COP28: is there room for optimism?

The event may have had its critics, but it was right that COP28 focused on funding the transition away from fossil fuels.

James Close, Head of Climate and Environment at NatWest said: “If 2023 was the year of the transition plan, the outcome of COP28 shows that 2024 will be the year of transition finance to support the transition away from fossil fuels.” 

According to the UN Framework Convention on Climate Change (UNFCCC), the agreement – which is the response to the global stocktake – is the central outcome of COP28 and must now be used by countries to develop stronger climate action plans due by 2025. The overarching aim is still to limit the global temperature increase to 1.5°C and keeping this important milestone alive.

While many feel that there are loopholes in the UAE Consensus (as the agreement is called), it does at least create a framework for the private sector to supply the significant amounts of capital required for the transition away from fossil fuels, in partnership with the public sector – whether governments (national and local) and the multilateral development banks (MDBs). 

Progress amid criticisms

One of the criticisms of the UAE Consensus is that it is vague about where the trillions of dollars of finance will come from to support developing countries in financing the transition and, more pointedly, adapting to climate change given their direct exposure to natural disasters, such as flooding and drought. To do this, the stocktake identifies reforming the multilateral financial architecture and establishing innovative financial structures. Blended finance, the strategic use of development finance for the mobilisation of additional finance from the private sector towards sustainable development in developing countries, was discussed extensively at COP28. It will have a key role to play in attracting a broader capital base towards projects by taking risks that other forms of capital cannot and, thereby, mobilising more funding and financing across climate-related projects, whether green or transitioning activities, as well as adaptation tools, at a reduced cost of capital.


To this end, we welcome speeches from minister Graham Stuart (Minister of State for Energy Security and Net Zero), and Chris Starck (CEO at UK Climate Change Committee), who talked about the importance of the private sector, and the role that we will have to play to accelerate the action towards net zero.

It was also of note that US$8.7bn was committed to “lives and livelihoods”, which included the endorsement by 143 countries to the advancement of climate-resilient development, the strengthening of health systems and the building of resilient and thriving communities, for the benefit of present and future generations. The interconnectivity of climate, health and the environment was underpinned by 158 countries’ commitment to scale up adaptation and resilience activities to promote sustainable food security, production and nutrition, while conserving, protecting and restoring nature, alongside US$7.1bn for climate positive action for the food system sector.

Adopting a systems approach

The protection and restoration of forests, mangroves, land, and oceans received commitments and pledges of over US$186m, re-affirming the required near-term action to protect and restore nature for the benefit of climate action to provide further support to the US$2.5bn mobilised during COP28’s World Climate Action Summit on 2 December. Reversing nature-loss can provide at least 30% of the mitigation action needed to keep 1.5°C within reach of 2030. 

The climate, health and environmental nexus clearly highlights the negative impact that climate change is having on lives daily, resulting in displacement, inequality and poverty. Although complex given the number of variables, taking a systems approach to addressing these fundamental issues will create outcomes that benefit the broader ecosystem resulting in healthier, more sustainable communities with a reduced emissions footprint.

Given the duration of the tasks ahead and impact on the future, COP28 institutionalised the role of the Presidency Youth Climate Champion (YCC) within the UNFCCC to enhance the meaningful participation and representation of youth in future COPs putting children and young people at the heart of climate action. It is important to note that approximately one billion children worldwide are at extreme high risk from the impact of climate change, but their voices have been limited – including all future generations, for that matter.

As the President of COP28 UAE, H.E. Dr Sultan Ahmed Al Jaber said, “An Agreement is only as good as its implementation. This historic consensus is only the beginning of the road.” Hopefully the UAE Consensus has given the impetus for global action and collaboration in putting the US$85bn commitments to work.

As COP28 ends, it’s worth reflecting that we can capture the energy and the dynamism played out among delegates. While much needs to be done, the trajectory is now clearer and we will all have to step up to stay within the safe level of 1.5°C of warming, while ensuring a just transition for all communities for the best long-term sustainable outcome. We look forward to next November and COP29, hosted by Azerbaijan, where the world will be able to evaluate our progress to counter the detrimental effects of climate change over the next 12 months – something we can all contribute to, from governments, MDBs, corporates and financial institutions. 

