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COP27 and supply chain – of agendas and actions

COP27
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(Conference of the Parties) COP27 is the 27th United Nations’ Climate Change Conference being held in Sharm El Sheikh Convention Center, Egypt between 6th to 18th November 2022. The conference has been held annually since the first UN climate agreement in 1992, and is used by governments to agree on policies to limit global temperature rises and adapt to impacts associated with climate change. Experts have defined COP27 as a ‘make or break’ event for the ongoing climate change crisis.

When it comes to connecting the dots between COP27 and supply chain, it should be noted that many supply chain giants have pledged their efforts under various agreements, to reduce the impact of their business activities on the environment, and to reduce the loss and damage caused by climate change. However, in light of the pandemic, the Russo-Ukrainian war and several other disruptions of global scale, it has been difficult to take action on these pledges as planned. As it stands, the Paris Agreement is teetering on the brink of irrelevance, therefore, a successful COP27 is essential to keep international cooperation on climate alive. All countries of the world agreed to step up efforts to try and limit global warming to 1.5°C above pre-industrial temperatures, and boost climate action financing under the Paris Agreement of 2015.

Trying to put in simple terms, the objectives of COP27 are as listed below:

  • Mitigation: Efforts to reduce or prevent the emission of greenhouse gases, including the use of new technologies and renewable energy sources, making older equipment more energy efficient, or changing management practices or consumer behaviour.
  • Adaptation: How are countries going to adapt and help others do the same? The plan generally includes equipping communities and countries with the knowledge and tools to ensure that adaptation actions they take, are indeed moving the world towards a more climate-resilient future.
  • Climate Finance: Climate finance will be a top theme once again at COP27, many finance-related discussions are already on the agenda, with developing countries making a loud call for developed countries to reassure sufficient and adequate financial support.

The COP27 is even more relevant for India considering a 2021 study on extreme weather events, which found that India was the 7th most impacted country in the world by climate change. In September this year, India’s Union Environment Minister Bhupendra Yadav also announced that loss and damage due to climate change will be a major discussion point this year at COP27 in Egypt.

Though PM Narendra Modi will not be attending the COP27, Yadav will lead the Indian delegation at the Convention. According to the Union Environment Ministry, the Indian delegation will indulge in discussions related to climate finance and clarity on its definition, while also nudging developed countries to enhance supply of technology and finance needed to address climate change and resulting disasters.

Industry decarbonisation at a global is also an important point on the COP27 agenda. The sensible implementation of commitments, made last year in Glasgow, in emerging economies will have the limelight at Egypt. As South Asia witnesses rapid urbanisation, the materials required to achieve low-carbon, climate-resilient cities will be a key to achieve decarbonisation. These materials, as well as the ships, planes, and trucks that move them – the key to transition these global sectors is to drive down the prices of clean methods and technologies. In this context, the First Movers Coalition is a leading global public-private partnership to scale new clean technologies to decarbonise long-range transport and materials sectors.

The rise of Environmental, Social and corporate Governance (ESG) has highlighted the concept of supply chain transparency on a global level. Benchmarking by Climate Action 100+ shows that corporate net-zero commitments are rising. In March 2021, a quarter of firms surveyed expressed ambitions to reach net-zero greenhouse gas emissions by 2050, which jumped to 51% last month. There are signs that companies have lately been realising the need to get serious about their supply chains, and also see it as an achievable task.

It has been seen already that companies imbibing traceability through their supply chain can increase efficiency and build resilience on the back of supply chain transparency. Hernan Saenz, a partner at Bain and Company (a global consultancy), and his co-authors write that technology is already available to trace each raw material that goes into a product and follow how a product is used and where it is discarded. “It allows companies to redefine the boundary of operational excellence and set aspirational new goals,” they add.

The organisations that are in possession of data regarding movement of goods starting from procurement and moving further across the supply chain are rendered better equipped and agile to handle a disruption of any kind. The said data could make the difference between securing alternative materials or being too slow to respond. The Blockchain technology works in favour of uncovering and processed such data to improve end-to-end track and trace.

Jumping to a different segment of supply chain, ‘green shipping corridors’ are specific maritime routes decarbonised from end to end, including both land-side infrastructure and vessels for freight movement. The UK, US, Norway and Netherlands made a major pledge at the COP27 yesterday, to establish such ‘green corridors’. In particular, the UK and the US have agreed to launch a special Green Shipping Corridor Task Force focussed on bringing together experts in the sector, facilitate R&D and look over the implementation of initiatives.

‘Green shipping corridors’ use zero-emission fuels/energy, with refuelling or recharging infrastructure developed at ports. Zero-emission capable vessels ply on these corridors. Last year at Glasgow, the UK led the Clydebank Declaration to provide a a framework for governments to establish zero-emission shipping routes between ports.

If such corridors become a reality, it will be soon that the ambitions of the Paris Agreement will be achieved and global warmings targets will be met. The international maritime sector is currently responsible for almost 3% of global emissions – if it were a country, it would be the world’s 8th largest emitter.


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