COP28: A historic agreement struck, but will it be enough?

Posted on: December 14th, 2023 by Morgan Arnold

Yesterday, the UAE Consensus was adopted at COP28 in Dubai. Only hours earlier, many were questioning whether a deal could even be reached. Several nations were angered by an earlier draft agreement that failed to include strong wording on fossil fuels. However, the final ‘Global Stocktake’ text was published early Wednesday following a dramatically swift adoption process.

Running to more than 20 pages and nearly 200 clauses, the UAE Consensus “calls on parties to contribute” to take actions including “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science”.

In what is being described as a historic moment, this is the first time there has been an explicit mention of reducing the use of fossil fuels in a COP text.

However, developing nations and campaigners have not shied away from critiquing the agreement since the moment the gavel came down on the negotiations. They claim that the deal has a litany of loopholes, appears to placate fossil fuel interests and will ultimately hamper the world from cutting greenhouse gas emissions drastically enough to limit global heating to 1.5c above pre-industrial levels.

They also argue that, despite an agreement on a loss and damage fund, developing nations still require hundreds of billions more in finance to help them transition away from coal, oil and gas. During the summit, the US pledged just over $20m in new finance, while India announced it would double its coal production by the end of the decade.

Despite its imperfections, the deal represents perhaps the biggest step forward since the Paris Agreement of 2015. It signals the start of the end of the fossil fuel era and a global push towards renewable energy.

The hope is that the commitment to triple renewables and energy efficiency by 2030 will see wind and solar replace coal, oil and gas and the requirement for nations to submit stronger carbon-cutting plans by 2025 should, in theory, help to accelerate the transition.

As diplomats and officials leave Dubai, there will be a sense that there is still much more work to be done to achieve the goal of limiting climate change and its impacts. This year was the warmest year on record and 2024 is set to pass the 1.5c threshold, according to The Met Office, and the UN recently warned that global temperatures will rise by 3-5c by the end of the century.

Away from the politics, many will be wondering if the agreement struck today is radical enough to address the scale and pace required to avoid climate breakdown.

Is this the beginning of the UK’s anti-ESG backlash?

Posted on: August 2nd, 2023 by Benjamin Carr

While the British summer is living up to its expectations with more damp weather forecast, many business leaders will have begun August fearing that another set of storm clouds is gathering on the horizon.  

Rishi Sunak’s decision to boost North Sea oil and gas production this week has been criticised as a dangerous watering down of climate policies by critics. It comes amid the potential rolling back of the 2030 ban on petrol and diesel cars in a bid to show the government is “on the side of motorists”, while London’s Mayor Sadiq Khan pushes ahead with the Ultra-Low Emissions Zone.  

The weakening of the national emissions trading scheme to make it cheaper for industry to pollute in Britain, alongside government ministers criticising “ESG investment groupthink” in the shunning of defence stocks, are further additions to the growing list of anti-green moves and rhetoric making headlines in recent days.  

The government is seemingly attempting to drive a policy wedge on climate change in the UK political debate, marking the end of a period of consensus across parties on the country’s net zero ambitions. 

Governance in the frame 

Away from climate change and looking at the governance pillar within ESG, the recent Coutts debanking saga is further evidence that a broader ESG backlash may be emerging in the UK. 

The ousting of NatWest CEO Dame Alison Rose was set in motion by concerns that businesses are yielding too much power and should not be pursuing political positions or goals. Indeed, Nigel Farage has declared war on ‘woke capitalism’ and has since launched a national campaign to mobilise those stripped of their bank accounts for political or other reasons. 

For a deeper dive into this saga and the dynamics at play, see MHP’s Deputy CEO, Nick Barron’s article: Coutts is not Britain’s Bud Light. 

US vs UK  

Comparing these recent events with the genesis of the anti-ESG movement in the US, some notable similarities exist.  

Firstly, political forces are driving camps on both sides of the Atlantic, with legislative levers being pulled to affect change. The US has seen 99 anti-ESG legislative bills filed in the first four months of 2023 compared to 39 during the whole of 2022, primarily driven by Republican lawmakers, including measures to reduce climate constraints for fossil fuel firms.  

