What is COP?

All countries who have signed up to a United Nations convention are invited to annual meetings called the Conference of the Parties (COP) to discuss the subject of that particular convention.

Each year, the conferences are named based on the instance of that particular version. For example, this year marks the 27th edition of the UN Framework Convention on Climate Change (UNFCCC) conference, it will be called COP27. This year will also see the 15th edition of the Convention on Biological Diversity (CBD) conference, which will be known as COP15.

The purpose of COP is to bring government parties together to agree upon targets and milestones, which then have to be met in some way in their home countries through government policy. Progress towards these goals will be reviewed during future conferences. 

This year will see Egypt host COP27, the UN Framework Convention on Climate Change (UNFCCC) conference. 

The UNFCCC is an international treaty that recognizes the existence of man-made climate change and that provides a framework for negotiations to prevent dangerous impacts to the climate system in the future. 

154 countries, or ‘Parties’, adopted the convention in 1992. As of today, that number sits at 198, they are also known as ‘Parties to the Convention’. 

 

The main objective of the UNFCCC’s COP is to review and assess the progress made by parties to the convention in limiting man-made climate change. 

Since the adoption of The Paris Agreement in 2015, COP is an opportunity to evaluate how well the parties are progressing with their Nationally Determined Contributions (NDCs). Commitments made by each nation to reduce their emissions and adaption, addressing the impacts of climate change. 

Combining all nation’s commitments, these NDCs determine whether the goals of the Paris Agreement – to limit global warming to well below 2 °C (preferably to 1.5 °C) compared to pre-industrial levels – can be achieved, or whether further planning is necessary to hit the target. 

COP can also lead to new agreements or treaties which are often aimed at refining targets, agreeing to new goals or forming legally binding international agreements. Examples of such agreements include; the Kyoto Protocol and the Glasgow Pact. 

Since the first COP (or “COP1”) took place in Berlin in March 1995, there have been several major moments to come out of the conferences, including The Kyoto Protocol, The Paris Agreement, and The Glasgow Pact.

The Kyoto Protocol, which was adopted on 11th December 1997 at COP3, required a commitment from developed nations to reduce their nation’s greenhouse gas emissions. The process was to be achieved through a set of rolling emission reduction commitment periods – the first of which ended in 2012, the second in 2020. 

The Protocol, which did not formally come into effect until 8 years later in 2005, was unlike the broader UNFCCC treaty as the agreements made under the Protocol were legally binding. If a country failed to meet its emissions target, the Protocol required it to make up the difference in the next commitment period with an extra 30% on top. 

Notable members of the wider UNFCCC community who were not part of the agreement included Andorra, Palestine, South Sudan, the United States, and Canada. Canada originally joined the protocol, but withdrew on 15 December 2012, stating that the accord “cannot work” as it did not cover the world’s largest two emitters, the United States and China.

The signing of the Paris Climate Agreement effectively replaced the Kyoto Protocol.

The Paris Agreement was adopted at COP21 in 2015 and came into force in 2016. The goal of the agreement is to limit global warming to well below 2 °C (preferably to 1.5 °C) compared to pre-industrial levels (1850-1900).

Recent reports from the Intergovernmental Panel on Climate Change (IPCC) warn that the world is currently on course for a warming of 2.4 °C, with every fraction of a degree fuelling worse impacts.

Every five years, countries engage in the Global Stocktake, which is an assessment of their progress under the Paris Climate Agreement. They will be expected to make new emission reduction commitments after that. This cycle is in place to ensure that commitments become progressively more ambitious over time, based on the latest climate research data.
 

The Glasgow Pact was signed at COP26 in 2021. The agreement covered three main areas. 

1. Revisiting emission reduction plans (NDCs)

Prior to the 2021 negotiations in Glasgow, many countries had chosen to build on their 2020 emission reduction commitments by submitting new or updated ones.

However, due to insufficient levels of commitment, along with overly ambitious but ultimately unmet commitments, there remains a significant gap between the projected global emissions based on the reduction commitments and the trajectory required.

A recent UN report suggests that current reduction commitments will lead to global warming of around 2.5 °C by the end of the century, an excess of 1 °C above the 1.5 °C limit set forth in the Paris Agreement.

