At the top of the formal agenda for this year’s Conference of the Parties is the debate on loss and damage, or the destructive impacts of climate change that can’t be avoided either by mitigation or adaptation. World leaders are grappling with whether to create a reallocation fund that will arm countries disproportionately affected by climate change with the means to cope with such change.
On one end of the negotiating table, proponents argue that wealthy nations — North America, Japan, Western Europe, accounting for a tenth of the world population — are solely responsible for about half of anthropogenic greenhouse gas emissions, and thus should be held responsible for the incurred loss and damage. Developing poor nations have called for aid from developed rich nations for three decades, beginning in 1991, when the Alliance of Small Island States rightly projected costly rising sea levels. Since then, the Conferences — most notably COP15 in Copenhagen, COP19 in Warsaw, COP21 in Paris, and COP25 in Madrid — have shaped the loss and damage debate, though thus far without enacting liability.
The figurehead for those in favor of loss and damage is currently Mia Mottley, the Prime Minister of Barbados, who this summer gathered leaders on the island nation to propose what is now known as the Bridgetown Initiative, aimed to mobilize capital towards nations heavily indebted by climate disasters. With political leverage secured in Egypt from French President Emmanuel Macron and former Vice President Al Gore, Mottley is now calling for a revisit of the 1944 Bretton Woods Agreement, where the International Monetary Fund and the World Bank was devised, to codify that nations in the Global South particularly exposed to climate injustice — some of which were formed after the Agreement — obtain operational power over the institutions that can hedge high-risk nations against global warming. With support from David Malpass, the President of the World Bank, and Janet Yellen, the United States Treasury secretary, a new task force is set to be formed, to carve out the path forward before the two institutions’ spring negotiations in Washington.
On the other end of the negotiating table, adversaries against loss and damage argue that rich nations aren’t in fact solely responsible for climate change. Special Presidential Envoy for Climate John Kerry acknowledged on a panel I attended last week that the United States, having burned coal since the 1880s, are in fact responsible, but share the burden of global warming with emerging nations. Since loss and damage further lack a clear-cut definition, rich countries — and particularly European nations, insofar as the United States remain uncommitted to the cause — are hesitant to open up what could turn out to be a floodgate of funding, as the total requirement may range from between $300 and $600 billion per year by 2030, to $1.7 trillion by 2050.
After COP26 in Glasgow, some of the world’s largest financial institutions, together representing 450 firms across 45 countries, committed over $130 trillion of private capital towards transforming the economy, through the Glasgow Financial Alliance for Net Zero. And just ahead of COP27, that same group decided to drop the criteria requiring them to phase out fossil fuels, as coal, oil and gas prices skyrocketed in the aftermath of Russia’s invasion of Ukraine. A financial institution will, as I have written before, never ground their thinking in morality. Whether through incentives or legislation, we will need to bridge the gap between sustainable development and sustainable profits, if we want to mobilize the amount of capital necessary to reach net zero.
The latest IPCC report is abundantly clear: a temperature rise above 1.5 degrees Celsius would significantly increase the likelihood of a catastrophic climate impact, and we are currently on track for a rise of between 2.4 and 2.6 Celsius by the end of the century. If we are to bring environmental justice to this world — and particularly to marginalized communities disproportionately vulnerable to global warming — we need constructive negotiations across the board at the end of this week.
I am thankful for the multitude of perspectives gained in Egypt. For the entire Doconomy team — Johan Pihl and Johanna Nordin in the LAB, of course — and our brilliant on-the-ground colleagues, Mathias Wikström and Katarina Wangler Björk. Last but not least, for the entire team at Business Sweden, who produced a wide array of stellar panels at the Swedish Pavilion. Looking forward to all that lies ahead.
Milton Noel Malmestrom
Innovation Lead at Doconomy