COP28: What portfolio managers want to see

COP28 is well under way in the UAE and the agenda is packed. Some of the key topics for discussion are addressing the climate financing gap, clean energy targets, nature and biodiversity policies, climate adaptation strategies, and supporting emerging market and developing countries in their climate battles.

Expectations of breakthroughs are relatively low compared to previous years. A number of competing events are vying for political attention, including ongoing geopolitical turmoil and economic headwinds as the world continues to bear the fallout from the global pandemic. However, COP has become a high-profile event capturing the world’s attention; addressing climate change is at or near the top of the global long-term priorities, so world leaders will be loathe not to announce some tangible progress.

While the negotiation and hard bargaining continues, for the investment world its clear what needs to be done. We have compiled the thoughts of five sustainable portfolio managers across asset classes to address some of the key agenda items at COP.

Download perspective

Contributions by

Kris Atkinson, Climate Bond portfolio manager, stresses the need for urgency in policy decisions because the progress made today will reverberate for decades to come. Policymakers must quickly create frameworks that effectively channel capital towards sustainable investments, which will not only reduce our carbon footprint but also unlock economic growth across a range of sectors.  

Velislava Dimitrova, Climate Solutions and Biodiversity portfolio manager, picks out some of the key areas where she thinks there could be agreements at COP. Renewable energy capacity, energy efficiency targets, updates to the Global Biodiversity Framework and deals around hydrogen and solar power are areas to watch. 

Shamil Pankhania, Climate Bond co-portfolio manager, explains why climate adaptation is a crucial part of the strategy to combat climate change. While we still need to continue targeting net-zero by 2050, we must also prepare for the inevitable changes in the climate from past emissions. This requires a two-pronged approach of closing the financing gap and developing clear plans to address the impacts of climate change.

Paul Greer, Emerging Market Debt portfolio manager, discusses the climate change financing gap for emerging markets and developing countries (EMDCs). These countries paradoxically face the most acute effects of climate change yet have the least access to capital to combat these impacts. A robust carbon credit framework and better engagement with private finance are important ways to fund the shortfall. 

Julie-Ann Ashcroft, Sustainable Multi-Asset portfolio manager, argues that the evidence of lower costs of capital for green energy projects compared to those of oil and gas shows that investors are willing supporters of the energy transition.  However, visibility is key for long term-investors. Reneging on previous goals, changing priorities, and watering down targets sow doubt, so it is crucial that policymakers at COP display strong leadership and unequivocally reaffirm their commitment to net-zero targets.