【Certified ESG Analyst Insights Sharing】Delton Lau, CESGA

The 28th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC), more commonly referred to as COP28, is the largest annual international meeting on climate organized by the United Nations. Government representatives from 197 countries come together and attempt to agree on action for the climate crisis which has also gathered financial actors, corporates and civil society. This article would briefly address one of the key outcomes regarding climate data for net zero and its implications.
Following a year of increased frequency of extreme weather events and record breaking in temperature, the stakes for COP28 this year always reaches a high records. The Global Stocktake (GST) was the world’s first exhaustive check-up on progress towards meeting the objectives of the 2015 Paris Agreement, and the outcome showed that global greenhouse gas (GHG) emissions levels have exceeded interim targets and are off-target for the near-term goals of 2030: global GHG emissions need to be cut by 43% by 2030 and 60% by 2035 from 2019 levels, aiming for net zero GHG emissions by 2050. This has far-reaching implications for maintaining the 1.5°C target of the Paris Agreement as a realistic option. Also, this calls for governments to work on updating Nationally Determined Contributions (NDCs) for 2035, and yet there are other technical, financial and political actions that are necessary to correct the course of global GHG emissions before time runs out.
It specifically calls out the urgent need to get financing to developing countries in order to avoid locking-in fossil fuel infrastructure. For what concerns financial actors, there are initiatives that track progress of members of the Glasgow Financial Alliance for Net Zero (GFANZ), which was launched in April 2021 in partnership with the “Race to Zero campaign”, to coordinate efforts across all sectors of the financial system to accelerate the transition to a global net-zero economy. Nevertheless, the lack of accessible, high-quality, and comparable climate data remains one of the most significant barriers to achieving a global net-zero economy. A primary concern of stakeholders is ensuring that climate data is consistent and easy to access and compare, to ensure that climate considerations can be fully integrated into decision-making and strategies.
Indeed, in the “One Planet Summit” initiative on 28 October 2021, which focus on global biodiversity, the President of France, Emmanuel Macron, and UN Special Envoy, Michael R. Bloomberg, launched the Climate Data Steering Committee. This committee published initial recommendations in September 2022 calling for the creation of a Net Zero Data Public Utility (NZDPU). As outlined in the Climate Data Steering Committee (CDSC) progress report 1, the NZDPU proof of concept is a significant milestone towards making climate transition-related data freely available in one place with enhanced consistency and transparency to serve user needs. The proof of concept delivers the foundational architecture to allow for scaling accessibility of companies’ direct (Scope 1) and indirect (Scope 2 and Scope 3) GHG emissions, and GHG emissions reduction targets. Populated with data from hundreds of companies that disclose publicly through Carbon Disclosure Project (CDP), the global environmental disclosure system, the proof of concept allows users to experience the initial set of features and functionality of the NZDPU. The design of the NZDPU closely follows the GHG Protocol methodology 2, which has a much narrower scope than the Task Force on Climate-related Financial Disclosures (TCFD), as it focuses specifically on emissions disclosures. The NZDPU will also focus on trying to overcome the existing data challenges experienced by users of climate transition-related data and identified by the CDSC. In simple words, the NZDPU will be the world’s first global, centralized, free, and open repository for private sector climate transition-related data. This new data portal will allow investors and regulators to see which companies are making progress on their commitments, while also empowering the public to hold companies accountable for backing up words with action.
A public consultation opens through March 1, 2024 will give stakeholders an opportunity to provide feedback that will inform the NZDPU’s future development. It is believed that net zero data from NZDPU could close the gap on investors’ data needs to estimate climate risk and further push Net Zero Investors financing to reach net zero targets. Nevertheless, the real outcome on the NZDPU remain conscious as there are multiple jurisdictions have seen considerable progress relating to disclosure of climate-related information, internationally consistent mandatory disclosure rules and standards have not been implemented globally with plenty of grey zones, which are pending to solve. Meanwhile, it is recognized that there are boundaries to disclosing specific climate transition-related metrics, and further development is needed to address remaining methodological and data challenges.
1. https://assets.bbhub.io/company/sites/75/2023/11/CDSC-2023-Progress-Report.pdf
2. See “Recommendations for the Development of the Net-Zero Data Public Utility” (CDSC, 2022)
Article is written by EFFAS Certified Environmental, Social, and Governance Analyst (CESGA). CESGA is highly recognized in Europe and globally which has been steadily increasing in the worldwide. If interested in enrolling, please refer to https://bit.ly/3tFUQ1M.