COP28: Words, Actions, and the Lingering Imperative

Picture of Michael Palmieri

Michael Palmieri

CEO, FFI Solutions

As the curtain falls on COP28, the spotlight remains fixed on what was a critical battleground — the final wording around the future of fossil fuels. The meticulously chosen term, “transition away,” echoes through the halls of negotiation, leaving both a sense of progress and a lingering question mark.

In our recap of the week blog last Saturday, we emphasized that regardless of the exact words chosen, there will be good takes and bad takes. That balance to us is a good thing. Using an American football analogy, we are approaching halftime, and we are behind with a large deficit to overcome. Our defense is getting gashed by misdirection (excessive fossil fuel stock returns) and trick plays (carbon capture to justify further fossil fuel development). Our offense has committed turnovers (meager pledges for loss/damage in developing nations amid record fossil-fuel production). But we are starting to move the ball on the ground and in the air (commitment to reduce methane emissions, pledge to triple renewable energy by 2030 and massive funding for renewables in developing countries). We make halftime adjustments: focus on better discipline (even cheaper and more accessible renewables), change up our defensive schemes (recognizing a fair and equitable transition) and swarm to the ball (global collaboration). Victory (1.5°C and a just transition) is still within reach.

Harkening back to our recap blog of COP27, we again question the relevance of these talks. It’s essential to acknowledge the competing forces at play. The polarization surrounding fossil fuel cuts highlights the complexities inherent in international negotiations and the quest to address goals like a just transition. While we may have avoided Groundhog Day at COP28, we must ask ourselves – can these talks adapt to meet the evolving demands of our changing world?

COP28 may be remembered for its careful dance of words, but the real legacy lies in the actions that follow. We think that COP28, and the simple words “transition away,” will further put investors on notice that they not only have the duty to manage the risks that will arise from the transition, but also the power to effectuate change through their portfolio investments and engagement with companies.

While all fossil fuel companies may not be part of the climate solution, the energy sector is going to be influential on how the “transition away” plays out. Asset owners seeking long term investments will need to evaluate the individual players based on the degree to which their operations and capital allocation decisions are aligned with the changing landscape ahead.

The transition away from fossil fuels is a collective responsibility, and the world is watching closely to see if the rhetoric will translate into meaningful change.