News

  Tuesday's focus at COP28 was energy and industry, the just transition, and Indigenous Peoples.  While controversy still surrounds remarks made by COP President about fossil fuels, and reports of the host country’s own plans to increase its own oil production, there was also coverage of high-level agreements at this year’s global climate summit: The second report of the Independent High Level Group on Climate Finance has been released at COP28. 'A climate finance framework: decisive action to deliver on the Paris Agreement' was co-authored by Nicholas Stern and presents a framework which it says can mobilise the estimated $2.4 trillion a year in investment required by 2030. The UK, France and a number of other countries and banks - including the World Bank and European Investment Bank (EIB) – have agreed to include more climate-resilient debt clauses in their lending. Climate-resilient debt clauses (CRDCs) allow vulnerable countries to pause debt repayments when climate disaster strikes, affording them ‘breathing space’ to recover. Welcoming the announcement, Prime Minister of Barbados Mia Mottley stated “I want to thank you for the extraordinary courage to do the right thing.  We can always bring back our debt, but we cannot bring back our society.”   Bill Gates has praised innovation at this year’s COP when he was among those attending the Climate Innovation Forum. The former CEO of Microsoft attended alongside Arvind Krishna, CEO of IBM, Kate Brandt, Chief Sustainability Officer of Google and other world leaders in the technology sector, who convened to explore cutting-edge solutions to tackle the global climate crisis. Solutions discussed included artificial intelligence (AI), satellite technology, big data, clean energy, industrial decarbonization, low-carbon hydrogen, and more. The world’s largest independent carbon crediting standards have announced a collaboration to increase the impact of activities under their standards. The pledge, published by the non-profit organisation IETA, outlines a number of activities which will help amplify the impact of carbon markets. Separately, the US regulator, the Commodity Futures Trading Commission (CFTC), is expected to propose the first federal guidelines for voluntary carbon credit derivatives, in a bit to “bring order to a market for the offset of emissions described as the ‘wild west’”. The value of the carbon trading market worldwide could reportedly expand to $100bn by 2030, up from $2bn in 2022. COP28 in numbers 36.8 billion: the number of metric tons of carbon dioxide that will be emitted this year from burning fossil fuels. 1.1: the percentage increase in those emissions on 2022. 1.4: the percentage increase in those emissions on 2019, before the Covid-19 pandemic.  6: the percentage increase in those emissions since the year of the Paris Agreement, according to research by the Centre for International Climate Research (Cicero) 0: the number of new power plants that should be built anywhere in the world fired by coal (the world's ‘dirtiest fuel’) according to US climate representative, John Kerry. The US has now committed to closing its existing coal power plants and not building any more of them in the future, and have joined the Powering Past Coal Alliance along with seven other countries, although it had to defends its climate leadership despite record oil and gas production (Financial Times) 60: the percentage by which much oil companies must commit to reducing their Scope 1 and 2 emissions by 2030, according to the Executive Director of the International Energy Agency Fatih Birol says 94: the percentage of oil-producing countries to have no pledges on phase out oil exploration, according to a new report from the Net-Zero Tracker. 2,456: the number of fossil fuel representatives at COP28, the largest ever to have attend the climate summit. Quote of the day “Absolutely not.” — Saudi energy minister Prince Abdulaziz bin Salman, on whether he would be happy to see a COP28 agreement on a “phase-down” of fossil fuels (Financial Times)   Find more news on the global climate summit our our COP28 page on Chartered Accountants Ireland's sustainability centre. 

