Last Thursday, annual mid-year multilateral climate talks ended in acrimony as issues of funding and compensation for the impacts of climate change raised negotiators’ temperatures.
Held in Bonn, the fortnight-long discussions brought together negotiators from every country for the first time since COP26 in Glasgow. On the agenda: a number of technical issues, which COP26 had kicked off, and preliminary work on the decisions due to be taken at COP27. One of the key moments in the international climate change calendar, the annual Bonn summit is often seen as firing the starting gun for the year’s COP summit held in November.
Having spoken with former colleagues on the ground, it soon became clear that the heatwave sweeping Europe wasn’t the only thing raising temperatures. Developing countries again pushed hard on the issue of Loss and Damage, or compensation for the impacts of climate change. The hard-won compromise that had been negotiated in Glasgow last November for a series of discussions on the issue was set aside, with developing countries calling for an immediate funding system to be put in place. The EU took the lead in rejecting these proposals, taking the flak on behalf of other developed countries that would also potentially be on the hook for billions, if not trillions, of dollars in climate reparations.
As with all issues in a negotiation, the impacts of these confrontations will bleed into the other negotiating rooms. Countries may look to adopt stronger positions to gain greater leverage on topics closer to their hearts. Taken at face value, this could point to a loss of the spirit of compromise that was fostered at COP26 to successfully reach agreement on the Glasgow Climate Pact; however, such practices are to be expected within a negotiation and the incoming Presidency team for COP27 will be watching these discussions with interest to inform their handling of November’s climate summit.
That’s not to say that the Egyptian team won’t have their work cut out for them: it's an uncertain time for multilateralism on climate issues - Russia's invasion of Ukraine, the increasing intensity of weather impacts being felt around the globe and the impending departure of UN Climate Change chief Patricia Espinosa next month. However, a number of factors exist which provide certainty to business on the direction of travel: the requirement from COP26 for countries to revisit their emissions-reduction targets this year to ensure they’re 1.5C aligned; the newly-elected Australian government’s commitment to show climate leadership; and the SEC’s proposed climate disclosure rule. As the science of climate change becomes increasingly stark and the impacts begin to hit home, governments will continue to respond with ever more ambitious regulation increasing the transition risk to which businesses are exposed.