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Climate change is the greatest challenge humanity has ever faced

Climate change is the greatest challenge humanity has ever faced. It is the race of our lives. Investing in sustainability means investing in our grandchildren, in our civilization, in our survival as a species. Initiatives aligning with net zero are critical ways our industry can show the leadership that will be a necessary part of combating these challenges. All of us need to make sustainability integral to what we do. It is the fight for our very existence on this planet,” said Jeremy Grantham, Co-Founder and Long-Term Investment Strategist, and a leading global advocate for climate change efforts and investment.

The Net Zero Asset Managers initiative was launched in December 2020 and is designed to enable asset managers to play their part in helping to deliver on the goals of the Paris Agreement. Its signatories now include 291 asset managers with $66 trillion in assets under management, more than half of the entire asset management industry globally in terms of total funds managed.

After 30 years of demands from developing countries, an agreement was finally agreed at the COP27 climate summit to establish a loss and damage fund. This fund, which will provide finance to developing countries for the disasters they are already experiencing due to climate change, was however a lone breakthrough at a summit that has been widely described as a failure, our South Asia director Joydeep Gupta reported as the talks ended in Sharm El-Sheikh, Egypt.

The negotiations have not spurred countries to increase their climate ambition, despite the rapidly shrinking window left to mitigate the worst impacts of climate change.

A crucial sticking point proved to be the lack of money to help poor countries develop or transition to low-carbon economies, combined with ill feeling over the breaking of past promises on climate finance. The last-ditch accomodation made by rich countries to set up a loss and damage fund did little to ultimately remedy this.

Experts cautioned that the success of the fund depends on what happens next – which The Third Pole will be watching closely.

Countries at the sharp end of climate change

Pakistan was an important voice at COP27, campaigning strongly for loss and damage finance in the aftermath of this year’s floods, which caused damage estimated at around USD 15 billion. One way such funding would be put to use is the Living Indus Initiative, a series of projects that aim to increase flood resilience in the Indus basin in Pakistan, while restoring it to good ecological health. As Sherry Rehman, Pakistan’s climate change minister, showcased the initiative to investors at COP27, we spoke with water experts to find out where the programme holds up, and where it might fail to avoid future floods on the scale seen this year.

On a similar theme, we report on how the idea of reducing risk of urban flooding while replenishing groundwater has been gaining momentum in Islamabad, where 50 artificial groundwater recharge wells have been dug, recharging the capital city’s aquifer by a reported 1.9 million gallons of water.

As countries were urged to ramp up their energy transitions at COP27, we published an analysis of Chinese energy investments in Pakistan. To date, investments have focused on coal and hydropower projects, but there are signs this is starting to shift, with several China-backed wind projects now underway.

Like Pakistan, Mongolia is now experiencing more frequent and intense floods. Rainfall patterns are changing in the once cold, arid country, we report, with intense deluges replacing long periods of light rainfall. Our story focuses on the impacts this is having in the country’s growing cities, where changing weather and lack of infrastructure are combining to create devastating impacts for residents.

Investigating EIAs in Nepal

Our final highlight is an investigation by our Nepal editor, Ramesh Bhushal. He explores why, despite environmental impact assessments (EIAs) being an established part of decision-making under Nepali law, they are rarely effective in reducing environmental harm caused by projects such as roads, dams and airports. Officials and developers speak frankly on how the process has become a box-ticking exercise.

COP27: Loss and damage fund sole success

The only solace is the start of a fund to pay poor nations for the loss and damage they are suffering due to climate change.The disconnect between the reality of climate change and the artificial bubble in which global climate negotiations take place became significantly wider as the extended 2022 summit drew to a close 40 hours behind schedule in Sharm El-Sheikh, Egypt.

The only success at the failing summit (COP27) could show was the establishment of a fund to pay poor nations for the loss and damage they are suffering due to climate change.

That is an admission that three decades of negotiations have failed to mitigate emissions of greenhouse gases (GHG) that are warming the atmosphere or to enable people adapt to the impacts of climate change. That is why the negotiators have been forced to launch a fund to deal with loss and damage, though all its modalities are supposed to be worked out in future.

At the closing plenary session, Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, acknowledged that the negotiations were “not easy at all”, but pointed out that the establishment of the fund “helps the most vulnerable”.

Failure of COP27 in a code red year

The disappointing finale came in a year that started with warnings from the Intergovernmental Panel on Climate Change (IPCC) that GHG emissions must halve by 2030 and reach net zero by 2050 if humanity is to avert a level of warming it will be unable to cope with.

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The IPCC’s ‘code red’ warning was strengthened by a series of reports in October 2022. The World Meteorological Organisation (WMO) reported record levels of the three main GHGs – carbon dioxide, methane and nitrous oxide – in the atmosphere.

The UN Framework Convention on Climate Change (UNFCCC) reported that nations’ current pledges to control GHG emissions (called Nationally Determined Contributions or NDCs) would, even if fully achieved, still fail to keep average global temperature rise within two degrees Celsius as vowed by all countries in the Paris Agreement, let alone the aspirational goal of keeping warming within 1.5?C above pre-Industrial Age levels. Instead, it estimated a rise of 2.4-2.6?C by 2100. The UNFCCC calculated that developing countries would need USD 5.6 trillion up to 2030 to fulfil even current NDCs.

