🔎 Market Mysteries

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Global leaders from nearly 200 nations convened in Dubai for a two-week United Nations climate summit, following the hottest year on record. Their mission was to tackle the climate crisis head-on and seek solutions. The urgency for action has never been more palpable, and the delegates accomplished a historic feat by acknowledging the beginning of the end for fossil fuels. Although the COP 29 summit brought about a significant change in the global perspective, the policy inadequacies and unreliable implementation have shown that we cannot depend on international policy alone.

The 28th Conference of the Parties to the United Nations Framework Convention on Climate Change, aka COP28, is this year’s meeting of global leaders to discuss climate policy. Representatives from nearly 200 countries meet annually to discuss how to slow human-made global warming and adapt to the challenges of rising temperatures and climate change. The 2015 Paris conference led to the historic Paris Agreement, where countries pledged to limit global warming by 2 degrees Celsius above pre-industrial temperatures by reducing greenhouse gas emissions. The summit’s optimistic goal of 1.5 degrees stands as the benchmark of climate policy for nations and corporations worldwide.

However, not every COP is productive, and this year’s setting and guest list raised skepticism from the start. Held in Dubai, this year’s conference welcomed four times more fossil fuel lobbyists than last year’s. The nearly 2,500 representatives of fossil fuel interests outnumbered the delegations from every country except two: the host countries for this year (UAE) and next year (Brazil).

The climate crisis is here, and we face an unprecedented urgency for immediate and significant measures to curb emissions, clean our atmosphere, and adapt civilization for a changing climate. While human-caused climate change is virtually undeniable, there used to be sufficient room to challenge the speed and scale of doomsday projections. However, the past few years have demonstrated that things are worsening faster than scientists predicted.

Averaging 1.5 degrees Celsius above pre-industrial levels and breaking 2 degrees for two days, 2023 was named the hottest year ever with a month to go. Sea temperatures broke records, and Antarctica’s sea ice melted to new lows. While cyclical patterns like El Nino deserve some of the blame for the early threshold crossing, the severity of warming has scientists highly concerned. Rising temperatures have exacerbated extreme weather patterns, leading to catastrophic droughts, floods, storms, and wildfires with dangerous emissions compounding effects.

While the costs of a clean energy transition are immense, they pale compared to the economic consequences of inaction. Economists estimate we need to spend $6-9 trillion annually to reach our 2050 climate goals, but inaction could cost 2-3 times that. The costs grow clearer each day. Droughts and floods diminish agricultural production and perpetuate disease and starvation risk. Extreme heat disruptions extend beyond agriculture to every industry, from tech to logistics. Death tolls rise for outdoor workers. Severe weather has broken supply chains. The insurance industry has already given up on entire regions, multiplying the risk of every financial loss. The most significant risk of all may be the refugee crisis. Climate disasters or uninhabitable temperatures are projected to force 1.2 billion from their homes within the next thirty years. That’s nearly 4x the population of the United States.

We are not moving fast enough anywhere in the world. Emissions rose more slowly this year but are still on track to break records. Nearly every global climate initiative across energy efficiency, transportation, buildings, agriculture, carbon removal, preservation, and climate finance is falling behind or worsening. This year has been so disastrous that the broader narrative has shifted from preventing climate change toward adaptation. There’s still not enough investment in adaption. The planet demands action.

COP 28 deserves to be hailed as a momentous event in the fight against climate change, but its promises must be matched with action.

Global leaders, including the biggest oil exporting countries, acknowledged the beginning of the end for fossil fuels. COP28 ended with a historic agreement to transition away from all fossil fuels in a swift, just, and orderly fashion. This is huge because it's the first time a fossil fuel transition has ever been officially mentioned. The agreement also aims to triple renewable energy and double energy efficiency by 2030.

Leaders also doubled down on existing commitments and put support for climate-vulnerable countries in motion. They reiterated the goal of keeping global temperature rises below 1.5C, acknowledging that it would entail emissions cuts of 43% by 2030 and 60% by 2035 in comparison to the emission levels of 2019. This means countries will likely have to accelerate their targets and policies in 2025. Wealthy nations also kickstarted a fund dedicated to assisting climate-vulnerable countries in adapting and responding to damage caused by climate change.

Of course, the commitments have some shortcomings. The agreement calls for a "transition away" from fossil fuels, rather than a "phaseout." This wording might seem minor, but it's significant. It suggests a more gradual shift and leaves room to use transition fuels like natural gas. While the $429 million committed to the loss and damage fund for vulnerable countries is a great start, it's far from the $400 billion annual cost of damage. Everything also clearly hinges on follow-through. At COP26 in Glasgow two years ago, leaders pledged to phase down coal, but consumption has continued to rise.

Just as the wealthiest countries have a responsibility to reverse their impacts on the planet, the wealthiest corporations must be held accountable. Since the pollution caused by burning fossil fuels remains the primary instigator of climate change, evaluating both fossil fuel suppliers and the biggest consumers is essential.

Fossil fuel producers have made some progress, but they’re still doing their best to slow the transition to clean energy. We’re too reliant on fossil fuels for our power needs to completely shut off the pump anytime soon. That reality has allowed the energy industry to adopt transition pledges and strategies that are simply too slow and ineffective. Some have made promises to reduce operational emissions. BP is gradually reducing its dependence on fossil fuels and increasing its investment in clean energy. Others are taking steps to address methane emissions. The energy industry is also at the forefront of carbon capture efforts. Skepticism is warranted there, as it is still an unproven and unreliable technology. Meanwhile, the industry has quietly funded efforts to block sustainable finance initiatives. Ultimately, we need to decrease the demand for fossil fuels to see significant changes in their business.

When we look at the most significant fossil fuel consumers, there’s a ton of progress. It’s just not enough. Across industries, leaders have called for a fossil fuels phase-out. The number of companies setting carbon neutral or net zero 2050 goals, disclosing emissions and carbon credits, and aligning their strategies with the Paris Agreement have surged in the past year. Companies with massive supply chains, like Apple and Nike, have accelerated renewable energy adoption with hundreds of partners. Boeing, Tesla, and GM have started using tech to analyze supply chain emissions more effectively. Big Tech is pouring money into groundbreaking clean energy and emissions reduction work.

But here’s the thing - even the companies making the most considerable efforts are falling short of their goals. Emissions are still rising, and the easy wins of efficiency are done. Despite investing more than anyone in renewable energy, Amazon still can’t cut its pollution. Corporate leaders have dialed back ambitions despite recognizing sustainability as an even clearer business imperative. The fossil fuel political lobbying efforts have discouraged companies from publicizing sustainability ambitions.

Make it clear that sustainability matters to you as an employee, investor, and consumer. Integrate it into your purchase, investment, and career decisions. Vote in your scoops to let companies know you support commitments to decrease emissions and improve sustainability.

Embracing responsible resource usage and investing in planet-preserving solutions isn’t just a moral obligation; it’s smart business. Let’s empower corporate leaders to adopt a long-term mindset and drive meaningful change. After all, we have more influence over companies in our daily lives than we do over elected officials. That’s how we drive change.

Keep building,

The Scoop Team