KBRA: COP27 will have widespread impact on international climate investment
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KBRA report concludes that COP remains an important global event despite challenges of reaching consensus on loss and damages this year
For investors tracking the world’s transition to a low-carbon economy, the COP27 conference flagged a range of challenges — from the Russia-Ukraine war and rising inflation to fears over energy security — according to global rating agency KBRA.
In the report, KBRA said that the 27th annual United Nations Climate Change Conference of the Parties, which was held in Sharm el-Sheikh, Egypt, from November 6-18, will likely have widespread implications for international climate investment. Among the key themes of this year’s event, the report said, were potential compensation for climate-related loss and damages, fossil fuel participation, and accusations of greenwashing.
The report said there is still much public skepticism about whether countries and corporations will be able to work together to limit global warming. However, it added, COP remains an important event.
KBRA pointed to the loss and damages debate, which it described as a growing sense in the developing world that developed countries must pay their share of the costs surrounding climate-related environmental catastrophes caused by their own GHG emissions.
KBRA said pressure over loss and damages came this year from leaders such as Pakistan’s Prime Minister Shehbaz Sharif, who sought financial help for the nearly $30 billion in recent flood damages to his country. Those floods also resulted in 1,700 deaths. The Prime Minister of The Bahamas, Philip Davis, raised the prospect of “tens of millions” of climate refugees. Brazilian President-elect Luiz Inácio Lula da Silva said that his administration will “do whatever it takes” to protect the Amazon rainforest from further deforestation and degradation.
The report quoted scientists’ estimates that approximately 1.6 billion people live in “vulnerability hotspots,” areas that are experiencing severe climate change effects. This number, KBRA said, could double by 2050 as emissions continue to increase. Recent years, the report added, have seen devastation from heat waves, drought, floods, and hurricanes.
Recalling the founding of COP in Berlin in 1995, the KBRA report traced the conference’s history through the Rio Earth Summit in 1992 and the Kyoto Protocol, which was negotiated in that Japanese city in 1997. COP21 saw the ratification of the Paris Agreement, with binding commitments that limit global warming to below 2°C, the report said, noting the increasing public pressure for countries and corporations to accelerate their alignment with the goals of the Paris Agreement.