Loss and Damage

The most memorable outcome of COP27 was the agreed fund for climate justice, from which payments will be given to developing countries who suffer “loss and damage” from the implications of climate change. COP has again highlighted the close association between the E and S of ESG.   

The next major challenge will be how to approach the distribution and utility of the fund to address and further mitigate the negative impacts of Climate Change, such as investment in flood defences or drought resilient crops.  

There is a clear requirement to think about the impact of our operations on others or be held accountable. We must proactively consider how we can work with others to build towards a resilient future.  

As the implications of climate change become more severe and apparent, our priorities are changing. Consider investor surveys. In 2020, Blackrock, in a survey of 324 sustainable investors suggested the focus on Social aspects of ESG would become a bigger focus over the next few years, whilst Environment would remain prominent. Similarly, in a 2022 survey of over 1130 investors, more than 40% believed social issues of Climate Change were being overlooked (Capital Group ESG Global Survey).   

Over the past few years, we have been exposed to a volatile environment: a pandemic, geo-political tensions, an energy crisis and inflation. Many representatives at COP27 agreed these challenges must not limit our progress towards addressing climate change.  

Whilst the difficulties we have faced have strained systems, a period a rapid change is often a catalyst for innovation.

Innovation is required to address the tensions which will continue to surface between a growing population, and our need to reduce environmental impacts.   The Stern Report 2007 reiterated that the planned adaptation will be more cost-effective than reactive responses to climate change. We must align our thinking and work together to develop resilient systems.

Consider the potential implications for your business and, most importantly, the implications of business on wider society.