What happened at COP15? | Financial Times

On Sunday morning, with just a few hours left of COP15, the long-awaited updated draft text was published. Though it was quickly applauded by the WWF, it also drew concerns.

“There still remain several loopholes, weak language, and timelines around actions that aren’t commensurate with the scale of the nature crisis,” the environmental organisation said. There was little agreement on how to measure progress, it added. “We are particularly concerned by the weak language on species which would commit countries to halting extinctions at some point before 2050, instead of 2030.”

The COP15 plenary was scheduled to meet on Sunday evening, but it was delayed by two hours. After 10pm, the meeting had still not started. What happened?

On the one hand, COP15 business has been beautiful. Countries from around the world worked amicably to reach agreements (and let fatigue — a time-honoured tactic in negotiations — mollify people into compromise).

On the other hand, COP15 has been overwhelming. At Sharm el-Sheikh and Glasgow last year, those COP meetings neatly targeted one thing: cutting carbon emissions.

As the hours rolled on, I could not help wonder if biodiversity really needed its own COP. Yes, coral reefs are important, trees are important and getting things right with “other conventions and international organisations” is important — but all of this lumped together is too much. Would it be better to include coral, trees and other biodiversity issues as part of the UN’s general business in New York all year round? Wouldn’t it be better to focus on one or two crucial projects rather than spread people too thinly?

It is heartening that the draft was voted through by negotiators in Montreal in the early hours of Monday morning, including a provision to boost financial flows to developing countries and a target to protect 30 per cent of the world’s biodiversity by 2030.

But as an outsider looking in, it still looks like there were too many projects going on. And China’s decision to brush aside opposition to the final text by some African countries disappointed with the funding settlement will be hard to stomach for some. I would appreciate your feedback. Email us with your thoughts at moralmoneyreply@ft.com.

Though today’s first item features the action in Montreal, the biggest news of the weekend came from Brussels. EU countries have finalised the Carbon Border Adjustment Mechanism (CBAM), which will force foreign importers to cover the cost of their emissions.

Plus, a story on the simple fix net zero organisations can make to lessen the antitrust scrutiny they will face in 2023. Thank you for reading. (Patrick Temple-West)

Carney touts carbon credits as a tool to fight global warming

One of the lasting legacies of the Glasgow climate COP is that the business community is now involved on the ground at these events, and engages in a seemingly unprecedented manner. Our colleague Aime Williams reported over the weekend that several investors were attending their first biodiversity COP in Montreal.

Last week, COP15 held a finance day that included Mark Carney, the UN special envoy for climate action, and Emmanuel Faber, who talked about the progress of the International Sustainability Standards Board, which he chairs.

For Carney, the nature summit presented a crucial opportunity to use offsets in the fight against global warming. The relatively new idea of biodiversity credits was included in the draft agreement despite concerns about their effectiveness and integrity that we alluded to at the start of COP15.

For years, Carney has been a proponent of carbon credits (or offsets), even as our FT colleagues have reported they can be questionable products. Without standards determining quality, the carbon offset market remains a “wild west.”

But speaking during finance day at COP15, Carney emphasised that carbon credits were not going to be a silver bullet.

“We have been dithering instead of supporting natural climate solutions with the perfect becoming the enemy of the good.” Carney said. “Carbon credits can provide literally vital funding for nature-based solutions and climate transitions in emerging and developing economies.”

He reiterated support for the Integrity Council for the Voluntary Carbon Market (ICVCM), which is working to write standards for carbon credits (and Carney is an adviser to this group). High integrity standards and more supply will juice up the market “so that carbon credits can fulfil their potential of reducing emissions”, Carney said.

While these standards are still in the works, companies are starting to spend serious cash on carbon offsets. US oil company Hess recently announced a partnership with the Guyanese government to spend $750mn on carbon credits within 10 years. But other companies are claiming a badge of honour by striving for net zero carbon emissions without using carbon credits. US airline United has said its goal is to get to net zero by 2050 without relying on carbon offsets.

If more companies are going to use carbon offsets to hit net zero targets, then quality standards and enforcement will be crucial. We will be closely watching the ICVCM’s work and will be surveying the market for unscrupulous products. Buyer beware. (Patrick Temple-West)

Antitrust worries to plague green investing groups in 2023

The Washington-based Bank Policy Institute is an organisation that lobbies for the world’s biggest lenders and is chaired by JPMorgan chief executive Jamie Dimon. Its big holiday bash was on December 6. If you missed that party you could catch the celebration at the American Bankers Association on December 14.

My point here is that big banks are well organised in Washington — they collaborate all the time to get stuff they want — but never a word is spoken about their antitrust concerns.

So why is it the case that the Glasgow Financial Alliance for Net Zero (Gfanz), the group of financial firms that Carney launched in April 2021, is all tied up in antitrust worry?

Joel Mitnick, a partner at law firm Cadwalader who has decades of antitrust legal experience, recently said on a call with Jefferies investment bank that antitrust is the “sleeper issue of 2023” for Gfanz and other sustainability efforts to limit the production of oil and gas.

Mitnick told me that Gfanz would benefit from increasing the oversight role of antitrust attorneys in negotiations over standards in voluntary groups. While better representation would help protect these organisations from genuine antitrust concerns, it “would not mollify those people in Congress who are concerned that Gfanz and other net zero initiatives are leading to tacit agreements that harm certain energy sectors”, Mitnick said.

“I am sceptical that there will be liability here, but there will be real serious investigations,” Mitnick said, referring to investigations under way by Republican attorneys-general, and possible investigations when the party takes control of the House.

Republicans in 2023 will throw everything they can at green investing to protect the oil and gas industry. But doing small things like adding antitrust protections will help Gfanz and other efforts weather the attacks. (Patrick Temple-West)

Smart reads

Check out this Texas Monthly profile of Bud Brigham, an oil executive who has attacked the findings of climate scientists and was the first witness in last week’s Republican-led hearing on ESG policies in Marshall, Texas.

Or to ease back into the working week, read our FT Lunch with the fiery 87-year-old Pulitzer-winning author Annie Proulx. The Brokeback Mountain author has recently published a discursive history of natural wetlands, arguing that understanding the reasons they are gradually being lost can also help us get a grip on forest fires and pandemics.

How effective is your company at combating climate change? The FT and data provider Statista are currently compiling the 2023 editions of Europe’s Climate Leaders and Asia-Pacific Climate Leaders — two surveys listing the businesses that have gone furthest in reducing their carbon emissions intensity. If you think your company might be eligible, please click through to the Europe and Asia-Pacific calls for entries, where you can find details of how to participate.