Weekly News | 16th to 29th November 2022

Codo Advisory keeps an eye for you on the latest events and trends in climate finance and corporate sustainability, in the world and in Japan. Here’s what caught our attention last week.

World | COP27 delivers climate fund breakthrough through historic deal 

• The COP27 climate talks ended with a last-minute deal to create a loss and damage fund to aid “developing countries that are particularly vulnerable to the effects of climate change”.  
• This loss and damage deal is the result of intense debate between developing and developed countries and became the main subject of discussion through the last moments of COP27, interrogating richer countries’ willingness to accept their role in temperature rise.  
• However, there are still many details to work out, the most urgent one being how the loss and damage facility will use the amount of money it will receive.  
• Read more about this story: Bloomberg  

World | COP27 climate summit considered a missed opportunity for ambition on fossil fuels 

• Through the long process of delivering climate justice with the creation of a loss and damage fund, numerous countries claimed they felt pressured to give up on tougher commitments to limiting global warming to 1.5°.  
• Of all the COP27 members, Saudi Arabia, Iran, Russia, and other oil-producing countries firmly stood against expanded language on fossil fuels proposed by the High Ambition Coalition gathered to support a pledge to “phase out” fossil fuels by 2025. 
• The lack of emission-related deals representing the missed opportunity for a truly successful COP27, Pakistan’s UN Ambassador Munir Akram stated “it has now become quite clear that the transition away from fossil fuel is going to be a difficult one”. 
• Read more about this story: Reuters 1 & 2, Bloomberg 

World | Deal on biodiversity to be discussed at the upcoming COP15 Biodiversity Summit  

• No progress has been made regarding the preservation of wildlife since a single pledge made by politicians in Aichi, Japan, in 2010, quite the contrary: the animal population was reported to decrease by 2.5% a year.  
• From December 7^th to 19^th, governments from all around the world will gather and status upon the Post-2020 Global Biodiversity Framework, aiming that by 2050, biodiversity will be restored and conserved. However, prospects of success look grim according to the Institute of Zoology’s Living Planet Index. 
• China will lead talks to secure an “ambitious and pragmatic” biodiversity agreement, trying to consider past shortcomings on how to fund conservation in poorer countries, and the attainability of new targets. 
• Read more about this story: The Guardian, Reuters, Unep 

Comment from Codo: Biodiversity collapse is the next major challenge to be addressed by companies, with a level of importance and urgency that will be comparable to climate change. Frameworks and tools will be needed to accompany firms, the same way they are using today frameworks and tools for decarbonization. Central banks are already starting to prepare: the NGFS global network that gathers 120 central banks and observers ambitions to create a shared reference framework to take into account biodiversity-related risks in their activities. 

Canada | CPPIB warns it will start selling firms that don’t take ESG seriously 

• John Graham, the head of the Canada Pension Plan Investment Board (CPPIB), said he’s willing to cut ties with firms that aren’t devoted to fulfilling their net-zero targets.  
• The CPPIB, one of the world’s largest institutional investors in private equities, will consider voting against all directors at companies with a record of failures related to climate change, board gender diversity, and deficient corporate governance: “we’re there as an investor and we share our expectations and use our governance rights”, Graham said.  
• On another hand, other investment firms’ CEOs argued that you can’t force change as it needs to come from within the companies, thus refocusing the divestment debate over the responsibility of ESG investors: should they stop funding polluting businesses or guide them towards transition?  
• Read more about this story: Reuters 

Americas | Mexico pledges 35% emissions-cutting target for 2030 

• Mexico seeks to boost its Paris Agreement pledge by cutting emissions by 35% within the next 7 years after environmentalists judged its earlier promise of a 22% cut by 2030 as insufficient. 
• The move follows a series of meeting between US president Biden and Mexico president Obrador a few weeks ago and will require $40 billion in investment and approximately 40 gigawatts of additional clean energy generation along with limitations on Petroleos Mexicanos oil and gas facilities output.  
• By updating its nationally determined contribution to reach Paris Agreement’s goal, Mexico sends a powerful message and already influenced other countries such as Turkey, which plans to upgrade its ambitions soon.  
• Read more about this story: Bloomberg, Bloomberg Law  

Asia | US, Japan-Led climate pact to offer Indonesia $15 Billion 

• The “just energy transition partnership” (JETP) is set to help Indonesia shift away from its coal-dominated power generation with financial assistance worth as much as $20 billion. Experts estimate the country will need a total of $600 billion to phase out coal generation and fully develop the renewable energy sector by 2050. 
• Indonesia is the world’s top exporter of thermal coal, this power accounting for more than half of the country’s electricity. However, it recently stepped up its climate-related goals by setting an ambitious greenhouse gas cut objective by 2030 and a net-zero by 2060 target. 
• This agreement follows the $8.5 billion climate finance deal for South Africa from last year’s COP26 and is the result of a full year of negotiations between many countries, leading to a solid initial framework even though the number of already existing coal plants to be closed is still to be determined.  
• Read more about this story: Bloomberg 1 & 2