November 2022 is a pivotal month for sustainability

As we move to the fall of 2022, we should note that November is a busy month with sustainability and green growth summits and opportunities. These include the Egypt Climate Conference of the Parties COP27 and the Group of 20 summit in Indonesia. These events are taking place during an economic recession, a war between Russia and Ukraine, and a very fragile global economy affected by high inflation, supply chain disruptions and post-Covid traumas. 
 
While these economic and geopolitical shocks create incentives for unsustainable carbon intensive practices such as coal-based energy generation, we should look at November in the context of a “changed world”. A world that has lost 6.5 million people due to Covid 19 (as of August 31, 2022) and that has lost $8 trillion in economic output just in 2020 (this equal 10% of 2020 global output). This is a word that also believes decarbonization is the best way to prevent future crises, to manage shocks when these occur, as well as to create a new industrial revolution. 

Let’s look at these opportunities

Climate Summit COP27: The Egyptian government will host over 150 Heads of States to continue executing the Paris 2015 Climate Accords. These aimed to ensure that all countries reach Zero-Net by 2050 (Net-zero refers to the decarbonization of our economies to the level in which the greenhouse gases going into the atmosphere are harmonized by their complete removal), to prevent uncontrollable global warming. Last year at the COP26 in the United Kingdom, most countries except China, Russia, Saudi Arabia, Australia, and India, committed to Net-Zero by 2050. These laggards committed to do the same by 2060. It is important to note that these are just commitments and non-binding agreements. Suffice to remember that when President Trump won the election 6 years ago, withdrew the US from all global climate agreements. 
 
COP27 takes place at an inflexion point though. The US has just approved a $500 billion climate investment package. Clean tech investment has accelerated, topping 1$ trillion in 2021. The First Mover Coalition (50 of the largest corporations in the world (with a market cap of 60 trillion) committed at Davos Economic to buy green cement, green hydrogen and green coal providing the market signals to make these scalable. Wall Street is scooping up any climate risk modelling firm to ensure that investment is pricing in environmental risk going forward. Finally, on the clean energy front there is an unprecedented investment momentum given that countries are seeking more energy security to insulate themselves from geopolitical shocks. 
 
There is also more coordination between the public private sectors and capital market, as there is clarity that the risk of uncontrollable disaster events (accelerated by global warming) will become unmanageable unless vulnerabilities are tackled. The price tag to reach Net-Zero is clearly significant, however, the cost of unmanaged and unpredictable climate change (based on business as usual) would be much higher as climate events are projected to affect about 20 percent of global GDP by 2040. Under the Net-Zero plans almost $30 trillion dollars will have to be invested by 2050. This corresponds to roughly 4 percent of annual GDP (in 2021 money). 
 
G20 Summit: The Group of 20 (G20) Presidents of most industrialized countries will meet in Bali Indonesia after the Climate Summit of Egypt. These countries combined represent approximately 90% of global GDP, 80% of global trade, and 74% of global carbon emission. The theme of this year G20 is ‘Recover Together, Recover Stronger’. And one of the key pillars on the summit is sustainable energy transition. This has become a top priority for all G20 countries, given the recent energy shock caused by Russia's invasion of Ukraine. This has resulted in higher inflation and economic decline, affecting particularly the most financially fragile countries in the developing world.  
 
Unlike 2021, this year G20 takes place after the Climate Summit and can benefit from the outcomes of the Egyptian meetings. Last year G20 was the first one held in person since Covid 19 and was hosted by former Italy Prime Minister Mario Draghi before the Climate Summit COP26 in the UK. Several key G20 countries, namely Brazil, China, Japan, Mexico, Russia, Saudi Arabia, and South Africa did not attend the Italian meeting in person. China is the largest carbon emitter, Saudi Arabia, and Russia, respectively, are the second and third largest oil producers in the world. Their absence in Rome, sent a negative message in terms of their commitment to help manage the climate crisis and decarbonize the global economy. For the most part, the 2021 G20 summit did little to move the needle on the most pressing climate challenges. 
 
This year though, the situation is far worse as the world risks entering a prolonged recession, and G20 will be under the radar to deliver on a sustainable recovery which is based on resiliency, greater health coordination and sustainable energy. 

Actionable thoughts:

Bottom line, the Egyptian leadership will push hard to operationalize the Paris Climate Agreements and seek to become a catalyzer of the MENA (Middle East and North Africa) region transformation toward green growth and green investments. There is also a big branding opportunity for Egypt potentially attracting billions of dollars to the country to transform its energy base and economy. The Indonesian leader, on the other hand, will work hard to ensure that the G20 summit serves as a platform to coordinate global economic recovery (and not peace talks between countries at war), addressing the supply chain choke points, and promoting health resiliency which underpins the global economic recovery. Time has come to make these global summits actionable for the wellbeing of everyone.