Climate Archives - Page 3 of 18

Do Climate Change and Broader ESG Disclosures Really Work?

November 25, 2022 - By Lily Hsueh

The U.S. Securities and Exchange Commission (“SEC”) is considering requiring publicly traded companies in the United States to make disclosures about the climate-related risks they face. Republican state officials, emboldened by a Supreme Court ruling this summer, have already threatened to sue, claiming that regulators do not have the authority to require such disclosures. As the debate heats up, what is surprisingly missing is a discussion about whether disclosures actually influence corporate behavior.

An underlying premise of financial disclosures is that what gets measured is more likely to be managed – but do corporations that disclose climate change information actually reduce their carbon footprints? While carbon disclosure encourages some improvement, it is not enough by itself to ensure that companies’ greenhouse gas emissions fall. Worse still, some companies use it to obfuscate and enable greenwashing – false or misleading advertising claiming a company is more environmentally or socially responsible than it really is.

Disclosure doesn’t always mean less carbon

Although carbon disclosure is often held up as an indicator of corporate social responsibility, the data tells a more nuanced story. Consider the carbon disclosures made by nearly 600 companies that were listed in the S&P 500 index at least once between 2011 and 2016. The climate-related disclosures were made to CDP, formerly the Carbon Disclosure Project, a nonprofit organization that surveys companies and governments about their carbon emissions and management. (More than half of all S&P 500 firms respond to its requests for information.)

Companies that have proactively disclosed their emissions to CDP on average reduced their entity-wide carbon emissions intensity by at least one measure: carbon emissions per capita of full-time employees. This means that as a company increases in size, it is estimated to reduce its carbon footprint on a per-employee basis. This does not, however, necessarily translate to a reduction in a company’s overall carbon emissions. Much of the decline involved large emissions-intensive companies, such as utilities, that were trying to get ahead of expected climate regulations. Companies that received a “B” grade from CDP actually increased their entity-wide carbon emissions on average over that time. Notably, those in the financial, health care, and other consumer-oriented sectors, which did not experience the same level of regulatory pressure as greenhouse gas-intensive firms, led the increase.

About a quarter of the S&P 500 companies that completed CDP’s annual climate change survey undertook assessments of their business impacts on the environment and integrated climate risk management into their business strategy. Yet, entity-wide emissions still increased.

Earlier research found similar results in the first decade of the U.S. Department of Energy’s Voluntary Greenhouse Gas Registry. Overall, it revealed that participating in the registry had no significant effect on the companies’ carbon emissions intensity, but that many of the companies reported emissions reductions, namely by being selective in what they reported. Still yet, another study, which focused on the power sector’s participation in CDP’s surveys and was published by the Official Journal of the European Association of Environmental and Resource Economists, found an increase in carbon intensity.

‘A-List’ may not be exempt from greenwashing

Even companies that made CDP’s coveted “A-List” of climate leaders may not necessarily be free of greenwashing. A company earns an “A” grade when it has met criteria of disclosure, awareness, management, and leadership, including adopting global best practices, such as a science-based emissions target, regardless of whether these practices translate into improved environmental performance. Because CDP grades companies based on sustainability outputs rather than outcomes, an “A-list” company could be “carbon neutral” when it counts only the facilities it owns and not the factories that make its products. Moreover, a company that has earned an “A” could commit to removing all emitted carbon but maintain partnerships with oil and gas companies to “generate new exploration opportunities.”

Retail and apparel giants like Walmart, Target and Nike – all in the “B” to “A-minus” range in recent years – offer an example of the challenge. They regularly disclose their carbon management plans and emissions to CDP, but they are also part of the industry-led Sustainable Apparel Coalition, which has controversially portrayed petroleum-based synthetics as the most sustainable choice above natural fibers in the Higgs Index, a supply chain measurement tool that some clothing companies use to show a social and environmental footprint to consumers.

Walmart, for one, was sued by the Federal Trade Commission (and has since settled the case) over products that were “misleadingly” described as bamboo and “eco-friendly and sustainable” that were made from rayon, a semi-synthetic fiber made using toxic chemicals.