In order to make sure the target is met, the Glasgow Climate Pact asks countries to revisit and strengthen their targets by the end of 2022.

2. The “phase down” of coal 

Since the signing of the Kyoto Protocol in 1997, discussions and documents drafted at COP summits have never specifically mentioned fossil fuels in regard to emission reduction. The first instance was at COP26. 

While the original document language expressed the desire to “phase out” subsidies for inefficient fuels such as coal, a last-minute intervention from India proposed a watered-down version of the language, replacing the wording with “phasing down”. This new wording was reluctantly accepted and means that under the agreement, countries can continue to use “unabated coal” meaning coal burning combined with carbon capture and storage methods. 

3. Climate Finance

During the 2009 COP15 in Copenhagen, developed nations agreed that $100 billion a year – until 2020 – would be given to developing countries to help them both reduce emissions, and adapt to the existing impacts of climate change (adaptation and mitigation). This financial commitment was to be paid in addition to the existing Official Development Assistance (ODA) government aid package. This agreement was later extended by five years to 2025.

However, the agreement’s funding target has been repeatedly missed since 2013, leading to frustration from developing nations. In addition to the original funding, developing nations have also called for additional funding to help them adapt to the ongoing challenges of climate change. 

The Glasgow Pact builds upon the original Copenhagen agreement terms, with signatories pledging increased financing for the Adaptation Fund (totalling over USD 350 million) and to the Least Developed Countries Fund (LDCF) (totalling over USD 600 million).

Unlike both the Paris Agreement and Kyoto Protocol, the Glasgow Pact is not legally binding. 

There are two main sites for the event: the Blue Zone and the Green Zone. The former is where the official negotiations take place, bringing together delegates and observers through discussions, exhibits and cultural activities.

The Green Zone is a place where people can come to talk about climate change and soak up the atmosphere. Businesses can also exhibit what they are doing to tackle the climate crisis.

It is estimated that more than 30,000 people attended COP26 in Glasgow, including representatives of more than 200 countries, business leaders, NGOs, intergovernmental organisations and religious leaders as well as thousands of media personnel.

From a preservation standpoint, everybody should be invested in the COP process. By the year 2100, the Earth is expected to warm significantly. Further warming would cause sea levels to rise and large parts of the planet to become uninhabitable, along with increases in extreme weather events around the globe.

But, what is the direct impact on business from COP? There are a few key points to consider. 

1. Growth of green finance

The market for sustainable investing has grown significantly in the last few years, with global assets held in ESG funds ballooning to roughly $35 trillion.

Organisations that can demonstrate sustainability throughout their operations are likely to be seen as favourable to value-driven investors, who may also look to reduce the risk of capital loss due to unethical practices within an organisation. This is often called ESG investing.

Businesses should watch out for any green financing arrangements that come out of the COP mechanism, as well as anything specific to their areas of focus, such as clean air or habitat protection.

2. Consumer behaviour and business revenue

As consumers become more aware of the climate crisis, they are changing how they behave and what they expect. According to a 2021 study from First Insight and the Baker Retailing Center, 75% of Gen Z (those born between 1997 and 2012) consumers place sustainability ahead of brand names in their purchasing decisions and actions.

As COP continues to bring the climate crisis to the public attention, this trend is likely to continue growing significantly.

Responding to trends in demand for sustainable consumption allows businesses to target their audience, create value, and grow revenues while consumers can feel positive about voting with their wallets.

3. Creating an engaging workforce

Like consumers, the staffing market is also moving toward sustainable values, as demonstrated by a recent YouGov poll that highlights how 37% of employees would not work for a company with poor green credentials. Within the 18 to 24-year-old age range, that number increased to 42%, indicating a shift in the values of the younger generations entering the workforce.

To remain relevant and develop an engaged and proactive workforce, organisations need to remain at the cutting edge of the climate discussion and promote their sustainable credentials.
 
4. Supply chain salvation

Supply chains are an essential part of any businesses, a network of interconnected stakeholders working together to create a product or service. The more complex a supply chain, the more risk it faces due to the inevitable impacts of climate change.

According to global management consulting firm Mckinsey, on average, an auto manufacturer has around 250 tier-one suppliers, but the number multiplies to 18,000 across the full-value chain. Aerospace manufacturers have an average of 200 tier-one suppliers and 12,000 across all tiers. Finally, technology companies have an average of 125 suppliers in their tier-one group and more than 7,000 across all tiers.

