COP27 Entrance
© Munich Re Foundation

Munich Re Foundation at the COP27

Sharm El-Sheik, 07 to 11 November

Around 45,000 people attended the COP27 in Sharm El-Sheik. Around 13,000 of them belong to country delegations, the others are representatives from the UN network and official observer organisations, but also climate activists, business representatives and media delegates. The Munich Re Foundation has been an accredited observer for years and also participated in COP27 in 2022. What has been achieved in Egypt and how does Munich Re Foundation’s work relate to the main topics?

Global climate protection not on track

In a nutshell, COP27 resulted in a breakthrough decision on setting up a loss and damage fund for vulnerable countries hit hard by climate-related disasters at the expense of raising ambition in climate change mitigation. By signing the Paris Climate Agreement 2015, the international community had agreed to limit global warming to well below 2 degrees, preferably to below 1.5 degrees. By 2020 all countries were obliged to update and finally present their national climate targets (nationally determined contributions - NDCs). The 1.5 degree target was reaffirmed at last year’s COP26 in Glasgow with a call for stronger ambition. Only a few signatories followed that call and a recent analysis of all NDCs shows that the ambition level is still way too low.

If all promised emission reductions are met, the world will see a temperature rise of 2.4 to 2.6 degrees by the end of this century (-> more), still causing massive changes in the climate system and dire consequences especially for vulnerable people in the global South. The international community is falling short of presenting a credible pathway to limit global warming to 1.5 degrees. COP27 saw no increase in the level of climate ambition, but rather a great danger of softening this target. Ambition-boosting measures (e.g. on emissions peaking before 2025, or on the phase out of additional fossil fuels such as gas and oil) were kept out of the decisions. 

Adaptation is becoming increasingly important

Since mitigation of climate change is not happening fast enough, it is inevitable to adapt to its consequences. COP27 saw some progress on adaptation: Governments agreed on a joint pathway to move forward on the Global Goal on Adaptation (GGA), a work program that will conclude at COP28. New pledges of more than USD 230 million were made to the Adaptation Fund, which is used to finance concrete adaptation solutions.
COP27 Resilience Hub
© Munich Re Foundation
A risk management and skills development event at GRP's Resilience Hub.

Breakthrough on dealing with Loss and Damage (L&D)

Adaptation to climate change impacts is not always possible. There are situations where damage and losses cannot be avoided. For example, when land is lost due to sea-level rise, or when land becomes unusable due to salinisation or degradation. In view of the increasing damage and the disappearance of habitats that can already be observed today (e.g. Pacific island states), loss and damage was a major topic at COP27.

130 developing and emerging countries had urged in advance that L&D must be treated as a top item on the agenda. COP27 succeeded in establishing the basis for a fund for loss and damage for vulnerable countries. The issue has been added to the official agenda and adopted for the first time. While this can definitely be considered a success, it will likely be years until the fund is operational and payouts will be made. A transitional committee will make recommendations on how to operationalize both the new funding arrangement and the structure of the fund at COP28. This is likely to involve extremely challenging negotiations.  With the Green Climate Fund, the UN Adaptation Fund and others, there are already a number of theoretically powerful financial instruments in place. However, the promised contributions often fail to materialise. The most vulnerable do not always benefit from the disbursement, and the number of successful projects so far is expandable. There is no guarantee that the new fund will work more efficiently.

A protest action by representatives of indigenous populations: The justice aspect has been an important topic in COP discussions, and was widely addressed by protest actions.

Many commitments and initiatives outside the formal COP27 process

While progress of the formal COP27 negotiations is too slow, there were many announcements and initiatives from countries, partnerships of various states, international organizations, NGOs and the private sector. Countless sub-national initiatives are being formed, cities are joining forces, private funds are being launched to make climate protection and adaptation happen. One initiative presented at COP27 with particular relevance for the insurance industry is the Global Shield against climate risks. The G7 countries in cooperation with the V20-group (most vulnerable developing countries) are working on a global programme based on prevention and climate risk insurance solutions. Losses from climate-related disasters are to be buffered better and faster. 
COP27 Innovation Hub
© Munich Re Foundation
Cities at the forefront of climate action, presented at the UNFCCC Innovation Hub.

Munich Re Foundation’s work related to climate change

Munich Re Foundation has been addressing climate change issues for many years in the areas of academic research, policy advocacy, disaster risk reduction and financial inclusion.

Climate Academy 2022

Together with our partners UN-University, UNFCCC and ICLEI, we hosted an international academy program on the role of new technologies and digitalisation in the energy transition in the global South in September 2022. The objective was to inform climate policy making on different levels. We were able to showcase the academy results at COP27 in three events. Himanshu Shekar (UNU-EHS), representing our Climate Academy project, focused in particular on the energy transition in sub-Saharan Africa during an official UNFCCC side event titled “Digital Innovation & Resource Mobilization Innovation for Inclusive Action for Climate Empowerment”. Erick Tambo (UNU-EHS) together with Shekar discussed energy pathways in Sub-Saharan Africa in a Fireside Session, organized by MCII. Simone Sandholz (UNU-EHS) talked about sustainable urbanization pathways in an ICLEI organized Side Event on “Cities of the Future”.

RISK Award

Munich Re Foundation, together with the UN Office for Disaster Risk Reduction (UNDRR), has been awarding and funding innovative projects in disaster risk reduction and climate change adaptation for the past ten years. Our currently open "RISK Award - Call for Applications" is dedicated to the topic of early warning. Early warning is an essential pillar of risk management, especially regarding extreme weather events which will increase in frequency and severity also due to climate change. In March 2022, the UN and WMO announced that within the next five years all people globally should be protected against natural hazards by early warning systems (> more).

Inclusive insurance

For years Munich Re Foundation has been advocating for the powerful role of insurance in contributing to many of the SDGs thus in achieving sustainable development. Climate risk insurance is becoming increasingly important in this context. Munich Re Foundation, together with the Microinsurance Network, is host of the annual International Conference of Inclusive Insurance as well as of several regional conferences on the topic. The objective is to convene relevant stakeholders – private sector, regulators, policy makers, donor organizations, academics – in order to share knowledge and facilitate the development of solutions which can contribute to decreasing the protection gap in developing and emerging countries.

Dialogue Forums 2022 - Smart solutions for climate protection

The dialogue forums provide a platform for exchange. We invite experts from politics, science, practice and the media to discuss important questions on climate protection and sustainability. The forums address the general public. We want to raise awareness and contribute to positive changes in behaviour. (> more)

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Renate Bleich, Christian Barthelt, 25 November 2022