Designing a greenwashing-resistant disclosures program

There are three key ways for the SEC to design a climate disclosures program that is greenwashing-resistant. First, misinformation or disinformation about environmental, social and governance factors can be minimized if companies are given clear guidelines on what constitutes a low-carbon initiative. Second, companies can be required to benchmark their emission targets based on historical emissions, undergo independent audits, and report concrete changes.

It is important to clearly define “carbon footprint” so these metrics are comparable among companies and over time. For example, there are different types of emissions: Scope 1 emissions are the direct emissions coming out of a firm’s chimneys and tailpipes. Scope 2 emissions are associated with the power a company consumes. Scope 3 is harder to measure – it includes emissions in a company’s supply chain and through the use of its products, such as gasoline used in cars. It reflects the complexity of the modern supply chain.

Third, companies could be asked to disclose a fixed deadline for phasing out fossil fuel assets. This will better ensure that pledges translate into concrete actions in a timely and transparent manner.

Ultimately, investors and financial markets need accurate and verifiable information to assess their investments’ future risk and determine for themselves whether net-zero pledges made by companies are credible. There is now momentum across the globe to hold companies accountable for their emissions and climate pledges. Climate disclosures rules have been introduced in the United Kingdom, European Union and New Zealand, and in Asian business hubs like Singapore and Hong Kong. When countries have similar policies, allowing for consistency, comparability and verifiability, there will be fewer opportunities for loopholes and exploitation.

Lily Hsueh is an Associate Professor of Economics and Public Policy at Arizona State University. (This article was initially published by The Conversation.)

Fashion Brands and Marketing

As Companies Turn to Alternative Textiles, Greenwashing Risks Remain

November 15, 2022 - By TFL

Some of the biggest fashion industry-specific news out of the United Nations’ COP27 came on Monday, with well-known companies ranging from Zara-owned Inditex and fellow fast-fashion retailer H&M to Gucci and Balenciaga’s parent company Kering announcing a commitment to collectively purchase 550,000 tons of “low-carbon, low-footprint alternative fibers” – such as agricultural residues and recycled textiles – for use in manufacturing “fashion textiles and paper packaging” in order to “support the protection of the world’s vital forests and ecosystems and lower forest degradation pressures from the fashion and packaging supply chains.”

The newly announced initiative that brings together almost three dozen brands, printers, and producers, including Stella McCartney, Ben & Jerry’s, and HH Global, to name a few more, has garnered headlines. In a market filled with increasingly-climate-cognizant consumers, the effort boasts some notable environmental benefits: For every ton of alternative fibers used, “between four and 15 tons of carbon per ton of product” will be saved, environmental nonprofit Canopy, which is spearheading the effort, said in a statement early this week. In the same release, H&M Group’s head of resource use and circular impact Cecilia Stromblad Brannsten touted the project as helping the fast fashion giant to “mov[e] towards more sustainable alternatives for our materials, [which] plays a crucial role [in reducing] our absolute emissions by 56 percent by 2030 and achieving net-zero by 2040.”

Meanwhile, Kering, which recently issued guidelines that focus on how its brands (and vendors) should approach green claims, released a broader statement. Yoann Régent, Head of Sustainable Sourcing & Nature Initiatives for the luxury group, said, “At Kering, we aim at reducing our footprint on biodiversity, and contribute to preserving and restoring critical ecosystems.”

Potential “Greenwashing” Pain Points

The alternative textiles effort comes as fashion industry entities face off against a seemingly rising amount of greenwashing allegations (and the threat of legal action as a result), with companies’ activities – and their marketing of themselves, their products/services, and their environmental, social, and governance (“ESG”)-centric initiatives – being examined not just on their face but from a bigger-picture perspective. After all, greenwashing does not merely refer to the use of unsubstantiated sustainability claims but also encompasses efforts by companies to market themselves and/or their products and ESG endeavors as having a greater positive environmental impact than they actually do.

Against this background, there may be room for potential pushback when it comes to the Canopy-led fibers venture on at least a few fronts, which should serve as a takeaway for players in this space.