Introduction The agri-food industry operates in a rapidly changing and dynamic business environment, where farmers and food producers, from multinational to artisan, are continually required to innovate and adapt. Events such as the COVID-19 pandemic and the war in Ukraine have increased complexity, disrupting food-supply chains and threatening food security. These circumstances have an impact on food production processes and consequently require a focus on sustainability. Sustainability is a key challenge facing all business sectors, not least the agriculture and food production industries. At a national and international level there is a huge focus on developing a sustainable food supply for a growing worldwide population. The United Nations (UN) forecasts a 34% increase in world population by 2050 and that an increase of 70% in food production will be required. Despite this, the UN reports that 30% of all food produced globally is lost or wasted. Greenhouse gases (GHG) emissions globally have increased by more than 60% between 1990 and 2022. The impact on climate change has been well documented, including increases in the frequency of flooding, droughts and wildfires. Such climate-change effects have serious consequences on food production and necessitate collaboration between all sectors of society to address the challenges presented. In Ireland, the economic importance of agriculture is clear. According to the Department of Agriculture, Food and the Marine, the agri-food sector accounted for 9% (€18.78 billion) of total exports in 2022 and 6.5% of total employment or 164,900 jobs, mostly in rural areas. Farms and farmers also provide valuable sources of environmental assets (e.g. hedgerows, wetlands and woodlands) and contribute to preserving natural habitats and biodiversity. However, from an environmental sustainability perspective there is much debate about the high level of GHG emissions generated by the Irish agricultural industry and how this issue needs to be addressed. In this article, I do not debate the extent to which the agricultural industry contributes to Ireland’s GHG emissions problem, but rather focus on acknowledging that farmers and food producers need to be included in determining a solution.  I also believe that the accounting profession has a key role to play in assisting farm enterprises, and small and micro agri-food businesses, to create more sustainable enterprises and to contribute to a sustainable food supply.  Environmental sustainability in agriculture Environmental sustainability is at the forefront of national and international policy development in agriculture and food production. This is primarily driven by the UN Sustainable Development Goals, as several of them relate to agriculture and food production.  At EU level, the European Green Deal, through its “Farm to Fork Strategy”, has set out plans on how to improve sustainability and the environmental impact of the agri-food industry. These are being incorporated into reform of the common agricultural (CAP).  At a national level, the Climate Action and Low Carbon Development (Amendment) Act 2021 introduced a framework of sectoral GHG emissions (‘carbon’) budgets, to be subsequently developed and proposed by the Climate Change Advisory Council (CCAC). In July 2022 (after much debate) the sectoral emissions ceiling for agriculture was set at a level requiring an ambitious 25% reduction by 2030. Stakeholders acknowledge the fundamental challenge that environmental sustainability presents for the industry. They also acknowledge the key role that the industry must play in addressing the national environmental sustainability challenge. A financial perspective on sustainability in agriculture Sustainability in agriculture is multidimensional and is broadly comprised of three main pillars:  environmental sustainability,  social sustainability, and economic sustainability. Environmental sustainability refers to how agriculture and food production processes impact our environment, and is the most widely discussed pillar of sustainability, the contribution of the industry to GHG emissions attracting significant debate.  Social sustainability in agriculture relates to farming communities, and the many challenges they face, and how the industry’s sustainability affects wider society.  Economic sustainability is generally viewed as economic viability, i.e. whether a farming system can survive financially in the long term in a changing economic context. It is perhaps to the economic sustainability of agriculture that the role and contribution of accountants is most relevant.  The National Farm Survey (NFS) is conducted annually by Teagasc, the Agriculture and Food Development Authority. Highlighting the economic vulnerability of many farm enterprises in Ireland, the 2022 report classes 43% of Irish farms as economically ‘viable’, 32% as ‘sustainable’, and 25% as ‘vulnerable’. At the root of this economic vulnerability is rising inflation and increases in the cost of farm inputs (e.g. fuel, fertiliser and feed), reducing the profit margins of food producers.  The challenge for farm and food production enterprises is to balance economic with environmental and social sustainability. A phrase used in the industry is “it’s hard to be green when in the red”. The NFS statistics reveal a situation of economic vulnerability for many farm enterprises. Therefore, financial viability may understandably be their top priority, with environmental and social sustainability of secondary importance.  