The major role businesses can play at COP28 in Dubai

The Conference of Parties (COP) is an intergovernmental meeting that has been held annually since 1992, when the Earth Summit was hosted in Rio de Janeiro. The negotiations require complete unanimity among member states which can be extremely challenging to secure. As a result, a number of COPs, such as those held in Copenhagen and Rome, failed to deliver international consensus on a range of climate goals.

However, COP21, held in Paris in 2015, made significant progress in aligning major world powers’ outlook on climate change. The resulting international agreement, known as the Paris Climate Accords, set a long-term temperature goal to keep the rise in mean global temperature to well below 2°C above pre-industrial levels.

COP26, held in Glasgow in November 2021, built upon the success of COP21, and highlighted the crucial role that business has to play in tackling climate change for the first time. For example, in the week before global leaders arrived in Glasgow to try to agree to further climate goals, there were days of the gathering dedicated to climate financing and specifically to the energy transition.

One of the key highlights of COP27, convened in Sharm el-Sheikh, Egypt, November 2022, saw creation of a ‘loss and damage’ fund for vulnerable countries, with recommendations on how to operationalise the fund expected at COP28 in Dubai. Other expectations for COP28, include consideration of the first global stock take since COP21.

Reforms in the UAE

It is already clear that COP28 will take place in the context of challenging geopolitical relations. Businesses in the region are at an earlier stage in their sustainability journey and much of the current focus is on how to achieve ‘just transition’ – making sure that global decarbonisation efforts are equitable, fair, and inclusive.

For the government in the UAE, hosting COP28 is also about credibility on the world stage. Competing with US and European multinationals requires alignment on environmental, social and governance (ESG) and other standards for doing business, and the new UAE labour law signals that the government is taking the challenge seriously.

Increasingly, big regulatory initiatives apply to any business operating on a global stage. UAE businesses will have to comply with EU Sustainable Finance Disclosure Regulations (SFDR), the EU Taxonomy, the incoming EU Corporate Sustainability Reporting Directive (CSRD) and supply chain governance regulations if they want to operate in Europe, or be open to European investment. There will also be similar implications coming from the G20’s commitment to the International Sustainability Standards Board’s (ISSB) disclosure requirements.

Whether a major breakthrough in the intergovernmental negotiations can be achieved, remains to be seen. What is already clear, however, is that the government of the UAE is keen both to enable and facilitate vital action by business as a central feature of the COP.

How businesses should engage with COP28

Dubai’s COP in November this year has a particular significance because it is the first “stock take” since Glasgow. At Glasgow, it was agreed that this stock take should take place every two years, rather than the previously agreed five years to allow the world a sense as to whether it is on track to limit global temperatures as set out in the Paris Climate Accords.

The recent stock take report issued to support COP28, using best-available scientific evidence, concludes that we must accelerate to increase ambition across all fronts, taking an all-of-society approach to make progress towards the Paris Agreement goals.

The UAE’s priorities for its COP of course will include a focus on how to implement the policies that were agreed in Paris and Glasgow. The challenge and the opportunity for business, therefore, is to engage early and constructively in a process that can at times seem opaque but that still represents an indispensable forum for countries across the world to come together to meet the common challenge of dangerous climate change.

There will be significant business opportunities around the intergovernmental negotiations. Companies should consider how they can use the limited time at COP most effectively, for example to engaging with new clients, or to talking to potential partners.

One challenge for the Government of the UAE will be to think about COP as a 52-week process, not just a two-week meeting. Of course, the negotiations and the gathering of world leaders between 30 November to 12 December will be the focal point, but for a COP to be judged a success, it requires months and months of hard work, planning and discussion.

For businesses seeking to share their thinking on climate policies and transition plans, it is therefore important to start that process of dialogue early, because the capacity of negotiators to listen and engage constructively to business perspectives diminishes inevitably as the intergovernmental negotiations take centre stage.