From oil to soil | highlights from COP28 and opportunities for the UK’s private sector

COP28, held last December in Dubai, sent a strong signal to business leaders. It welcomed the start of a new era – one of clearer political direction and even more private sector engagement. 

As a global centre for sustainable finance, the UK offers a myriad of opportunities for the private sector to scale environmental ambition and to take climate action. From participating in the voluntary carbon market, to investing in technologies which support the growth of renewable energy, there are numerous routes to support the delivery of COP28’s climate commitments and the overarching goals of the Paris Agreement.

Yet, whichever strategies corporate stakeholders deploy, what matters most is that the decision-making process is always informed by the very latest climate science. Only then will the private sector be able to support the outcomes of COP28 with the integrity and ambition required to fully engage with the UK’s increasing opportunities for green growth. 

Taking stock: What does COP28 mean for the UK’s private sector?

The first Global Stocktake set the tone of COP28. It found environmental progress – eight years after the Paris Agreement – to be dangerously off track. However, as the conference progressed, several breakthrough developments provided clear sources of optimism and direction for the UK’s private sector.

The conference opened with a historic deal on loss and damage. Large amounts of capital must flow to the people on the frontlines of the climate crisis – predominantly those in the Global South – who need financial support to build resilience to climate change. So, following years of negotiations, the operationalisation of this fund was widely celebrated. More than $700 million of funding has so far been committed.

Another positive outcome of the conference was the COP28 High-Level Champion’s support of a call to mobilise private finance for climate adaptation. To help raise additional finance, the call urges the private sector to build the necessary architecture that would enable funding to flow to adaptation projects. This call offers a chance for corporate stakeholders to actively shape the future of adaptation efforts.

Even though the final language of the Global Stocktake was less ambitious than was hoped for, it still crucially sent a clear political signal regarding a transition away from fossil fuels and will likely galvanise new sustainable investment opportunities with which the private sector can engage.

Yet despite these positive developments, there is still more work to be done. With so great a proportion of global capital flowing between non-state actors, funding cannot come purely from governments. Indeed, the High Level Expert Group on Climate Finance advocates for greater collaboration between financial institutions and the private sector to deliver at least $2.4 trillion to developing countries by 2030. In this arena, the UK private sector can make a tangible difference to global climate action.

Maximum impact: Post-COP opportunities and market-based developments

Carbon markets

With the UK home to a £1.4bn voluntary carbon market (VCM), the positive momentum that surrounded the sector at COP28 was a clear source of optimism for the private sector.

The World Bank voiced its support of the VCM, while the Commodity Futures Trading Commission and IOSCO both launched plans to promote market integrity. Such established market regulators dedicating resources to scale the VCM should represent a green light for private sector investment. 

Amid the high-level backing, there was one clear disappointment for global carbon markets. Many had hoped to see agreement over the technical aspects of Article 6 and were left frustrated by the lack of consensus.

With respect to Article 6.2, the delay will not stop operations as bilateral agreements can still be signed. However, the indecision on Article 6.4 is a missed opportunity to raise the overall integrity of market-based climate solutions. Nevertheless, there are still many opportunities for the private sector to use high-integrity carbon credits to counterbalance hard-to-abate emissions as outlined in the end-to-end integrity framework promoted by leading industry standards during the conference.

The biodiversity boom

Given the interconnectedness of biodiversity loss and climate change, it was encouraging to see the COP28 High-Level Champion launch of the Joint Statement for Climate, Nature and People. Nearly 20 national governments, including the UK, committed.

One of the statement’s aims is to scale investment in climate and nature. These strong policy signals on nature and biodiversity from COP28 promote a clear investment environment within which the private sector can engage with nature-based climate solutions. Such opportunities include, but are not limited to, community-led forest conservation and restoration projects, especially in the Global South.

The energy transition

With the COP President simultaneously the CEO of the UAE state oil company, fossil fuels were at the forefront of negotiations. After tense discussions, the final text agreed a ‘transition away’ from fossil fuels:

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

With just six years remaining until the all-important 2030 deadline to cut our global emissions, political will must keep pace with climate science, not least that which is published by the UK’s universities such as the Cambridge Institute for Sustainability Leadership. Adopting and enacting ambitious science-based climate targets will create a more stable environment in which innovative investment possibilities can continue to multiply.

COP28’s fossil fuel language offers a clear political direction on decarbonisation, but transition finance is urgently required to support the private sector’s energy transition. For this reason, the UK Government is currently exploring how transition-focused capital can be raised with integrity and to maximise the opportunity for UK-based financial and professional services firms to aid the global transition. This will be essential to support the decarbonisation of hard-to-abate sectors.

What can be expected in 2024?

The UK applauds the ambition set by the UAE’s COP presidency and welcomes the progress achieved in Dubai. We recognise the magnitude of these efforts, especially given the successful bilateral partnerships the UK agreed with the UAE last year, such as a MoU on financial services collaboration.

Moreover, we are pleased to be hosting the Net Zero Delivery Summit at Mansion House during the UAE’s COP presidency year. As a halfway point between COP28 and COP29, this event in June provides an important opportunity for the private sector to take stock of progress since Dubai and drive forward more grounded, practical progress ahead of COP29.

For the sake of both people and the planet, it is more important than ever that private sector stakeholders seize the opportunities the UAE’s COP has created. The conference’s clear policy signals offer an ambitious new environment in which to shape the future of sustainable finance. Sign up to our mailing list to be the first to hear news about the Net Zero Delivery Summit. 

About the author

Rebecca Britton is a sustainable finance engagement manager at The City of London Corporation and leads a programme of external engagements underpinning our work streams, with a particular focus on delivering the annual Net Zero Delivery Summit and the City of London Corporation's priorities and presence at COP.