Primarily, there is the issue of scope. While the figures at play – from the 550,000 tons of low-carbon fibers to the savings of 4 to 15 tons of carbon – are noteworthy, the reality is, of course, more complex than meets the eye. As the Wall Street Journal’s Dieter Holger stated on Monday, “The planned purchase [of 550k tons of alternative fibers] represents only a small portion of [the companies’] total output.” It is an even smaller portion when viewed on a more macro scale: Global fiber production is expected to reach 130 million tons in 2025 – up from 85.5 million tons in 2013, according to researchers at Lodz University of Technology.

Measured against that 130 million tons figure, the 550,000 tons of alternative fibers, no matter how well-intentioned, represents a negligible 0.42 percent. The kicker here: The relatively small-scale of the alternative fibers purchase by the likes of Inditex, Zara, Kering, and co. could very well prove to be problematic if not marketed carefully by the brands involved.

Maybe even more pressing than the size of the collective commitment is how it could be viewed as skirting a more critical issue: “Most of our clothing is made from polyester [not forest fibers], produced in places far from where it is consumed, and produced in countries with the dirtiest energy grids,” sustainability policy expert Kristen Fanarakis says. As a result, commitments to “reducing the amount of polyester used, shortening the supply chains, or shifting production away from existing centers” would be a “more meaningful” approach. (Fanarakis notes that polyester is the most commonly used textile for apparel, making up at least 52 percent of all fiber production, according to Common Objective, and a particularly problematic one, “given how it is produced (using oil), what happens when we use it (micro-plastics shedding), and where it ends up (living in a landfill forever).”

The Legal Perspective

Looking at such commitments from a legal perspective, the stakes are getting higher for brands. In light of rising skepticism – and in some cases, lawsuits – from regulators and consumers, alike, over companies’ often-widely-marketed ESG credentials and/or use of industry ratings systems, it could be risky for companies engage in efforts on this front. (Fear of PR backlash and/or legal action over ESG commitments is prompting a growing number of companies to reconsider how they are talking about their ESG initiatives, while others are walking back on making such efforts public.)

In the wake of recent criticism of the Higg Index and its treatment of synthetic textiles, the “preferred” fibers and materials narrative may be an especially treacherous avenue to navigate at the moment. In June, for example, the New York Times published a lengthy article dissecting the Higg Index, the “influential rating system assessing the environmental impact of all sorts of fabrics and materials,” and ultimately, calling foul. The Higg Index “strongly favors synthetic materials made from fossil fuels over natural ones like cotton, wool or leather,” the Times’ Hiroko Tabuchi wrote, asserting that such ratings “are coming under fire from independent experts … who say the Higg Index is being used to portray the increasing use of synthetics use as environmentally desirable despite questions over synthetics’ environmental toll.”

All the while, the Higg Index and its stance on synthetics has also been cited in more than one lawsuit, with Allbirds, for instance, landing on the receiving end of consumer protection statute violation, breach of warranty, negligent misrepresentation, and unjust enrichment claims last year due, in large part, to its use of allegedly “misleading” environmental impact claims, which it based on the Higg Index. (A New York federal court tossed out the case in April. In terms of Allbirds’ environmental impact claims, and namely, Plaintiff Patricia Dwyer’s pushback against its use of the Higg Index as the basis for such claims, the court determined that her “criticism [is] of the tool’s methodology,” not with Allbirds’ statements about its products.)

The bigger picture here is that companies – including well-meaning ones – would be wise to approach this textiles-related initiatives and marketing carefully, as growing consumer and regulatory attention is requiring brands to work overtime to balance the marketing of their climate efforts with the very-real risks of greenwashing-centric backlash and litigation.

Business

Carbon Offsets Are Not Working, Here’s What to Companies & Regulators Can Do

November 10, 2022 - By Piers Forster

The environmental impact of carbon emissions will be the same regardless of where the emissions take place. In other words, carbon emitted in one part of the world can be cancelled out if the same amount is removed elsewhere, with carbon offsetting being one way of achieving this. Hardly an untested avenue, many companies – including those in the fashion and luxury space – are meeting their emissions reduction targets by way of carbon offsets, or more specifically, by purchasing carbon credits awarded to projects that either emit fewer emissions at source, such as cleaner energy production, or that remove them from the atmosphere, such as via forestry initiatives. Each credit corresponds to one metric ton of reduced or removed carbon emissions.

