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Dec 20, 2023

How COP28, and climate change, affects every business – and us all 

Fossil fuels are in the spotlight at climate talks in the United Arab Emirates, for their role in carbon emissions today. But the climate crisis is casting a lengthening shadow, as the private sector at large faces growing scrutiny, and as greater transparency and traceability bite, empowering concerned consumers. 

The UAE is hosting the 28th Conference of the Parties (COP28), under the UN climate convention, in long-running talks to bridge polar-opposite interests, and reach climate consensus among low-lying island states, oil exporters, low-income countries and rich nations. 

As expected, the issue of how to phase out fossil fuels is at the heart of negotiations on how to fight climate change, avoid its worst effects, and pay for damage and losses from more intense storms, droughts and wildfires, and sea level rise. 

Feeling the heat

Naturally, oil, gas and coal exporters are feeling the heat, as successive COPs focus more sharply on a fossil fuel phaseout. 

The Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Haitham Al Ghais, revealed such qualms, when he asked OPEC members, during the climate conference, to reject any proposals that targeted fossil fuels directly. 

Fossil fuels still account for around four fifths of the world’s energy supply. As a result, any rules that restrict the coal, oil and gas supply, will also challenge energy-guzzling industries. 

The COP28 hosts, the UAE, have sought to deliver a “course correction” on greenhouse gas emissions, and stressed that countries must attack emissions everywhere, including from energy demand, as well as energy supply.

Staying competitive

Big sources of emissions include power generation and transport, where China’s growing dominance of global renewable energy, battery and electric vehicle supply chains shows how U.S. and European manufacturers have lost ground, and will have to step up, if they want to stay competitive. 

Other big energy users – such as steel and cement – have for decades paid lip service to climate action, while remaining hugely carbon-intensive. But they are also now in the crosshairs.

COP28 unveiled a Breakthrough agenda, during its two-week programme of themed events, for a net zero cement and concrete sector by the middle of the century. Thirty-five energy-intensive companies and six industry associations supported an Industrial Transition Accelerator, such as the World Steel Association, International Aluminium Institute and the Global Cement and Concrete Association. 

Switch or pay the price

These voluntary initiatives are an early warning, for these industries, to switch to more sustainable practices, or face costly and risky, mandatory compliance. 

While the energy sector tops greenhouse gas emissions, the agriculture and food system is perhaps a surprise second place, in particular from its contribution to deforestation, to make way for livestock and crops. 

Food companies face growing pressure from consumers, policymakers and even their bankers, to prove the traceability of their products, and transparency of their supply chains. Or risk penalties, reputation harm and loss of public support. 

The UAE hosted two weeks of themed days, at COP28, to showcase practical solutions and diverse voices, from indigenous peoples to urban networks. All with the goal to inform and inject urgency, action and ambition, in the parallel track of climate talks. 

Changing how we live, move and eat

On these sidelines were opportunities for more sustainable food production, where the impact of one technology loomed large – the use of remote sensing, and satellite data, to scrutinize the supply chains of food producers. This empowers consumers to understand the environmental impact of the food they eat, from coffee and cocoa, to beef, soy and palm oil. 

New laws, such as the European Union’s due diligence directive, add bite – applying penalties to fast-moving consumer goods companies that contribute to environmental harm through their suppliers. 

Growing pressure from a climate emergency is creating urgency, both in the political track of climate talks, but also, increasingly, in the real economy. Here, energy system change is leading food system change, to impact transport, food and construction, altering the fundamentals of how we all live, move and eat.