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What to expect at COP 28

ESG
Ida portrait
Ida Kassa Johannesen

Head of ESG investments, Saxo Bank.

Where do we stand when it comes to reducing carbon emissions? What progress have we made since the Paris Agreement and are we on track? At COP 28, the annual conference established by the United Nations to address climate change, heated debates about those questions are guaranteed.

This article will give you an overview of the main topics at COP 28 and how you may invest in some of them.

What are COP 28 top priorities?

  • Climate action assessment
    Discussions will center around the current state of the planet, an assessment of progress made and the areas of failure. The objective is to ensure renewed commitment and galvanize countries to go from motion (planning and strategizing) to action. 
  • Accelerating the energy transition
    Rapidly scaling up renewable energy to meet CO2 emission reduction targets is essential and the role of innovations and technologies like hydrogen fuels, solar, wind and carbon capture can help reduce emissions. Another topic of contention that will be debated is nuclear energy and its potential role in the transition.  
  • A just transition
    As different regions of the world have different starting points in terms of economic growth and development, an approach, that focuses on low-income populations, energy affordability, job creation and reskilling for people affected by the energy transition is key. Thus, for the transition to be sustainable and inclusive, there will have to be multiple pathways, not just one. 
  • Climate finances
    Climate actions and adaptation are costly and will require substantial financing. According to McKinsey, the annual cost of getting to net zero is $9.2trn. The world already spends around $6trn to lower the impact of fossil fuels and use alternatives but an additional whopping $3.2trn (around 3% of global gross domestic product) is needed from both public and private sectors.
  • Climate change impact on human health
    Climate change can also have serious repercussions on human health through air quality, pollution, heatwaves, and heat-related illnesses and even deaths. Natural disasters and the ensuing displacement can contribute to stress and other mental health diseases. Water scarcity and the resulting disruption of agricultural systems can affect crop yields and lead to malnutrition. 

What is COP?

COP is a conference established by the United Nations to address climate change and avoid dangerous interference with the climate system. COP or the conference of parties is held every year and governments of the participating nations evaluate progress and establish new goals for emissions. 


The 1st COP took place in 1995 in Berlin and the next one, COP 28 will take place in Dubai from 30 November to 12 December 2023. Not all COPs are created equal, some are more significant than others and the Kyoto Protocol in 2005 and the Paris Agreement in 2015 are definitely the most notable ones.

What are the main causes of climate change?


The burning of fossil fuels (coal, oil and gas) is the major contributor to climate change and accounts for over 75% of global GHG emissions. GHG emissions primarily come from the following activities: 

  1. Generating electricity and heat used in industry and commercial and residential buildings
  2. Manufacturing goods
  3. Transportation (road transport, airlines, shipping)
  4. Food production
  5. Consuming too much and
  6. Deforestation.

According to the Intergovernmental Panel on Climate Change (IPCC) rising temperatures could have disastrous consequences for the environment. See Exhibit 1, for the impact of climate change under different scenarios.

Web Stats COP28 1920x1080 V2

Source: 6 Big Findings from the IPCC 2022 Report on Climate Impacts, Adaptation and Vulnerability | World Resources Institute (wri.org).

 

What can we expect from COP 28?

Until the conference is over, it is difficult to say what will come out of it. Is COP 28 just going to be a number among other COP numbers or will anything significant come out of it? Only time will tell. But instead of expecting anything from COP 28, your local government official or your neighbor, what about what you can do?  

If you believe that climate change is real and you care about the environment, then you can take a stance and start investing in companies or funds that are developing and scaling solutions to address climate change. By making that choice, not only you are anticipating the risks and opportunities associated with climate change, but you also become part of the solution to one of the most challenging issues the world faces.

How to invest in climate change?

Investors can benefit from climate change by investing in companies or sectors that take positive action and provide mitigation and adaptation solutions to climate change. Examples include clean energy or renewable energy (wind, solar, biofuels), low-carbon transportation (electric vehicles), sustainable agriculture, or clean cooling systems. 

 

There are several investment products available including individual stocks, mutual funds, and ETFs aligned to climate benchmarks such as the Paris Agreement or climate transition benchmarks. You can browse through Saxo’s COP 28 climate change theme for a list of funds and individual stocks focused on tackling the climate change problem in a variety of ways.

Before making any investments, remember to review the available information about the product on the platform and consider your investment objectives, risk tolerance and time horizon.

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