The first day of the UN climate summit, COP27, in Egypt this week saw intense discussions over the trade of carbon offsets. The U.S., for one, views offsets as a promising way of directing investment towards clean energy projects in developing countries, many scientists and environmentalists are skeptical of companies offsetting their emissions instead of actually reducing them. This has prompted some firms, from EasyJet to Copenhagen-based fashion brand Ganni, to focus their efforts on reducing their emissions directly. (“We stopped compensating for our carbon footprint. We put aside that money and saved it up for investments in bringing down the carbon footprint of our supply chain, making actual reductions along our supply chain,” Ganni founder Nicolaj Reffstrup told Vogue early this year.)

The skepticism around carbon offsetting is not unfounded. Yet, we also found ways to improve offsetting.

Relying on Carbon Offsets

At their core, carbon credits are cheap: one ton of carbon dioxide costs just £3 ($3.41) to offset on average. And companies are also not required to disclose how offsets are being used to meet their net zero targets, which means that they have little incentive to reduce their emissions as they can claim to be “net zero” while relying entirely on offsetting. The reality is that offsetting often fails to reduce carbon emissions in a meaningful way. Global carbon credit standards exist to ensure that credits are traceable and meet a minimum verifiable level. However, an emissions reduction may occur whether or not it is paid for with credits. An area of rainforest, for example, will remove carbon from the atmosphere whether or not it has been sold as part of a carbon offsetting scheme.

At the same time, projects may not remove emissions permanently. A fire that destroys a forest, for example, will damage the integrity of the credits sold by forestry projects. Not a hypothetical concern, six forest projects tied in the carbon offsetting market in California have released up to 6.8 million tons of carbon dioxide since 2015 because of fires.

Seeds of Hope

If used correctly, carbon offsetting can be an important component of the policy mix as we transition to net zero, and a rise in the price of credits would allow offsetting to make a greater contribution to global climate priorities, such as restoring nature. Moreover, international accounting mechanisms were agreed at COP26 that encourage countries that sell offsets not to count these emissions savings towards their own climate targets. Within their borders, countries would have to deliver both their domestic targets and any offsetting projects sold to overseas buyers. This could help raise overall climate ambition in some countries. But national climate targets for countries selling offsets need to be ambitious and the sale of offsets must be monitored to ensure the delivery of offsetting projects.

We also found that the purchase of carbon credits could raise £400 million in funding each year for emerging climate technologies in the UK, alone. One such technology is direct air capture, which involves pulling carbon dioxide from the atmosphere and storing it underground. Purchasing credits in long-term carbon removal projects, such as this one, represent an attractive option for industries that cannot easily curb their emissions, such as the aviation industry.

Carbon Offsets Can Work

Since 2018, the global market for offsets has grown five-fold and is set to continue growing, but further steps must be taken to ensure that carbon offsets are used correctly. Guidance about how companies should be using carbon offsetting must be improved. A company should only be able to claim that they are net zero when they have minimized their own emissions and are using offsetting to compensate for the rest. The UK government is developing its own regulations for businesses through a net zero transition plan. The plan will require organizations to disclose the steps they are taking to transition towards net zero. This involves setting out how offsetting contributes to these targets, enabling an independent assessment of how far organizations are reducing their emissions.

Efforts to improve UK and international standards for carbon offsetting projects should also be accelerated; standards are being developed in the UK for carbon credits associated with restoring kelp beds off our coasts, improving carbon storage in our soils, and planting hedgerows. They will support climate and biodiversity goals while providing a financial incentive for farmers. And for non-UK projects, a set of standards could be internationally agreed, possibly based on the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles. With a trusted set of standards, businesses can be confident that they are investing in high-quality offsetting projects.

