Climate change sell-out or landmark global warming fightback? Whatever your point of view, COP28 was not short on controversy.
This year the event was held in Dubai and 84,000 people registered to attend. Critics often point to the carbon footprint of moving this many people from place to place regardless of whether they pay the extra money to “offset” the carbon footprint of the air travel.
Sultan Ahmed Al Jaber’s appointment as COP28 President was also controversial: Al Jaber is the Minister of Industry and Advanced Technology of the UAE and Group MD and CEO of the Abu Dhabi National Oil Company. Critics including Al Gore questioned whether it made sense for the meeting to be held in an oil producing state and led by the CEO of a company that churns out more than 4 million barrels of oil per day.
This didn’t prevent the future of fossil fuels taking centre stage as one of the main issues discussed at this year’s meeting, alongside the ongoing discussions about equity and climate finance. There was also debate about the idea that funds should be provided to support countries impacted by climate change.
COP28 was also notable as it marked the first official stocktaking to measure the world’s progress against the agreement in Paris reached in 2015. The unsurprising outcome, which helped to focus minds and build COP28 consensus, is that the world needs to transition to a low carbon energy regime and the window to act is rapidly closing.
In the end the almost 200 countries involved committed to do this, although the final communique avoided strong language such as setting a specific timeline to phase out or end the use of coal, oil and gas. Instead, the language used was in the context of agreeing to keep the target of 1.5ºC average warming and “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.”
One way to look at COP28 is that the event was a resounding success and marks the beginning of the end of the fossil fuel era. This was the tone of the remarks by Simon Stiell, UN Climate Change Executive Secretary. Al Jaber was even more triumphant as he told the assembled audience: “Together, we have confronted realities and set the world in the right direction. We have given it a robust action plan to keep 1.5[°C] within reach.”
A contrarian view is that Al Jaber and his colleagues in other oil producing nations have managed to postpone a clearer plan to phase out fossil fuels to protect their own interests. Greenpeace called the final agreement “disappointing” and expressed its concern that the next meeting, COP29, is scheduled for Azerbaijan, another oil processing country.
In my view, perhaps the most significant achievement of COP28 is that the countries of the world reiterated their commitment to the process itself. This involves increasingly ambitious nationally determined contributions or targets, as well as a number of countries agreeing to do more than the rest, on issues ranging from banning coal to transforming their agricultural sectors.
The implication for business is that the world is clearly moving in the right direction. What this means is that the issue is not whether a specific company should transition to a low carbon operating model but when. This makes it fundamentally a financial decision. My advice is companies should move to a low carbon operating model sooner rather than later.
The even better news is that behind the scenes Global Capital has got the message and is putting its money behind industries, companies and technologies which will be part of a carbon neutral future. By Global Capital I mean the sovereign wealth funds and enormous pension funds which manage hundreds of billions of dollars.
The people who manage these organisations have already turned the page and are looking for innovative green energy and technology projects which will accelerate the transition away from fossil fuels. Many of them were in Dubai and are actively seeking projects and companies which will be on the right side of history.
COP28 just about delivered the collective willpower to keep the fight against global warming as a top priority. Sovereign wealth and pension funds and the projects they invest in, are the ones tasked with actually winning it.
About the Author
He teaches strategy, geopolitics, and sustainability in IESE´s MBA and executive programs, and publishes a weekly blog on these topics under the title Doing Business on the Earth.
His first book, Strategy and Sustainability (Palgrave Macmillan, 2015), is an exploration of the link between business and the environment. His second book, Strategy and Geopolitics (Emerald, 2017), encourages business leaders to pay more attention to what is happening around the planet. Both books offer his own frameworks for looking at these two issues. His latest book, Learning to Fly (Anthem, 2022), looks at how professionals at all levels can manage their careers during complex and uncertain times.
Prior to joining IESE Business School, Rosenberg spent 15 years as a management consultant in Europe, North America and Asia for A.T. Kearney and for Arthur D. Little, and was also the Automotive Practice Leader of Heidrick & Struggles.
Professor Rosenberg received his PhD. from Cranfield University, an MBA from IESE Business School, and a Bachelor of Science in Naval Architecture from the University of Michigan at Ann Arbor.