However, despite the uncertainty of economic conditions in the short term, the long-term focus on environmentally sustainable food production and its positive social impact should not be forgotten. When a holistic perspective is brought to the concept of sustainability, we realise that the pillars of economic, environmental and social sustainability are intertwined and cannot be simply viewed in isolation.  While there are many scientific solutions (e.g. soil and grassland management, fertiliser use, changes to feed additives, alternative energy sources, shorter animal-to-slaughter periods, etc.) proposed to farmers on how to reduce GHG emissions, there appears to be little known about, or consideration of, the financial impact of such changes to farm practices.  The onus of identifying the changes required to farm practices to reduce GHG emissions on farms is placed on individual farmers, and farm advisory services are available to assist in this regard. However, many of the scientific solutions to reduce on-farm emissions require investment and involve a cost to farmers when making the transition. There appears to be little focus from the advisory services on assisting farmers to assess the economic cost or benefit for them when implementing such changes to farm practices.  Though many farmers want to adapt their work practices to contribute to a reduction in GHG emissions, many experience a knowledge gap regarding the financial impact on their livelihoods. This is an area where improvement in advisory services is required. Bringing a focused financial perspective to sustainability, accountants can contribute to bridging this knowledge gap. I contend that the accounting profession must collaborate with stakeholders in the agriculture industry and lead the way in helping to create sustainable farm and food production enterprises.  A financial management perspective acknowledges that economic sustainability cannot be sacrificed, and is crucial for the survival of farming and food production. Rather, work practices need to change to meet the ‘triple-bottom-line’ agenda of economic, environmental, social sustainability. Farmers and food producers need to be supported and advised to achieve this more complex and yet balanced objective. The role of the accountancy profession It is paramount that farmers and food producers are educated about what sustainability means and the financial implications for their business. Accountants are one of the primary sources of trusted advice for small business owners, including farmers. Therefore, the accounting profession has the potential, and an existing platform, to lead on how farmers and food producers can improve their sustainability, in the broadest sense.  Accountants are unique in having a wide range of knowledge about sustainable work practices from dealing with a varied client base across multiple industries. They can share this with farmers and small agri-business owners.  Accountants could assist farmers and food producers by: identifying the business opportunities for farmers presented by the sustainability transition; conducting cost–benefit analyses of implementing environmental sustainability initiatives (e.g. alternative energy sources); calculating the payback or return on investments that reduce the GHG emissions of enterprises;  helping business owners to avail of financial supports available to meet the cost of sustainability initiatives; advising farmers on how to develop sustainable work practices in a cost-efficient manner; sharing knowledge gained from SMEs and larger companies (e.g. on how to conduct sustainability audits).  Resources are available to support accountants to work with clients in this regard. For example, Chartered Accountants Ireland provide online resources in its Sustainability Centre, where free-to-access publications such as Sustainability for Small Businesses – A Guide provide practical insights. Conclusion There are many ways the accountancy profession can contribute to assisting farmers and food producers meet sustainability targets. These insights are not only important for food and agricultural businesses but are equally relevant and transferrable to how the accounting profession could rise to the challenge of assisting businesses in other sectors of the economy meet the increasing demand to strive for improved sustainability.  Dr Michael Hayden, FCA, is an Assistant Professor of Accounting at Maynooth University  

Monday at COP28 was both Finance Day and Gender Equality Day, with discussions on financing gender-responsive just transition and climate action. As Razan Khalifa Al Mubarak, UN Climate Change High-Level Champion said, “Climate change is not gender neutral. Women make up the majority of the world’s poor and despite and maybe because of this women and girls are at the forefront of climate action.” Some highlights: The Gender-Responsive Just Transitions & Climate Action Partnership was unveiled and endorsed by 60 countries contained a three-year package of measures to address the disproportionate impact of climate-related job loss on women.   A report titled "Feminist Climate Justice: A Framework for Action", was launched by UN Women. The report identified the climate crisis as threatening progress on gender equality and human rights, and hindering the achievement of the Sustainable Development Goals. The report describes how to achieve feminist climate justice and provides practical guidance on what countries need to do to transition to low-emission climate-resilient economies that, while recognizing the leadership of women, girls, and gender-diverse people in driving the change that is so urgently needed.   Hillary Clinton said in an interview that the absence of women in climate talks is a major worry (The Independent) Find more news on the global climate summit our our COP28 page on Chartered Accountants Ireland's sustainability centre. 

