Your 3 key takeaways from COP27

Our focus at COP27 was on how to support the prosperity and growth of emerging markets, while ensuring a just transition to net zero. Tracey McDermott, our Group Head Conduct, Financial Crime & Compliance, and Chair of the Net-Zero Banking Alliance, was at COP27 and has shared her top 3 takeaways.

I came away from COP27 with a renewed sense of the size of the challenge and its urgency, but also hopeful about the momentum in the financial sector to play its part in finding solutions to help fund and support the transition to net zero.

I was encouraged by the focus on emerging market transition to net zero and the essential role banks must play in helping to tackle climate change. The top 3 things I'd like people to takeaway are: 

1. The necessity of a private and public partnership 

The private sector has a large role to play in climate action, but it needs to be in partnership with the public sector. Leaders have the chance to make this a historic turning point towards cleaner energy and a sustainable food system. Government targets, policies, and transition plans need to be ambitious. The Alliance of CEO Climate Leaders have called for this. 

“We, the Alliance of CEO Climate Leaders, are in this together to solve the climate crisis.” 

View the open letter to world leaders.

I’m also proud to announce that Standard Chartered Bank is part of the private sector working group to support the mobilisation of capital for Indonesia’s Just Energy Transition Partnership (JETP), as a member of the Glasgow Financial Alliance for Net Zero (GFANZ). The Government of Indonesia will pursue an ambitious national effort to accelerate the phasing down of fossil fuels and ramp up use of renewable energy, alongside investment in transition-aligned jobs and industries of the future.

The scale of investment needed to deliver on these ambitious goals is significant. The International Partners Group (IPG), are committing an initial $10 billion over a three-to-five year period, and the GFANZ will work in support of these efforts, with a particular focus on the mobilization of private capital. 

Learn more about the working group. 

2. The role of banks is crucial 

More banks need to set meaningful, science-based decarbonisation targets. The 122 members of the Net Zero Banking Alliance are leading the way – committing themselves to setting and reporting on transparent targets to reduce financed emissions. We have made good progress since our creation in April 2021 but there is much work yet to do. 

Some highlights:

• 95% of respondents report having measured their financed emissions
• 66% report having set a long-term portfolio target for achievement by 2050
• 32% report having set portfolio-wide intermediate targets for achievement by 2030
• 94% have set intermediate sector targets for 2030 or sooner

View the full progress report here 

3. Emerging markets require a just transition 

Emerging markets might be more complex and expensive to finance but there is real economic benefit in doing so. The adaptation market alone could be worth $2 trillion a year by 2026 (source: Bloomberg).

I spoke about the three ways banks can finance emerging markets transition to net zero, by focusing on leapfrogging, jumping straight to clean options without a heavy carbon phase; supporting a just transition which ensures we decarbonise while also supporting development and people; and monetising natural resources, which are critical to delivering net zero and are a potential financial resource for many emerging markets. 

However, when we talk about emerging markets, it's important to remind people that there are still countries with no access to energy of any type - green or otherwise. When we talk about a just transition to net zero for emerging markets, we're not just talking about climate. We're also talking about jobs, and development. For emerging markets, we must ensure we deliver both decarbonization and development.

Hear more of my thoughts on this in my recent Bloomberg panel below (jump to around 17 minutes in).

There will be many summaries and takeaways from #COP27. What stood out for you?