over implementation will persist. As COP28 President Sultan Ahmed Al Jaber on 12 December acknowledged, “An agreement is only as good as its implementation.” The COP26 summit in 2021 included a pledge to phase down use of coal, but consumption has increased since then, reinforcing how climate implementation agendas will remain contingent on geopolitical and economic circumstances.
Azerbaijan on 9 December was announced as the host of the COP29 summit in 2024. In the meantime, the conference’s credibility will be tested further as scepticism grows among civil society regarding the capacity for multilateralism to address more significant global crises – including conflicts and the climate emergency