"Finance is the great enabler of climate action" This was the message of UN Climate Change Executive Secretary Simon Stiell in a speech at a Green Climate Fund event today “Scaling up Access and Impact”.  And it is a key message of this year’s COP, at which a record number of financial executives are attending. Many may be drawn to what Nikita Singhal, co-head of sustainable investment & ESG at Lazard Asset Management, describes as possibly “the greatest alpha-generation or investment-return” in a long time. Singhal  was speaking at the Bloomberg Business Forum at COP28, and was one of several investors who see opportunities for investment returns in action on the twin crises of climate change and biodiversity destruction. “Let's be clear,” said another such investor, Prudential Plc Chair Shriti Vadera, who reminded the Forum “The private sector only does things that are commercial and create a commercial return: they are to preserve the capital of their customers, savers, pensioners and depositors.” Highlights Chair of the IFRS Foundation Trustees, Erkki Liikanen addressed COP28 and reflected on progress since the IFRS Foundation announced the decision to establish the International Sustainability Standards Board at COP26 in 2021.   Export credit agencies, supporting a combined estimated US$120 billion in global trade in 2022, have formed a net-zero alliance. The UN-convened Net-Zero Export Credit Agencies Alliance will be the first net-zero finance alliance comprising public finance institutions. “Public finance has been the missing piece in the net-zero financial landscape,” said Inger Andersen, Executive Director of UNEP. “Export Credit Agencies are in a strong position to deliver more sustainable global trade and to complement the work already being undertaken by the private finance sector”.   Climate Trace the non-profit project has released data “of unprecedented granularity” that shows how countries have been dramatically under-reporting their greenhouse gas emissions;   An 18-month collaboration between leading climate researchers across more than 20 nations has produced a report titled 10 New Insights in Climate Science 2023/2024. The report aims to help inform policy implementation at COP28 and beyond. It warns that humans will increasingly be unable to live in and move from/to places where climate risks continue to rise, and also warns of compound risks which will amplify the climate crisis and increase in uncertainty. Podcast Tripling renewables is one of the goals under discussion at COP28. Find out where more investments are needed and why decarbonizing energy is easier than you think. (Zero)  

Like previous global climate summits, days 1 and 2 of this COP saw global leaders, including Taoiseach Leo Varadkar, delivering speeches to the summit. As Environment and Science Editor Kevin O’Sullivan , writes in the COP28 special edition of the Irish Times Sunday ‘The game of “down or out” will surface repeatedly [at this year’s climate summit]. Should the world “phase out” what’s known as “unabated” oil and gas — that’s when fossil fuels are burned without technologies to capture their greenhouse gases — or should they just be “phased down”?’ Saturday Coinciding with Leaders Days was the newly launched two-day long Business & Philanthropy Climate Forum (BPCF). This multi-stakeholder-engagement platform is the first dedicated platform for the private sector and philanthropy to be included in the COP process. It convened over 1,300 global business leaders and philanthropists, and saw discussions on topics including carbon pricing, renewables, green economy programmes, commitments on nature, the role of media in climate change and AI’s impact on climate change. At the BPCF, three organizations – Green Climate Fund, Allied Climate Partners, and Allianz Global Investors – came together to mobilise $5 billion in collective philanthropic, public and private funding to unlock long-term capital of $20 billion to advance climate and nature action. Initiatives announced included  the new Climate Solutions investment platform, announced by Rishi Kapoor, co-CEO of Investcorp, which targets circa $750 million of growth capital investments to help scale companies that provide products, services and technologies to support decarbonization and address the impacts of climate change globally. Separately a pact, sponsored by COP28 President Sultan Al Jaber, was signed up to by 50 oil and gas companies. The Oil and Gas Decarbonization Charter commits signatories to cutting greenhouse gas emissions from their operations and slashing methane releases to near-zero by the end of the decade. The charter is reportedly one of COP28’s benchmark achievements for Al Jaber, himself the head of one of the world’s largest oil producers (ADNOC). Signatories to the charter represent nearly 40 percent of global oil production, and for 31 of those companies it was their first time making such a commitment to reach net-zero methane. Of the 50 companies that signed up, 60 percent of them were National Oil Companies, the largest-ever number to commit to a decarbonization initiative. The Charter was launched alongside another key initiative, the Global Decarbonization Accelerator (GDA). This initiative is focused on three key pillars: rapidly scaling the energy system of tomorrow decarbonizing the energy system of today and targeting methane and other non-CO2 greenhouse gases. The Charter has attracted criticism, including from UN Secretary-General António Guterres, however, because none of the companies have agreed to reduce oil and gas production, and that the Charter “says nothing about eliminating emissions from fossil fuel consumption”. Also, while signatories will have to submit a plan to meet the targets by 2025, the targets themselves are not binding. Defending the pact, Al Jaber