ESG Series: COP28 outcomes

Promises, pledges, platitudes

  • By Ehsan Khoman, Ramya RS
  • Dec 15, 2023
  • Commodities Oil
Download PDF Printable Version

To read the full report, please download the PDF above.

Executive summary | COP28 outcomes

Historic or full of loopholes?



“Transitioning away” rather than “phasing out” is a win for both climate campaigners and fossil fuel companies








Prospects of a rapid acceleration in electrification by 2030 is significant





What is success?

  • The COP28 climate deliberations ended on 13 December with an agreement that’s being declared as both historic and full of loopholes. Determining who is right is conditional on where one sits on the climate change spectrum.


  • After five drafts, the global stocktake settled on “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”.
  • This is the first time that the shift away from fossil fuels has been explicitly included at a COP. Climate purists who say COP28 marks the beginning of the end for oil, gas and coal, base their assertion on this phrasing. Yet, those who speak about the litany of loopholes, also refer to the very same wording. We believe the practicalities are somewhere in-between. Not all Parties were happy with this wording, although without compromise, COP28 risked failing altogether.
  • Critically, the final agreement talks about “transitioning away” rather than “phasing out” fossil fuels. The latter is wording that climate campaigners pushed for. We view that the language recognises the main cause of climate change, yet gives fossil fuel companies leeway in (i) determining how and when they will take part in the transition; as well as (ii) it putting the onus on the demand-side, with consumer behavioural changes needing to come, in tandem with production curbs.


  • The least controversial of all the announcements was the most noteworthy, in our view. While hardly any airtime was given to “tripling renewable energy capacity globally and doubling average annual rate of energy efficiency improvements by 2030”, this has the potential to be the most game-changing dimension.
  • The inclusion of the fixed date – 2030 – is significant. Notwithstanding qualifiers, if implemented, it has the potential to rapidly accelerate electrification of the global economy over the next seven years.


  • On net, the outcome is far from perfect – better than feared but less than what’s needed. What has emerged is a nuanced document. If the success of COP28 is determined by whether fossil fuels was mentioned in the final text, then we have some success – though if measured by the gravitas of climate pledges (ambition, adaptation, Article 6 of the Paris Agreement, new collective quantified goal on climate finance, amongst others), then we view results are very weak.
  • On balance, whilst the COP28 summit may have bowed too much to the forces of diplomacy and too little to the realities of science, it has delivered an unmistakable message that the global energy system must pivot from the old carbon-intensive economy. Governments, investors, companies and financiers will determine the speed and scale of the transition away from the fossil fuels – in the words of COP28 President, Dr. Sultan Al Jaber, “we are what we do, not what we say”.

I understand that any materials on this website have been produced only for persons regarded as professional investors (or equivalent) in their home jurisdiction and in jurisdictions which the MUFG entity producing the material is permitted to do so under applicable laws, rules and regulations.

I also understand that all materials on this website are not investment research or investment advice.