A disruption in any part of a companies value chain can lead to lost revenue of millions of pounds.
Seen recently, high temperatures across Europe this year resulted in the Rhine, the second-largest river in Europe and a pillar of the German, Dutch, and Swiss economies for centuries, dropped to record levels. As a knock on effect, cargo ships had no choice but to lower their capacity to ensure they wouldn’t ground themselves in the shallow waters, some transport operators even refused to travel the routes.

The poor conditions are expected to drag down the region’s economies far worse than the 5 billion-euro ($5.1 billion) hit caused by Rhine transit issues in 2018

Furthermore, a recent study from CDP found that companies could face up to $120 billion in costs from environmental risks in their supply chains within the next 5 years.

This year, COP took place in Sharm el-Sheikh, Egypt from 6th to 18th November 2022.
As the first COP to take place in Africa since 2016 it was hoped that it would be a focus of the event as African countries face some of the worst impacts of climate change but also rely on energy produced from fossil fuels.

The Egyptian Presidency of COP27 wanted this year to be an “implementation COP”, coining the #TogetherForImplementation tag and urging action across prior agreements through all areas of climate change need, with a focus on protecting people from the immediate impacts of climate change.

The Presidency also pointed to the need to first meet current financial commitments, with the $100 billion finance goal and the doubling of global adaptation finance, and to take global ambition on finance further.

Speaking about the vision for COP27, H.E. Sameh Shoukry, Egyptian Minister of Foreign Affairs and COP27 President-Designate, said: “We must accelerate climate action on all fronts including mitigation, adaptation, and finance in addition to adopting more ambitious mitigation measures to keep the 1.5 °C within reach.”

To encourage global decision makers to follow through on pledges, the COP27 Presidency launched Act Now, a short film which highlights the real and present danger of climate change, its man-made origins and its man-made solutions.

However, this year has also seen some major events that may impact the discussion.

Russia’s invasion of Ukraine has resulted in a global energy and food crisis. To compensate, some countries have increased production of fossil fuels or fired up old coal plants, including the UK, who is now accepting applications for new oil and gas projects. This will likely impact countries NDC’s and require further discussion and planning for the future.

Meanwhile, scores of countries, have been pummelled by devastating floods, wildfires and droughts, super-charged by climate change causing significant casualties and supply chain disruptions.

The conference aims to tackle the challenge of climate change on a global scale. Any decisions or pledges made during the conference are up to leaders to independently achieve in their home countries through national policies.

But, each year at the conference, there are several side events that target specific areas of the climate impact. Most notable for businesses is the World Climate Summit, also known as The investment COP.

The Summit facilitates collaboration for the innovation, investments, and policies which ultimately impact businesses around the world.

The event took place between 13-14 November.

This year, COP27 dealt with several new challenges.

To begin with, there were concerns from campaigners that Egypt’s track record of human rights will result in a conference where the free discussion may be muted. With several campaigns and UK politicians writing an open letter about the Egyptian authorities restrictions on freedom of the press, expression, association, and peaceful assembly.

It was also announced that this year, Coca-cola would be the official sponsor of COP27. This drew ire from some including Break Free From Plastic coordinator Emma Priestland who expressed, “Coca-Cola is one of the world’s biggest users of plastic. It’s astounding that a company so tied to the fossil fuel industry is allowed to sponsor such a vital climate meeting.”

In response, Coca-Cola said it shares “the goal of eliminating waste from the ocean and appreciates efforts to raise awareness about this challenge”, pointing to its “ambitious goals” that start with “helping to collect and recycle a bottle or can for every one we sell – regardless of where it comes from – by 2030.”

The conference began with a two-day summit for world leaders showing their commitment to the process. They then left their negotiators to thrash out the details, aiming to reach agreements on different issues by the end of the week. 

The talks and events followed a particular theme each day.  

Wednesday 9th: Finance
Thursday 10th: Science and youth day
Friday 11th: Decarbonisation
Saturday 12th: Adaptation and agriculture
Monday 14th: Gender and water
Tuesday 15th: Civil society and energy
Wednesday 16th: Biodiversity
Thursday 17th: Solutions