BNP Paribas and ADGM explore key areas of climate action in the lead to COP28 with UAE business leaders
International banking group BNP Paribas and Abu Dhabi Global Market (ADGM) co-authored a white paper entitled “UAE and the Energy Transition: Towards COP28“. The paper formalised the discussion of a number of prominent business leaders based in the UAE who attended a roundtable on the topic in November 2021.
Collectively, the session included the exploration of key areas of climate action including effective regulation, stronger collaboration, wider stakeholder engagement and the increasing role of the financial industry in the region’s climate action. The participants also reflected on the agreements made during COP26 in Glasgow last year, and recommended stronger public-private collaboration ahead of the UAE’s hosting of COP28, to achieve ambitious net-zero targets.
Jerome Ponrouch, Head of Company Engagement CIB MEA commented “BNP Paribas is proud to partner with ADGM to engage with key regional stakeholders on the energy transition and the path to net-zero. When it comes to climate action, a critical juncture was reached at COP26. As a responsible bank, it is important to share our knowledge and experience of sustainability and sustainable finance to engage more partners. Although somehow distant, we want COP28 to encapsulate not only the progress of prior COPs, but also to include more diverse stakeholders in the planning and delivery of a sustainable future for the planet.”
Mercedes Vela Monserrate, Head of Sustainable Finance at Abu Dhabi Global Market said: “The UAE’s hosting of the COP28 next year will be an important determinant of the impact of our efforts to decarbonise our economy. Our discussion with BNP Paribas, as well as with other private sector partners, set the scene for a more collaborative approach to clearly defining how to achieve net-zero goals. We should continue to integrate the private sector into our transition strategy, and set clear, actionable plans in line with global standards.”
Top findings from the white paper include:
Increased focus on public-private sector collaboration
Although COP26 was generally positive from a regional perspective, global negotiations were largely referred to as “fragile agreements.” One of the main reasons given for this, was the lack of consultation with some stakeholders such as the private sector—which was left out of crucial negotiations.
As such, one of the key recommendations of the roundtable is to encourage stronger collaboration between the public and private participants, and to set clear, credible, and timely plans to deliver on net-zero targets. Accelerating the decarbonisation of the economy is a vital part of climate mitigation, with over 70% of global emissions created by industry.
Regulation and communication
Governments and regulators play an important role in ensuring effective reporting of climate action. Rules and guidelines must be clear and achievable in order to make actors more accountable and reduce the risk of greenwashing.
Effective communication plays a pivotal role in ensuring alignment and informing the public about the impact of climate change. Engagement includes politicians, business people, civic society and the general public. Increased disclosure was also identified as a key enabler of progress for COP28, with access to information on topics such as national and international climate change priorities seen as fundamental to accountability.
Financing & Inclusivity
Finance and sustainability go hand-in-hand. If climate change projects do not meet the requirement of private finance, then sustainable finance will be hard to scale up, unless subsidies, guarantees or other incentives are offered by governments and supernational entities, like multilateral development banks.
The question of where financing the transition comes from is critical. There should be a toolkit available, including government incentives, support from regional SWFs, ESG dedicated financial institutions and a carbon tax scheme supported by an active carbon credit trading market. There are also key questions pertaining to each economic activity. Foster change in the behaviour of consumers and users is also important because both the supply and the demand matter in the transition at stake.
Whilst the financial market, lending and investment are switch mechanisms; regulators and the financial sector must ensure that they match the pace of participants in the economy. They must collaborate with companies in developing a mutually acceptable path to sustainability, accompanying companies and individuals on their transition journey.
As a special guest at the roundtable, BNP Paribas’ Global Sustainability Partner Craig Leeson came directly from COP26 to Abu Dhabi to participate and lead the discussion on the energy transition and practical actions to achieve it. Craig is also an award winning journalist, filmmaker , his most recent films are “A Plastic Ocean” and “The Last Glaciers.” The conversation was a review of COP26’s outcomes, looking forward to the UAE’s own commitments, the path to COP28 and the key challenges and opportunities lying ahead.
ADGM will continue to host knowledge sharing activities with key stakeholders in the UAE in the lead up to COP28.
To read the white paper “UAE and the Energy Transition: Towards COP28” click here.