The negotiators’ bubble at COP27

All the experts came to COP27, repeated their warnings and recommended solutions, but government representatives failed to show up to listen. In various parts of the sprawling seaside complex where the conference was held, victims of climate change-induced disasters related their experiences and turned their audiences teary-eyed. In other places, activists chanted slogans.

There were also over 600 lobbyists from oil and gas companies, a 25% increase from the 2021 summit. This may have contributed to the failure of a move started by India to phase down all fossil fuels at the UN Summit.

Sanjay Vashist, the director of Climate Action Network South Asia, said, “It is indeed unfortunate that COP27 failed to deliver on any of the three key outcomes that could have accelerated climate action to avert the worst impacts of the climate crisis. In a year when Pakistan floods reminded the world of the need for urgency, COP 27 had nothing new to offer on ambition to reduce greenhouse gas emissions. At a time when island nations like Sri Lanka are teetering under economic and climate crises, it has failed to find ways to expedite the delivery of promised billion dollars per annum, forget any new or additional financial assistance. At a time when Bangladesh, Maldives and Nepal are battered by multiple climate disasters, rich countries, especially US, did not heed India’s call and failed to agree to phase out all fossil fuels, coal, oil and gas for a sustainable and equitable clean energy transition.”

The negotiators from 197 governments bickered behind closed doors, with rich nations asking poor nations to increase ambition to control emissions, while poor nations asked how they would do it without the rich nations – the principal polluters since the start of the Industrial Age – not promising any money and not even paying the money they had promised earlier. COP27 failed to clear this fundamental logjam.

Appeals for compromise and increasing desperation

Sameh Shoukry, foreign minister of host nation Egypt and president of COP27, made repeated appeals for compromise, including a public appeal the morning after the summit was scheduled to close.

UN Secretary General Antonio Guterres said, “We need to drastically reduce emissions now – and this is an issue this COP did not address.” Despite his urging to countries to “cooperate or perish”, in the end the cooperation was just not there. In his closing statement, referring to the loss and damage fund, he said, “Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust.”

The European Union, too, criticised the lack of mitigation ambition during the closing session.

The desperation and sense of failure showed in the COP27 declaration, where one paragraph read: “The increasingly complex and challenging global geopolitical situation and its impact on the energy, food and economic situations, as well as the additional challenges associated with the socioeconomic recovery from the coronavirus pandemic, should not be used as a pretext for backtracking, backsliding or de-prioritising climate action.”

Despite this and other proclamations, the compromises in the operative portions made the COP27 declaration far too weak to combat climate change. The only new activity in the mitigation work programme next year will be two “global dialogues”.

This despite the same declaration pointing out that “about USD 4 trillion per year needs to be invested in renewable energy up until 2030 to be able to reach net zero emissions by 2050, and that, furthermore, a global transformation to a low-carbon economy is expected to require investment of at least USD 4-6 trillion per year.”

Many of the civil society activists at COP27 in Egypt emphasised the need for climate finance The declaration also highlighted that “delivering such funding will require a transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors.” It noted “with concern the growing gap between the needs of developing country Parties, in particular those due to the increasing impacts of climate change and their increased indebtedness, and the support provided and mobilised for their efforts to implement their nationally determined contributions, highlighting that such needs are currently estimated at USD 5.8-5.9 trillion for the pre-2030 period.”

Against such needs, rich nations have failed to keep their 2009 promise to provide USD 100 billion by 2020. COP27 failed to change that.

The declaration noted that “global climate finance flows are small relative to the overall needs of developing countries, with such flows in 2019-2020 estimated to be USD 803 billion, which is 31-32% of the annual investment needed to keep the global temperature rise” with 1.5C.

COP27 saw declarations from some rich nations that they would put more money into the Adaptation Fund. Apart from that, the only plan is to prepare a report on the doubling of adaptation finance, which had been agreed at the 2021 summit in Glasgow.

The lone success at a failed COP27

Many developing countries came to Sharm El-Sheikh with a one-point agenda – start a fund to pay for loss and damage. It was launched after tortuous negotiations. Saleemul Huq, head of the Dhaka-based International Centre for Climate and Development, told The Third Pole, “The establishment of the new fund for addressing loss and damage from human-induced climate change at COP27 is a major achievement for all the developing countries, and we congratulate the developed countries for agreeing to set it up.”

Harjeet Singh, head of global political strategy at Climate Action Network International, said the fund “offers hope to the vulnerable people that they will get help to recover from climate disasters and rebuild their lives.” Huq and Singh have spearheaded for decades the move to bring the issue of loss and damage to the fore at climate negotiations.

Hailing the establishment of the fund, Secretary General Guterres said, “This COP has taken an important step towards justice… Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust… Justice should also mean several other things: Finally making good on the long-delayed promise of USD 100 billion a year in climate finance for developing countries; clarity and a credible roadmap to double adaptation finance; changing the business models of multilateral development banks and international financial institutions. They must accept more risk and systematically leverage private finance for developing countries at reasonable costs.”

Welcoming the establishment of the fund, Farah Naureen, Pakistan director of Mercy Corps, said, “Anything less than this would have jeopardised trust in the climate negotiations and would have left countries like mine, Pakistan, paying the price… The effectiveness of the fund remains to be seen, and the real work will only begin after COP27.”

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