COP28: Commitments should speed up slowing decarbonisation rates

MSCI's Linda-Eling Lee shares her insights on net-zero polices, phase-out of coal power plants in Asia and the 'billion dollar question' for this COP

While companies have been decarbonising faster than the countries they are domiciled in, we are seeing a slow down in pace, said MSCI’s Linda-Eling Lee.

The head of MSCI’s sustainability institute, speaking to ESG Clarity from COP28 in Dubai, added, however, the commitments seen at the conference – such as the launch of the Taskforce for Net Zero Policy – should help speed things up again.

She also discussed how she was pleased to see the supportive policies and announcements made around the voluntary carbon markets and standard setting in that space.

Check the out full video interview above or read the transcript below:

NK: Hello, I’m Natalie Kenway and welcome to this COP28 video. I’m joined by Linda from MSCI who is on the ground in Dubai. Thank you so much for your time today, Linda. How is it going over there?

LEL: Well, it’s a very, very busy and I think everyone is quite tired, but it’s obviously a very, very exciting event.

NK: What have been the key highlights for you so far? What’s been a standout announcement perhaps?

LEL: Well, there are a series of announcements always, so it’s very difficult to pick one that’s the overwhelming one. And, of course, we’re only not even quite halfway really through to the full set of events. And I think that as usual, I think with the talks, you’re going to have much of the really big announcements or the big agreements or final negotiations really in the final hours.

Now, in terms of what we’re seeing so far it’s very much focused on finance and the role of finance in the energy transition. And so we’ve been very focused on the global stocktake, and the global stocktake of countries and how they’re doing. And we are really looking at companies and whether or not they have been progressing since the Paris Agreement and what their trajectory is going forward.

And so from our perspective in terms of some of the areas and announcements, there’s very much focus on what is actually happening in terms of transition and transition finance. What are some of the innovations that are required in order to get companies over the hurdle, if you will, and continue to accelerate the decarbonisation?

NK: We saw a flurry of announcements around Finance Day and a lot of international banks announcing commitments to climate projects and debt relief. Are those kind of things going to be really helpful in pushing forward in our climate transition?

LEL: Well, I think that is one of the focus areas that is really stands out this year, which is a lot of the focus has been on transition, and how is it that you’re going to do this.

It’s not just focused on more ambitions and more commitments. And in fact, as an example, around the commitments to phase out coal that was already announced from last year, this year, a lot of the focus is on how are you going to do this? So a piece of research that we’ve done was really to look at how it is that different Asia markets are going to manage to phase out their coal power plants and still have reliable energy security as well as more of an optimal way of actually transitioning over to normal energy.

Each of the markets are really very different. And I think that a lot of the conversation on the commitments that we’re seeing, and a lot of the innovations that are being proposed that have to do with how it is that you’re actually going to go to market by market situation by situation to try to incentivise each of these markets, as well as be able to provide the kinds of financing that you’re going to need to actually get transition to happen.

NK: From the conversations we’ve had so far, people are quite pleased with the commitments from companies, but we want to see a bit more from governments and nations. Is that something that you would agree with or you think there might be something else that coming up in the next week?

LEL: Well, I think that some of the areas already are looking in a promising direction.

So one area we’re always very focused on is on data and measurement. And in one area that really requires that more policy level work is around voluntary carbon markets and around having a high integrity carbon credit market. And we’re beginning to see those types of pieces come together in terms of the standards as well as some potentially even more supportive policies.

I do really think that there are a lot of things that are still in progress, even though there are some announcements already. I think that there are a lot of things that are still in the works.

NK: Okay. And I know that net zero is a big focus for MSCI and we’ve seen the announcement of the Taskforce for Net Zero Policy. What would you want to see come out of that?

LEL: Well, I think that when it comes to net zero, companies really have actually been progressing quite well in some ways more so than some of the governments. In the stocktake that we’ve done in terms of monitoring companies, many of the companies, especially in the developed markets, have actually been outpacing the countries that they’re domiciled over the past five years.

See also: – Green Dream with MSCI’s Linda-Eling Lee: Five trends to watch and figuring out the biodiversity footprint

But going forward, I think that one of the one of the issues on the ground is what companies decarbonisation rates are actually beginning to slow. And why is that?  And so that what are the kind of the policy and perhaps the policy barriers that need to be overcome? What are some of the commitments that need to happen in order to have companies continue to accelerate their decarbonisation?

And so I think that the commitments at COP to be tripling renewable energy, for example, and doubling energy efficiency, those are going to be quite consequential.

NK: And the final question I wanted to ask you is around the language. And we’ve got this kind of split area on the ‘phaseout’ of fossil fuels. Where do you think we’re going to end up or is that the million dollar or billion dollar question?

LEL: That is very much the billion dollar question. I don’t think that that’s going to be clear until quite near the end. I would say that I feel like some of the other really consequential areas, such as around methane and around coal, I think those are actually quite important just because they were initially announced and the initial commitments were made last year, I do feel like focusing on expanding those, those are actually going to be really worth celebrating. And so, yes, everyone is holding out to see what happens with fossil fuel phaseout versus phase down and so forth, but it’s actually also these other areas that we need to really be focused on continue to make progress.

NK: Fantastic. Well, thank you so much, Linda, for finding somewhere quiet and sharing your insights with us. really appreciate that.

LEL: It’s great to speak with you.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...