COP28 – Achievements and Outcomes

The “UAE-consensus” unveiled after two weeks of intergovernmental talks between 200 countries, pledged to transition away from fossil fuels - the first time in nearly 30 years of climate summits that such wording had made it into a COP text – providing hope that the world can still limit warming to 1.5C after the hottest year on record.

Nomura attended COP28 in its role as chair of one of Japan’s key working groups on green transformation.

At COP28, progress was made on multiple fronts including the operationalization of the Loss and Damages Fund for countries hit by climate catastrophes (proposed at last year’s COP27) with several nations including the UK and UAE agreeing to contribute $700 million into the pool so far.

Climate change is a global problem and the finance sector plays a pivotal role in supporting a ‘just transition’ – taking into account the needs of developing countries and whole communities - which requires trillions of dollars each year. This includes closing the adaptation financing gap, which the UN Environment Programme’s 2023 Adaptation Gap report found has grown to $194-366 billion per year amid worsening climate impacts.

The UNEP Finance Initiative and the International Labour Organisation unveiled a roadmap for a ‘just transition’, providing guidance on how to achieve low-carbon, resilient and resource-efficient economies. It will assist banks and insurance providers in incorporating equitable considerations into business products and practices to ensure that no country is left behind in the energy transition.

The world's top multilateral development banks launched a global task force to scale up the number and size of 'debt-for-nature' swaps, where a developing country's debt is cut in return for protecting vital ecosystems. Recent examples include Belize and the Galapagos islands.

The EU-led Global Green Bond Initiative (GGBI) and the African Development Bank partnered as part of GGBI's plan to extend its green bond assistance programme for emerging and developing markets.

The Monetary Authority of Singapore announced two finance partnerships as part of a broader Singaporean platform in an effort to raise $5 billion in blended capital, to de-risk projects and accelerate energy transition at scale in Asia.

Also in Asia, the Japanese government is working with regional partners under the framework of the Asia Zero Emission Community (AZEC), a forum of countries adopting decarbonization measures. AZEC will hold its first leaders meeting this month and aims for energy transition tailored to each country's circumstances. Japan is using its experience with green finance to provide financial, technology and policy support to partner countries.

The Japan Pavilion at COP28 hosted various nations for a dialogue about Japan's advanced Green Transformation initiatives. GX (Green Transformation) League, which was launched as a mechanism for industry, government, academia and financial institutions led by Ministry of Economy, Trade and Industry, played a major role. Nomura, as chair of the GX League's Working Group on Disclosure and Evaluation of Climate-related Opportunities, introduced a case study on "Leveraging Avoided Emissions” for financial institutions. Nomura Asset Management explained the evaluation method for avoided emissions and debated with other panellists.

Nomura also discussed the significance of Japan’s forthcoming Climate Transition Bond, the world's first such bond issued by a sovereign which aims to realize the deployment of technologies such as hydrogen supply networks, carbon capture and storage, synthetic fuels and small nuclear reactors.

Finally, more than 20 countries including the United States, UK and Japan launched the Declaration to Triple Nuclear Energy. The grouping invited the World Bank, regional development banks and international financial firms to include nuclear in their lending policies, while emphasizing the need to secure supply chains to increase deployment of the technology.

Earlier this year Japan announced a new nuclear policy. The development of next-generation advanced reactors equipped with new safety mechanisms will be promoted so that they will be constructed within the sites of power stations that are to be decommissioned, replacing the old units.

Next year, COP29 will be held in Azerbaijan, and COP30 will be hosted by Brazil. In the meantime, countries are expected to accelerate clean, just, affordable and inclusive energy transitions following various pathways, as a means of enabling strong, sustainable, and inclusive growth to achieve their climate objectives.