Carbon offsetting should support attempts to reduce an organization’s emission, not provide an alternative. By improving guidance on the use of offsetting, businesses can be encouraged to reduce their emissions directly, and through financing climate change mitigation and nature restoration, carbon offsetting can play an important role in the transition to net zero.

Piers Forster is a Professor of Physical Climate Change and the Director of the Priestley International Centre for Climate at the University of Leeds. (This article was initially published by The Conversation.)

Business

Luxury Brands Boast Warranties, Repair Services Amid Price Hikes, Circularity Push

November 9, 2022 - By TFL

“The latest season of couture offers elaborate creations, including micro-studded jeans that shimmer from waist to toe and a metallic dress that is as fine as jewelry,” the Wall Street Journal stated this weekend, reflecting on the wares of Chanel, Armani Privé, Maison Margiela, Fendi, and co. But look beyond rhinestone-encrusted jeans and cowboy boots from John Galliano’s most recent Maison Margiela Artisanal collection and the “thin, shiny feather-like rhodoïd fringe” material that Alexandre Vauthier used to construct pants for Fall 2022 couture, and you will see that there is another type of “extra flourish” coming from luxury brands: Warranties and repair services.

Bottega Veneta, for one, made headlines recently in connection with its “Certificate of Craft” initiative, which sees it offering a lifetime warranty for Bottega handbags purchased from the brand and its authorized retailers beginning this month. As part of the warranty, the Kering-owned company will proffer complimentary refresh and repair services for a growing list of bag styles. Speaking about the new endeavor, Bottega Veneta CEO Leo Rongone said that it is “born out of a desire to offer our clients a superior service of long-term preservation of their products,” noting that in conjunction with its “focus on responsible growth,” Bottega wants to “maintain products in use for longer, reducing the need for replacement.”

Rising Repair Initiatives

The Italian luxury brand is not the only one that is readily marketing repair services. As we first reported last year, Chanel has been putting its weight behind similar efforts, as primarily indicated by a budding number of trademark applications filed for its name and other branding – from “Ready to Care” to “Chanel & Moi” – for use on services, such as the “cleaning of clothing, textiles, shoes and leather goods.” Chanel has since introduced its “Warranty” initiative, in furtherance of which it “pledges an exclusive 5-year guarantee for all CHANEL handbags and CHANEL wallets on chain” acquired from its boutiques beginning in April 2021.

Reflecting on the influx of warranties in the upper-echelon of the luxury segment, Jefferies analysts Flavio Cereda and Kathryn Parker recently revealed that behind Bottega (and Brunello Cucinelli, which also provides a lifetime of free repairs for its products), “Chanel offers the second most comprehensive repair service with [its] 5-year warranty,” while Gucci provides a 2-year warranty for its handbags.

Cereda and Parker state that Louis Vuitton’s “bags do not have a warranty.” However, the brand “emphasized efforts to offer repair services for its products” this summer, and more recently, stated that it repairs some 500,000 bags per year, some of which are facilitated by its “e-service” in the U.S. Still yet, the Jefferies analysts point to Hermès, which “does not offer free repairs and refurbishment,” but carries out “Hermès Spa” services for its handbags at “a cost dependent upon the level of restoration needed.”

The brands that are rolling out warranties and related initiatives join a long list of watchmakers, such as Rolex, Audemars Piguet, Patek Philippe, LVMH-owned Tag Heuer, and Richemont’s Vacheron Constantin, just to name a few, and other luxury brands that have long – but often quietly – tendered warranties, and corresponding maintenance and repair services to buyers.

Marketing & Price Justification

The growing emphasis on product warranties and lifespan-extending services by luxury brands – which have traditionally been viewed as potential impediments to the volume-based model maintained by most brands, including ones in the “luxury” sphere – is being driven by a confluence of critical factors. For one thing, these increasingly-heavily-marketed repair services enable brands to tout sustainability credentials in the face of rising consumer concern about the environment. “Being environmentally virtuous” – including when it comes to fashion consumption – “has transitioned from niche consideration to central parameter of desire,” Luke Leitch wrote for Vogue last year in a nod to the growing adoption of repair services by luxury players.

