Brazil'COP28 can lead to global alignment funding to achieve net zero'
Companies that provide transparent climate-related disclosures and ESG reports are more likely to attract investors, says Ashley Taylor from Alvarez & Marsal.
The UN Climate Change Conference currently taking place in Dubai (COP28) has the potential to foster global alignment on climate disclosures, enabling the flow of capital towards investments consistent with an orderly cross-economy transition to net-zero emissions.
This is according to Ashley Taylor, a Managing Director at Alvarez & Marsal, a global management consultancy with several offices in the Middle East.
“COP28 brings a global stocktake that will require a global call to action. Governments, central banks and financial institutions at this COP and future events will continue to come under pressure to develop and use green taxonomies that provide a set criterion to enable companies undertaking sustainable activities to leverage such frameworks to raise sustainable finance.”
Similarly, companies that provide transparent climate-related disclosures and ESG reports are more likely to attract investors and raise sustainable finance, Taylor stated.
The UN climate change conference, COP28, opened last week in the Expo City Dubai with a resounding call to accelerate collective climate action. The summit will run until December 12, 2023.
The region has abundant capital, talent, natural resources and opportunities to achieve net zero targets, the Alvarez & Marsal consultant said. “Today, many corporates are tied into the value created by oil, gas and energy in the global economy, so the biggest challenge is pivoting from traditional models to new ones aligned to a low-carbon world.”
At the same time, demographic pressures, economic diversification, and investments in construction and infrastructure combine to complicate moves away from cheap, abundant and reliable traditional energy sources, he said.
While corporations are cognizant of national net-zero commitments and potential regulatory changes, the timing and nature of these regulations remain undefined, he said. “COP28’s primary challenge is to achieve a global consensus on immediate actions to stay within the remaining carbon budget, limiting warming to 1.5 degrees above pre-industrial times.”
The first global stocktake highlights the need to correct course to avoid the consequences and costs of practically irreversible climate change, together with updated Nationally Determined Contributions.
“The COP agenda is part of a global movement aimed at accelerating the flow of trillions of dollars of climate finance into renewable energies and electrification, sustainable fuels, carbon capture, and land use changes, particularly in addressing hard-to-abate sectors and the challenges of developing countries.”
ESG reporting
Taylor emphasised that continuous and accurate data is an enabler for a company looking to make better sustainability/ESG decisions. However, the absence of universal standards in ESG reporting poses challenges, resulting in variations in data collection and reporting methodologies.
In addition, ESG data often comes from various departments within an organization, making it challenging to consolidate and integrate data effectively, he added. “Companies must also navigate the expectations of various stakeholders, including investors, customers, employees, regulators, and advocacy groups.”
Taylor pointed out that companies often rely on external sources for ESG data, emphasizing the significance of the recently released sustainability disclosure standards by the International Financial Reporting Standards Foundation (IFRS) as a potential step toward a “global baseline” for sustainability disclosures.
