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With the dust still settling on the COP28 climate summit, the Climate Governance Malaysia (CGM) team convened a group of climate specialists to discuss the key conclusions of the two-week event in Dubai.
In welcoming the audience, the chairperson of CGM, Datin Seri Sunita Rajakumar reminded that it had been exactly three months since the start of COP28 in Dubai, the largest COP, arguably the most inclusive ever, and we had the benefit of hearing from the Natural Resources and Environmental Sustainability (NRES) Ministry and its Minister on 8 February 2024, just 3 weeks ago, about the key outcomes of COP28.
There are many thought leaders whom CGM would have liked to profile but unfortunately, we had to pick a much smaller group than we wanted to.
The first keynote speaker was the esteemed Ms. Meenakshi Raman, Head of Programmes at the Third World Network (TWN), President of Sahabat Alam Malaysia and a practising public interest lawyer. COP 28 was her 16th COP and she has also written a book on the COPs called “Clash of Climate Change Paradigms” with the late Martin Khor also of TWN.
As Meenakshi had prepared extensive notes, and her deck had been shared beforehand, so we decided to pivot from her presenting the slides to a conversation with her about her experiences at Cop28 and her take on the “real” outcome of the global summit and later take questions from the floor.
Meenakshi’s view was that the outcomes of the Dubai climate talks as mixed, at best. While some celebrated the first time “transitioning away from fossil fuels” was mentioned in the official text, others expressed despair and frustration at the snail’s pace of progress. The decision adopted on the global mitigation efforts did not go far enough in keeping the 1.5°C limit within reach, as developed countries were not doing their fair share of emission reductions.
The next speaker was Mr. Dave Sivaprasad, managing director & partner, Southeast Asia lead, climate and sustainability, Boston Consulting Group, who had a more optimistic view of Cop28. He was of the view that it delivered a bold “Action Agenda” and a landmark negotiated outcome. However, quoting the president of Cop28, Dave warned an agreement was only as good as its implementation.
Next on the agenda was the first panel discussion, which featured two panelists - Petronas Chief Sustainability Officer Ms. Charlotte Wolf-Bye and Tuan Syed Feizal Syed Mohammad, the group Chief Executive Officer of MSM Holdings Bhd.
For her opening remarks, Wolff-Bye echoed Dave of BCG’s assessment of COP28 being a success as it was much more inclusive event compared to previous COPs. To her, COP28 was encouraging to her because “in a fractious world”, nations agreed on “many, many things” that were critical. However, she pointed out that while the oil and gas industry have a role to play, they are only one part of the whole equation.
Meanwhile, Tuan Syed took the opposite view of Charlotte and said the commitments and policies from COP28 did not go far enough. Looking at the widening adaptation financing, Syed proposed that government assist corporates by providing unlimited incentives. He admitted that for climate change to succeed, collaborations, partnerships and synergies were needed to ensure all parties were involved.
The second panel consisted of the World Bank’s consultant and programme coordinator, Mr. Darshan Joshi, senior economist of the United Nations Development Programme, En. Alizan Mahadi and Mr. Dave Sivaprasad of BCG. The panel was moderated by CGM council member Datuk Faiz Azmi.
Datuk Faiz agreed with the sentiments echoed by Tuan Syed that climate change needed “a whole of society” approach and we shouldn’t be just relying on the government to come up with the solutions. He pointed out that the recurring theme from COP28 discussions was that funding was of paramount importance.
The second panel looked at the adaptation of climate change in the Malaysian context. Darshan’s review of COP28 was divided into four parts – looking at the “good” and “bad” of COP28, contextualization of the outcomes of Cop28 in regards to Malaysia, carbon pricing and the way forward.
Alizan focused on two areas of adaptation: adapting to transition and adaptation to climate change. He said for the next two years, leading up to COP29, all governments will be preparing the third round of the Nationally Determined Contributions but the Malaysian government should resist pressure to raise its ambitions and should instead pursue its own path in mitigation and adaptation policies.
Dave rounded up the discussion by identifying two reasons why the private sector has not mobilized around climate change: lack of understanding of impacts and misaligned incentives due to a perceived long timeline for implementation.
A recording of the webinar is available here.
Speaker slides are available here:
The panelists also fielded questions from the audience and, where possible, answered them in writing within the webinar’s Q&A panel. Below is an unedited copy of those questions and answers:
Q1: A good call out on developed countries practice on climate change. Wondering about climate change and migration which impacts social protection (child, women, food security, cultural risk...etc)
Meenakshi Raman: Migration is indeed a problem. We need to address this as a global community to addressing climate induced migration. It has been raised under (the) loss and damage but much more needs to be discussed.
Q2. During the recent budget announced by the Hong Kong (HK) government, HK is working with (the) UAE in climate finance and the climate finance conference will be held at the HK finance hub. We also know our NRES minister said per capita emissions for Malaysia is high. How can the allocations from developed economies help us in decarbonisation? Our climate ambition as a country is still conservative among regional economies.