argued that oil and gas will remain part of the energy system for decades to come even as fossil fuels are phased out, and they must be made clean as possible. In a widely supported initiatives, over 110 governments also pledged to triple the world's renewable energy capacity by 2030, as a route to cut the share of fossil fuels in the world's energy production. Also announced on Saturday was a collaboration by the International Energy Agency, Environmental Defense Fund, the UN Environment Programme, the International Methane Emission Observatory and RMI, with support from Bloomberg Philanthropies. Data from the program — including surveillance by the MethaneSAT satellite set to launch next year — is meant to supply governments, and the public and others with information about emissions that can be used to hold companies accountable. Sunday – Health Day Health has become a major focus of the climate summit: extreme weather has been linked to the spread of disease – including spikes in infectious diseases, like cholera and malaria, due to floods caused by climate change – but also cardiovascular-related deaths due to unusually high temperatures (reportedly expected to nearly triple in the US by mid-century as climate change raises the frequency of very hot days), pollution and even fears about ancient outbreaks coming back to life from thawing Siberian permafrost (which also poses risks of release billions of tonnes of the extremely potent greenhouse gas methane into the atmosphere). Sunday was Health Day at COP28 with 123 countries backing the ‘COP28 UAE Declaration on Climate and Health’. This declaration aims “to place health at the heart of climate action and accelerate the development of climate-resilient, sustainable and equitable health systems”. Included in set of finance commitments on climate and health were commitments of $300 million commitment by the Global Fund to prepare health systems, and £54 million from the UK government. New initiatives were also announced to meet climate and biodiversity goals. $1.7 billion in nature conservation finance was unveiled, alongside a pledge by host country, the UAE, to contribute $100 of new finance for nature-climate projects. Other national and regional investment plans and partnerships were announced, focusing on nature-climate action to deliver on the Paris Agreement and the recently adopted Kunming-Montreal Global Biodiversity Framework. These included: $250 million new funding under the Ocean Resilience Climate Alliance (ORCA); three forest finance packages, and the Nature Finance Hub, a new initiative committing to mobilize $1 billion from development partners, with the intention of mobilizing a further $2 billion in additional private finance capital by 2030 into nature-focused climate projects. Addressing nature-loss can reportedly save $104 billion in adaptation costs and has the potential to provide upwards of 30 percent of the CO2 mitigation (i.e. reduction) action needed by 2030. As approximately 50 percent of global GDP is directly or indirectly dependent on nature and other ecosystem services, the conservation and restoration of natural ecosystems supports economic prosperity, with the potential to create nearly 395 billion more jobs and to protect 1 billion people whose livelihoods are directly dependent on nature.  Articles Hopeful signs emerging in the serious business of climate talks (Irish Times) UAE COP28 guest list led by bankers, lobbyists — and housekeeping (Financial Times)  

Climate finance was expected to be a major agenda item for this COP, so it comes as no surprise to find it dominating coverage of this summit so far. Often described as the ‘master key’ needed to unlock climate action, climate finance is a central focus area of the COP presidency’s plan of action to deliver on the pillars of the Paris Agreement. These four focus areas are: fast-tracking the energy transition fixing climate finance putting nature, people, lives and livelihoods at the heart of climate action underpinning everything with full inclusivity. In his opening speech UN Climate Change Executive Secretary Simon Stiell laid out a vision for the next two years and what is expected of countries, i.e. “every single commitment – on finance, adaptation, and mitigation – has to be in line with a 1.5 degree world”. UK’s King Charles III used his opening speech  to appeal to countries to unlock more capital for the energy transition and UN Chief Antonio Gutérres warned that "Earth’s vital signs are failing", before urging a faster transition to renewable energy. A new Loss and Damage Fund was established on the first day of COP (30 November) which will aim to keep up with the rising costs caused by extreme weather and slow-onset disasters such as sea level rise, ocean acidification and melting glaciers. The cost of loss and damage is estimated to be over $400bn annually. The initial funding for the Loss and Damage fund is close to US$429m, with $245m coming from the EU, including $100m pledged by Germany, which was matched by a pledge of $100 million from the UAE and $75 million from the UK. UAE President Mohammed bin Zayed Al Nahyan subsequently announced a $30bn fund for "global climate solutions" to be put into a climate finance vehicle called Alterra. The US has pledged $17.5 million, and Japan $10 million. Agriculture and food also dominated discussions. COP28 President Sultan Al Jaber announced a new major declaration on the future of food which some 134 countries have signed up to, including major food producers and consumers. The first of three high-level events focusing on the global stocktake also got underway today, focusing first on adaptation. Delegates are expected to discuss how the stocktake’s outcome can bolster efforts for countries and communities to better adapt to the impacts of climate change.