At the same time, brands know that the messaging behind these ventures is particularly important when it comes to younger consumers, who are climate-conscious and who will, one day, be their biggest spenders. Repair services “have become far more interesting to young customers – even those who can afford something new,” according to McKinsey analyst Anita Balchandani. Hence, the push by buzzy companies like Bottega Veneta, which have found favor among millennials, to promote circularity by way of product longevity programs.

In addition to bringing about benefits on the marketing front and helping brands to attract new customers, these initiatives enable brands to engender goodwill and strengthen their bonds with existing clients, as well.

Beyond that, luxury brands’ warranties/repair benefits – which often apply only to new products that are purchased from the brands and/or their authorized retailers – serve as a way for companies to entice consumers to purchase products through authorized channels as opposed to the secondary market. In turn, this is a way for control-happy luxury giants to further hold on to – or in some cases, regain – as much control as possible over the market for their products. This puts the onus on brands to find ways to attract and sell to consumers directly, including by offering up benefits that unauthorized retailers and resellers cannot.

Still yet, there is the undeniable element of pricing. It is almost certainly not a coincidence that a number of the newly-introduced warranty/maintenance initiatives come as brands across the board have been aggressively raising their prices. By advertising these services, luxury brands like Chanel, for instance, are essentially providing consumers with additional value, potentially with the aim of softening the blow of soaring price tags.

The Rising Role of Web3

The increasing offering of warranties and repairs by brands will likely bring more of the practical aspects of web3 into the mix (this sphere is not just limited to expensive blockchain-linked MetaBirkins or Bored Ape jpegs, after all), with such efforts potentially pairing neatly with companies’ heightening adoption of blockchain technologies. It is not difficult to imagine brands opting to immutably record ownership and warranty information, as well as product repair histories, via blockchain-hosted tokens or QR codes.

We are seeing these endeavors come by way of luxury watch brands and auto manufacturers, alike. Breitling, for instance, was an early mover in this space, introducing blockchain-based product passports for its watches, and enabling customers to not only verify authenticity of their watches and transfer ownership of them upon resale, but to register repairs “with a timestamp on the blockchain.” Additionally, the watch company stated back in 2020 that it planned to roll out “upcoming insurance services and resale warranties enhance” with ties to the product passports. Panerai has also exploring this space, revealing early this year that “in time, every Panerai watch will be issued a Digital Passport, as a service to protect its valuable, singular identity, maintain an open line of communication with the brand and unlock benefits and services.”

More recently, Italian automaker Alfa Romeo announced that each of its new Tonale SUVs will come equipped with a blockchain-based certificate that tracks the car’s maintenance record. The Stellantis-owned company said in February that the “blockchain-guaranteed certification of the car’s life record” will provide a “confidential and non-modifiable record of the main stages in the life of [each] individual vehicle [that] can be used as a guarantee of the car’s overall status,” creating “a positive impact on its residual value.”

It will be interesting to see how brands will use blockchain tech hand-in-hand with their budding interest in repairs. Rolex seems like it may be eager to take part, filing a new trademark application with the U.S. Patent and Trademark to register its famous name for use across an array of goods and services, including “watches and chronometric instruments with digital codes, labels, tags and digital chips” (in Class 14). Not long before that, Hermès filed an application in something of the same vein, with an emphasis on services, such as “blockchain technology for representing a collectible item,” among other things.

Chances are, this is part of where luxury is headed, especially in light of the bigger picture, which is the enduring impact of the resale market and consumers’ treatment of certain luxury goods as investable (and tradable) assets. There will, of course, as the WSJ notes, be elaborate couture creations in the mix, as well.

Business

COP27: Five Things to Expect from This Year’s UN Climate Summit

November 7, 2022 - By Jen Allan

The world’s leaders are gathering for another global climate meeting, this time the COP27 in Sharm El-Sheikh, Egypt. Expect a bustle of promises and pacts from countries and companies. Expect pressure on states to support people who are most and permanently affected by climate change. Do not expect much more, but equally do not lay the blame solely on the United Nations. States are not doing what they have promised, according to a slate of recent reports. Countries’ promises and early actions show “no credible pathway” to keeping the world below 1.5℃. Financial promises remain unkept.