Meenakshi Raman: It is true our per capita emissions are high -- and we do need to bring this down but in terms of share of the global emissions, we are less than 1%. There is a Civil Society Equity Review which shows who is doing their fair shares and who are not. Most developing countries are still within their fair share but not developed countries. Who are not doing enough. But this equity approach is not the approach that is followed. - you can google www.equityreview.org
Q3. If carbon credits from NBS projects in Malaysia are reserved for Malaysian companies and meet NDCs, will price discovery through demand and supply align with global pricing for the project sponsors?
Darshan Joshi: We are still a few steps away from the point where there is robust supply of Malaysian NBS-based credits and demand for these credits from Malaysian companies, and we are also likely at least a couple of years away from the implementation of either a carbon tax or DETS. It is difficult to anticipate how these latter instruments, when implemented, will affect the price of NBS credits, but if I were to hazard a prediction here, I would suggest that domestic credit prices would track closely to domestic compliance market carbon prices (i.e., the price of carbon under our domestic carbon tax or DETS). Nevertheless, there is significant potential for NBS credits to assist Malaysia in meeting its NDC, unlocking finance for conservation, aiding mitigation/adaptation etc.
International cooperation on a carbon price presently feels like more an academic and theoretical pipe-dream – perhaps something that needs a bit more time to arrive at in terms of being an outcome of a future COP?
Q4. Could any of the panel suggest a feasible financing instrument to fund Malaysia's adaptation projects? It is severely underfunded (or more like lack of awareness on its importance and social cost)
Meenakshi Raman: There are international funds such as the Adaptation Fund and Green Climate Fund which are key for developing countries. We can tap these funds for our needs if we are clear on what to do.
Q5. The point Meena (TWN) made about the remaining carbon budget is fundamental. Yet policy design and implementation globally or nationally do not even mention this but rather the 1.5-degree goal. Why is this (carbon budget) not in the forefront of debates and dialogue?
Meenakshi Raman: At the global level, many developing countries did push for discussion on equitable sharing of the carbon budget but developed countries resisted this discussion as the implication of this is that their emissions reductions are not enough. We need to keep exposing this.
Q6. You raise valid points. There is opportunity within this uncertainty for Malaysia to mobilise capital for NBS projects locally and regionally, incentivising them to improve their reputation with data accuracy and quality. A voluntary carbon market could be the catalyst. Thank you.
Darshan Joshi: I absolutely agree with your point that Malaysia has a significant opportunity to develop NBS projects and, in doing so, create incentives for the private sector (and other parties) to directly fund actions that help us protect our natural resources. The VCM can certainly be a catalyst, especially while we wait to see how Malaysia goes about implementing a c-tax or DETS. In fact, I think it’s good that we’ve established our VCM prior to the implementation of a CPI – ideally, over the coming years, this market will develop and mature to the point where there is a steady stream of credits supporting emissions reductions/sequestration that can be purchased by corporates to reach net-zero, offset liabilities in a future c-tax/DETS, etc.
Q7. Taking up from Meena’s alert on the challenges of trading of carbon credits and the consequential impact on the ability of a country to claim the benefit from the reductions gained across its industries, when corporates trade their credits - what are the possible solutions. Particularly in what is a continuing lack of consistent standards, integrity and transparency in the carbon trading sector.
Datuk Faiz Azmi: To share a view, part of the reason the states are looking at carbon credits is to generate a new income stream for the state to wean them off cutting trees and digging mines and to get polluters to pay for mitigation and adaptation cost the state has to bear. We shouldn’t be hoarding sinks per se and I don’t see why we can’t use it as a new source of money to help us cope. And yes, we need standards, transparency and enforcement over these schemes!
Q8. The integration of mitigation and adaptation when implementing climate actions can build on synergies and build resilience. The investment in mitigation could be wiped-out by climate impacts (e.g. extreme weather), without appropriate adaptation measures. Integrated action contributes to avoided damages (and savings).
Charlotte Wolff-Bye: The recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD) include the expectation to consider both climate change risk to business model as well as physical effects, thus driving investors and company boardrooms to have to consider both mitigation and adaptation in unison. The TCFD recommendations are now incorporated into the International Sustainability Disclosure Standards by the IFRS (International Financial Reporting Standards) Foundation. Regulators around the world are currently evaluating whether these new standards should be made mandatory for issuers. The significance of this is that it may drive greater private sector investment in adaptation.
Q9. From the governance perspective, whilst certainly the conversation is far more informed and the standards and requirements practically force boards to be more proactive in monitoring the company’s efforts, there is a need for boards to be far more informed on a practical and implementation level from the respective company’s perspective. These policy discussions are very important to be understood and reflected practically in the commercial discussions (beyond being consultant driven check lists) … let’s continue this discussion.
Datin Seri Sunita Rajakumar: Fully agree with you. Directors need to utilise their critical thinking skills and strategic thinking skills to be constantly scanning the horizon to identify new threats and opportunities. The more ambitious and forward-thinking business leaders are striving to embed sustainability into the DNA of their businesses and engaging with policymakers to get their policy recommendations across. CGM’s Roundtable sessions are one such example.