Amid the noise of COP28, real climate progress is being made

I have just come back from #COP28UAE in Dubai – a city that’s home to our regional Africa & Middle East business and a significant location for us in engaging clients in transition and deploying sustainable finance capital. This was the largest ever climate summit by some distance, with over 84,000 attendees, and we've seen good progress this week in some important areas of the climate change challenge.

There are a few key takeaways that have stayed with me. First, corporations are taking very concrete steps to address previously intractable problems like eliminating methane emissions and publishing clear and verifiable net zero transition plans.

Second, there is a growing consensus that a robust and high-integrity carbon market is a necessary component for effective climate finance. I'm pleased to see Glasgow Financial Alliance for Net Zero (GFANZ) , along with the COP Presidency, the UNFCCC and The World Bank , supporting high-integrity carbon markets, and ensuring the key players work together on a roadmap for delivery. This is the first time that prominent global leaders have given unambiguous backing to carbon markets as critical climate finance tools. We must seize this opportunity to agree standards for high-quality carbon credits and incorporate those standards into a clear framework around corporate claims – what does a corporation need to do to say they are on a clear pathway to net zero? The foundations are in place, and we now need to get this over the line.

Third, much more private sector capital is required to close the financing gap. Multi-lateral development banks (MDBs) have a key role to play in mobilising private sector financing and their resources will be complemented by funds committed directly by wealthy governments, for example the $30 billion put forward by the UAE government. Other public/private partnerships like the Just Energy Transition Partnerships (JETPs) will provide additional mechanisms to channel funds to where they are needed most.

On this final point, apart from the funding benefits, the JETPs provide potentially high-impact innovations in areas like financing the early decommissioning of coal fired power plants. There have been significant hurdles along the way – designing the precise financing mechanisms, getting buy-in from key partners and building investor confidence. But since the initial South Africa JETP, Vietnam, Indonesia, and Senegal have signed partnerships demonstrating their commitment to change.

Through our work in Indonesia and Vietnam the groundwork has been laid for donor and private capital to come in and make the JETP concept a reality. Standard Chartered is a leading coordinator of the work across these markets. We co-hosted JETP events with both the Vietnam and Indonesian governments at COP28. I’m very proud of the work we’ve achieved, through our local market expertise. Working at this programme level will yield far greater results than a project-by-project approach. And, importantly, this continues our relationship with the communities of which we have been a part for more than 100 years.

Beyond these specific measures, there is a renewed, and welcomed, focus on the need for a just transition to net zero. Finding a path for a managed phase out of coal-fired power and carbon-intensive activities in other sectors, while also growing renewables capacity, is crucial for long-term growth.

Across many of Standard Chartered ’s markets, billions of people currently rely on coal to keep the lights on. Any transition that fails to take this into account will in itself fail. We must ensure that the transition to net zero improves the standard of living for our customers, and the communities we serve while addressing the climate crisis.

The opportunities that sustainable investment offers are huge. The low carbon economy is coming faster than expected. New solar generation added in 2023 is set to hit 413GW globally. Research from Bloomberg estimates that panel manufacturing capacity is now close to 900GW, meaning in future years capacity additions will likely be higher still. And then there is the additional wind or other forms of innovative, renewable energy generation. That should mean cheaper energy, more resilient economies and businesses, and more jobs.

But climate change is moving faster than climate investment, particularly in the high-growth markets that Standard Chartered calls home. As a further problem, financing conditions have deteriorated – higher rates and higher inflation make it even more difficult for companies of all sizes to secure the necessary net-zero investment.

That means we have to pull out all the stops as soon as possible: improve the use of development bank and other public capital; improve market standards and transparency; scale up new innovations, and; leverage digital technology to help smaller firms access climate finance.

There’s a lot to do, and less time in which to do it. Let’s not forget that once the noise from COP28 subsides.