UN climate change event is underway in the Middle East with strong investment industry attendance
The 2023 United Nations Climate Change Conference, COP28, is underway in Dubai, and a large contingent from the financial services sector is attending including investment banks, wealth managers, and asset owners.
But what are some of the key topics being discussed over the next week and how might they allay the fears of Canadians who are concerned about how natural disasters may impact their retirement plans.
For the first time, Chartered Professional Accountants of Canada (CPA Canada) is attending the event with CEO Pamela Steer highlighting how CPAs will be instrumental in helping navigate the new world of sustainability reporting.
CPA Canada’s experts have shared some of their expectations for the conference and insights with Wealth Professional including a key focus on climate action goals and how they are not being met.
“We’re not doing enough,” says David-Alexandre Brassard, CPA Canada’s chief economist. “We’re on track for a global temperature rise of 2.6° C by 2100, which does not align with the Paris Agreement. It highlights the importance of action.”
The action required includes speeding up the transition to clean energy sources and slashing greenhouse gas emissions, both by the end of this decade.
While many countries are making progress on this, but it requires a collaborative effort and must be done in an orderly way to ensure energy security and the ability of all communities to access the funds and technology they need.
“The idea is that we want to phase out oil, gas and high-emission industries—or at least modify them—but the most impacted communities aren’t in Toronto or Vancouver,” explained Brassard. “If you’re more than 100 kilometres from an urban centre and there are fewer post-secondary institutions, switching jobs is much harder. We want to make sure that people can transition from one job to the next.”
The growing pressure to meet climate action promises is facing pushback from some consumers. A recent study revealed that 4 in 10 Canadians would scrap the federal government’s carbon tax and many more would lower it, at least for now.
Meeting the goals set in the Paris Agreement will be costly – an estimated $2.3 trillion annually by 2030 – and Brassard says that will demand collaboration, new investment, and transparent and credible data.
“If we want money to go into transition, it will need to come from big pockets— institutional investors, like pension funds, insurance company, mutual funds and insurance companies,” says Brassard. “They’re the ones we want to bring into the journey, but they need returns and clear standards so they can target their investments.”
There has been progress on standardization of standards with the International Sustainability Standards Board (ISSB) recently publishing its inaugural standards (IFRS S1 and S2) which are designed to provide a comprehensive global baseline of sustainability and climate information for the capital markets.
Rosemary McGuire, CPA Canada’s vice-president, research, guidance, and support, says there are inconsistent and questionable climate-related claims in the market right now which must be addressed.
“Reporting standards, coupled with third-party assurance, play a critical role in creating a level playing field and building trust in that information,” she said.
There has been increased focus on biodiversity recently with recognition that nature and its ecosystems must be protected.
Last year, the COP15 Biodiversity Conference was held in Montreal and commitments were made to safeguard 30% of natural habitats by 2030. COP28 emphasizes safeguarding biodiversity, promoting nature-based solutions, and supporting frontline conservation and adaptation efforts.
“Nature-based solutions, such as using natural ecosystems to remove carbon from the atmosphere, play a critical role in achieving net-zero goals and we are pleased to see this topic figuring prominently on the agenda at COP28,” added McGuire. “Nature and climate change are interdependent, and we cannot afford to look at them in silos.”