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The Privilege of Agency

Will Martindale, Co-founder of Canbury, calls on investors to use the levers at their disposal to drive meaningful climate change action at COP28.

In the past 12 months, we’ve seen extreme wildfires in Greece and Chile, floods in South Africa and Nigeria, and heat in Southern Europe and India.

Ice sheet melt in Greenland, ice sea loss in the Arctic, ocean acidification, changes in ocean circulation and thawing permafrosts continue apace.

The increased frequency and severity of climate change is disproportionately affecting the world’s poorest and most vulnerable.

Low expectations

And so you might expect COP 28 in Dubai to provide an inflection point for a step-change in global efforts to address climate change. While undoubtedly there will be one or two highpoints, expectations are low.

Much of the decision-making related to COP has already been undertaken by negotiators in country, and we can expect announcements on:

  • Carbon pricing, and carbon border adjustment mechanisms, with efforts to raise the cost of polluting, and harmonise national and regional emissions trading systems.
  • Adaptation, and in particular, some progress on development finance (although we are still well short of the US$ 100 billion per year target).
  • Some sort of statement around “1.5C being alive” and “increased ambition” in national climate action plans.

And if NY climate week is a barometer, we can expect increased attention to:

  • Nature and biodiversity.
  • Company and investor transition plans.

But this year’s COP is likely to be overshadowed by conflicts in the Middle East and Ukraine, and from a climate change perspective, the resulting impacts on energy markets, with oil majors posting bumper profits, the US 2024 Presidential election, with Trump outpolling Biden in swing states, and the host country’s oil economy.

The UAE produces nearly 4 million barrels of oil per day, accounting for around 30% of the region’s GDP. COP’s president-designate is UAE Minister of Industry and Advanced Technology Sultan Al Jaber, also CEO of the Abu Dhabi National Oil Company and renewable energy company Masdar.

Those facing drought, flooding, wildfires, rising sea levels and extreme weather events are unlikely to have confidence in the process.

My own experience of COPs is mixed, from the jubilation (and for the climate veterans involved in the negotiations, the vindication) of Paris to the exasperation of Glasgow, where fringe events were a disparate mix of industry, NGOs and policymakers, each in their own bubble. The conversations were part existential, part jamboree.

But the fine line between realism and negativity must not be crossed. The roll-out of the Inflation Reduction Act, the EU Green Deal, early but meaningful efforts to transition in Japan, China, and elsewhere, as well as global efforts to protect and restore biodiversity are all cause for hope.

Investor opportunities

And for investors, I think there are (at least) five opportunities.

  1. The negotiations themselves: Some investors have access to senior decision-makers and no doubt can use that access to ‘lend weight’ in support of climate change progress, both in the run up to COP and during COP itself.
  2. National policy: For the negotiations to be successful, domestic policy change is a prerequisite. Investors can use COP as an opportunity to engage domestic policymakers. In my home market – the UK – COP is an opportunity to pushback against net zero rollback.
  3. Stewardship: As well as an opportunity to engage policymakers, COP provides us with an opportunity to renew engagement with portfolio companies: stewardship with grit, with clear escalation, linked to the investment thesis; a new era of stewardship as if our portfolios depended on it.
  4. Company influence: A nascent (but entirely logical) area of stewardship focuses on our portfolio companies’ policy engagement, which is often more substantial than our own, aligning companies’ influence with our sustainability targets; a multiplier effect.
  5. And finally, innovation, although here I’d recommend some caution: We can demonstrate new impact investments in energy, land use, water use, carbon sequestration, underpinned by new technologies. But while this is where we’re likely to find consensus (and excitement) it should support the tougher but necessary conversations on policy change.

There is an absolutism to climate change, unlike other sustainability issues. Within degrees of probability, we understand the warming effects caused by GHG emissions, changes we are now living through, in many regions, with threat to life.

As investors we have the privilege of agency. Doubling down on our own efforts may yet make this COP a success.

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