This meeting is an “in between” COP, focused on implementing policies that were agreed at the meetings in Glasgow (2021) and Paris (2015). That means there need to be clear signals that states are following up on past promises and decisions.

Overall, there will be a lot of “dialogues” and “work programs” but there really is no area where a major outcome is expected – if you’re hoping for a Paris-style “Sharm El-Sheikh agreement” then you will be disappointed. Nonetheless, lots of crucial discussions will take place over the next two weeks. Here are five key issues to look out for. In each case, failure to follow up on previous promises will likely haunt negotiations.

1. Contentious new agenda items

The first decision of the conference will be to adopt the agendas by consensus. These documents set out what issues will be discussed. The agendas can tell us a lot about the traditional priorities of the climate change negotiations, particularly that mitigation and national reporting issues dominate. There are four proposals for new agenda items at COP27 and at least three are contentious. At the outset – and, hopefully, before the negotiations formally begin – the presidency team will look to broker a deal to help get the agenda through.

Two of the new items relate to finance. One seeks negotiations on finance for loss and damage (more on that below). The other will try to align global financial flows to sustainable development pathways. This is very needed, but countries have wildly different views on how to go about pushing global financial assets toward low-carbon, climate-resilient investments. A third agenda proposal concerns the “special circumstances of Africa.” In 2015, there was a push to have the climate vulnerability of the continent recognized in the Paris agreement. This did not happen and ever since has been proposed and deferred. But this year, the COP is in Africa.

2. Vulnerable countries will demand finance for ‘loss and damage’

Loss and damage refers to the permanent and negative impacts of climate change. Think of droughts and lost crops, super typhoons, and lost lives. It is the result of high emissions that cause problems beyond what can be adapted to. How to provide finance for these losses is extremely contentious. Developed countries previously blocked a proposal to include this item on the agenda. These historic major emitters worry about liability and compensation.

Vulnerable developing countries point to the need to plan for people to relocate and rebuild when disasters strike. For them, the Glasgow dialogue to explore finance options on loss and damage is not enough.

3. Will there be stronger pledges?

A key promise of Glasgow was to “keep 1.5 alive.” It did not succeed. The pledges put forward before Glasgow put us on track for a nearly 3℃ warmer world. In the Glasgow climate pact, countries agreed to go home, revisit their pledges, and bring something better to COP27. But to date, only 24 countries have put forward updated NDCs (nationally determined contributions – each country’s pledge to reduce emissions). According to the UN Synthesis Report on these pledges, the dial has barely flinched since Glasgow.

A work program on how to scale up climate ambition before 2030 will continue in Egypt. It got off to a contentious start and so far, seems stalled.

4. Progress on climate finance

In Glasgow, developed countries had to admit they failed to reach their 10-year-old promise to provide $100 billion per year of climate finance. This can be spent on anything from new solar farms to stronger sea walls or retraining for people whose livelihoods are no longer viable. One year on, developed countries still have not met this goal. It is a huge blow to trust among countries.

Glasgow launched a work program to design a new collective finance goal for 2025. These talks will continue at COP27 and will show the wide gulf in how countries view the quantity and quality of climate finance provided. Again, it is likely there will not be a big-bang outcome here but hopefully some progress.

5. Building resilience among the most vulnerable

Adaptation is often ignored compared with mitigation, but building resilience is an urgent need. There is a “global goal for adaptation” in the Paris agreement, and now a two-year dialogue on how to make that goal usable for countries as a guiding star to reduce their climate vulnerability. This will also help capture global progress on adaptation. The Egyptian COP presidency has cited adaptation as a priority, so perhaps there is room for a mid-dialogue outcome to raise the profile of adaptation.

Overall, COP27 is a mismatch of ambitions. While we need urgent action from states, the institutional machinery will keep ticking along. Both are important and need to reinforce one another. To advance these discussions, states need to implement climate policies at home, then showcase meaningful actions when they gather again for COP28 in Dubai in a year’s time.

Jen Allan is a Lecturer in Environmental Politics at Cardiff University. (This article was initially published by The Conversation.)