Secondly, the financial system has been an early target of the debate. The banking sector is firmly under the spotlight in the UK. While in the US, asset managers have felt the brunt of the backlash, with some US states outlawing ESG considerations in investment strategies, and fund managers mandated to prioritise generating higher returns for investors.  

However, as the movement has matured in the US, several issues have defined activism, including LGBTQ+ rights, abortion and diversity and inclusion, highlighting a potential course the UK’s own backlash may take with a shift to more social issues.  

For now, contagion is likely within the financial services industry and beyond as brands come under a new level of scrutiny fuelled by deepening polarisation. 

Mitigating risk 

So how should firms respond? Firstly, communications should be considered against this evolving backdrop. Using less polarising language is one place to start. Terms like net zero and ESG have broad meanings, leaving space for politicisation. 

Stress-testing messaging to consider the variety of potential stakeholder responses through the lens of recent criticism is crucial. Where are the vulnerabilities? How can communications proactively address possible adverse reactions? 

Most importantly, firms should be clear about their sustainability story. Being specific about the impact the business is having on the planet and its communities, demonstrating why particular values are important and focusing on tangible achievements and progress are practical ways to mitigate risk. 

Whether or not this is the beginning of an anti-ESG backlash on the scale the US has experienced remains to be seen. But it would be prudent for firms to ensure they are prepared to operate in this shifting landscape. 

A polarised society: will political chaos push Israel’s tech ecosystem to the brink?

Posted on: March 28th, 2023 by Morgan Arnold

Israel has been facing its biggest protests in over a decade. Yesterday, a general strike was called, with schools and universities closed and Tel Aviv’s Ben-Gurion airport, its international gateway, forced to shut. Widespread civil action has been prompted by a highly controversial set of judicial reforms that would shift power away from the courts and strengthen its executive.

In what is an already polarised society, Netanyahu’s government has been under growing pressure both domestically and internationally to back down and change direction. Especially if the country’s longest-serving Prime Minister wants to keep an already fragile governing coalition intact. On Monday, a month-long delay to the reforms was announced to allow time for discussions.

Israel’s tech ecosystem has been a beacon of strength for the country over the last decade. Tel Aviv-headquartered firms rank third in terms of total VC investment in the EMEA region in 2022, after London and Paris and ahead of Berlin, a report from Dealroom said last week.

If start-ups haven’t faced enough of a battering with falling valuations, funding rounds drying up and the collapse of Silicon Valley Bank, this political turmoil is set to further dampen the outlook for the country’s most promising firms.

Cloud security firm Wiz said last week that it will not be transferring any of the proceeds from its latest $300m funding round to the country while the political uncertainty continued. There’s even talk of businesses relocating to alternative, bourgeoning tech hubs in Europe.

This is an unnerving time for the country’s entrepreneurs and tech community. Many will have been waiting to see if the civil action would force the government’s hand on a U-turn and for calm to return. But this saga risks scarring the reputation of the country’s tech credentials in the long term. Investors are likely to shy away from deploying further capital into Israeli start-ups and businesses may find it difficult to plan for their future success amid such instability.

Communicating effectively during turbulent political conditions

Businesses headquartered, or with a significant presence, in Israel will be watching the coming weeks unfold closely. Eynat Guez, the CEO and co-founder of Papaya Global, a payroll software unicorn, was the first to publicly criticise the reforms in January. But others, particularly international firms with large Israeli offices, will likely decide against any public declarations of support and remain neutral.

Regardless of whether or not to take a stand, from our experience working with firms around the world, we know that many will be keen to continue business-as-usual communications and marketing activity. However, they should be mindful of the external backdrop they are operating in and consider how stakeholders will view the appropriateness of messages at a time of political crisis.

With heightened feelings amongst audiences, businesses should also consider the potential for their communications to become unintentionally politicised and used as leverage by political forces, risking reputational damage for being seen to take sides.

Finally, but no less important, setting the right tone in internal communications is crucial. Employers should respect employees’ right to protest and show understanding towards the weight of feelings that will have taken hold amongst workers.