What other developments did we see?

In addition to the above, other notable developments (beyond those reported in our previous note) included in the second part of COP28:

What did we expect from COP28?

Ahead of the meeting in Dubai, NatWest organised a seminar called ‘COP28 & Financial Markets: expectations for a critical gathering’. Hosted by NatWest’s Dr Arthur Krebbers and Dean Shahfar, the session consisted of four sustainability and investment specialists sharing their insights on progress since COP27, expectations ahead of COP28, and how outcomes of this year’s meeting could influence financial markets.

Kate McGrath from Abrdn, Malika Takhtayeva from BNP Paribas AM, Scott Cantor from the World Bank and Caroline Haas from NatWest all highlighted themes developed at COP28:

  • The growing investor focus on adaptation finance;
  • Financing for climate mitigation; and
  • The need to channel help and funding towards developing countries, which are most affected by climate change.

View the webinar.

Noteworthy publications

It has been an exceptionally busy week for publications and announcements around COP28. Below is our round-up of the most significant.

General global developments

Carbon markets (Negotiations continue on Article 6).

  • IOSCO published its Consultation Report to promote the integrity and orderly functioning of the Voluntary Carbon Markets (VCMs). The report proposes a set of 21 good practices to foster sound and well-functioning VCMs where these fall within the scope of financial market integrity (i.e .sound market structures, sound and orderly trading, and transparency of data availability and accessibility). The Association for Financial Markets in Europe is discussing its response with stakeholders.
  • The Science Based Targets initiative, GHG Protocol and the Integrity Council for the Voluntary Carbon Market (ICVCM) and Voluntary Carbon Markets Initiative (VCMI) announced they will be setting up an end-to-end integrity framework providing a clear standard for project developers, intermediaries and buyers of carbon credits. They published an infographicd  as a first step.
  • The World Bank published The World Bank Engagement Roadmap for Carbon Markets with details of how it is scaling up technical assistance and finance for countries’ carbon markets.
  • The US Commodity Futures Trading Commission released a proposed guidance and request for public comment regarding the listing for trading of voluntary carbon credit derivative contracts (see CFTC press release and statements by Chairman Rostin Behnam and Commissioner Christy Goldsmith Romero).
  • To support the operationalisation of Article 6 and NDCs under the Paris Agreement, six independent crediting programmes are collaborating to advance the scale and integrity in carbon markets.



  • The Taskforce on Nature-related Financial Disclosures (TNFD) has published draft sector standards for eight priority sectors, supplementing its recommendations. It also published two new discussion papers on conducting advanced scenario analysis and biodiversity footprinting approaches for financial institutions.
  • The ECB published a report to increase public awareness of risks associated with nature by evaluating how the euro area economy, and the bank loans that support it, affect biodiversity.



  • The UK government recently issued a press release providing plans for the 2023 Green Finance Strategy and announcing that Vanessa Havard-Williams will be in charge of the Transition Finance Market Review, which will begin in January.
  • Baroness Young of Hornsey introduced a Private Members’ Bill on supply chain due diligence for human rights and the environment in the House of Lords.
  • The Environmental Audit Committee (EAC) of the House of Commons published its report The financial sector and the UK’s net zero transition outlining the sector’s involvement in reaching net-zero greenhouse gas emissions by 2050 (see the EAC’s press release).
  • A policy paper by the UK government Net zero government emissions: UK roadmap outlines the journey to central government net zero emissions, as part of the Net Zero Government Initiative.


Other updates



  • Speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB discusses the ECB’s use of its supervisory powers, including with respect to its climate and environmental risk expectations.
  • Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS) speech: Getting Transition Finance Right.
  • Verena Ross, European Securities and Markets Association (ESMA) Chair, discusses the organisation’s work on sustainable finance at COP28.
  • Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS) and Chair of NGFS, gave a speech discussing the relationship between climate change and the work of central banks and supervisors.

This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in The Netherlands, authorised and supervised by De Nederlandsche Bank, the European Central Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, The Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, The Netherlands. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright © NatWest Markets Plc. All rights reserved.

scroll to top