In advance of 45,000 participants coming together in Egypt to share ideas, solutions, build partnerships and coalitions—six major considerations were front of mind. Country leaders, climate experts and advisors gathered in Sharm el-Sheikh over the past two weeks for Conference of the Parties (COP) 27. Here is a summary of those six considerations, highlights of the agreement negotiators reached and what it all may portend for the commercial real estate industry.  

1. Keeping to 1.5⁰C 

Many consider the 1.5⁰C target set in Paris in 2015, and agreed by all participants, to be in jeopardy. Yet during the conference no meaningful commitments or pledges were made that would improve the chances of holding warming to the agreed target. That’s not to say it’s impossible to hit the Paris target, but chances are diminishing. To achieve success global emissions must be reduced 50% by 2030, yet record levels of pollution are still being pumped into the atmosphere. Global CO₂ emissions returned to their highest level External Link in history in 2021. A year on from the Glasgow COP26, that equates to an addition of 40 billion tonnes of carbon dioxide entering the atmosphere.  

2. Imbalance Between Major Emitters and those that Suffer the Worst Impacts of the Changing Climate 

Developed nations and their consumption of fossil fuels External Link have been the chief cause of global warming. As such, many argue that those developed nations should reimburse countries who suffer the most from climate change. The deal achieved at COP27 with respect to this imbalance could be viewed as significant (even historic). The “Loss and Damage” fund will provide relief for vulnerable countries hit hard by climate disasters, although the amount of money that will come from each developed country has yet to be decided and will be the subject of “further discussion.” 

3. Preservation of Natural Habitats 

Global warming has had a devastating impact on the habitats of the most threatened species across the world. As an example, at 1.5⁰C warming, between 70 and 90 percent of coral reefs will be lost. At 2⁰C, 99 percent will cease to exist. Yet, there were no specific discussions at COP27 related to natural habitats. However, comments from the newly elected President of Brazil, Lula da Silva, pledging to do everything to save his country’s rainforests were very welcome. 
 

4. No more Fossil Fuels 

The agreement reached at COP26 (reported on last year by Cushman & Wakefield) included the phrase “phasing down” the use of coal. It marked the first time a reference had been made to fossil fuels in any agreements to date. Although “phasing down” was not as strongly worded as hoped for “phasing out” was a major step forward. A year later, many hoped the comment would be expanded to include all fossil fuels—a sentiment further underscored by India’s call to phase down all fossil fuels.  

But the text of the final agreement does not mention fossil fuels. On the final Friday of the event a Saudi Arabian delegate said, “We should not target sources of energy; we should focus on emissions. We should not mention fossil fuels.” Despite concerted efforts of many countries the final text went no further than the text achieved at COP26. 
 

5. Enhancing the Resilience of Our Countries, Cities, Buildings 

Cutting carbon emissions will have the biggest impact on reducing risk and keeping the planet from warming to critical levels. Even so, nations and communities will need to adapt to the changing climate. Requirements vary from creating physical barriers to prevent flood damage to communities, to more extreme measures such as relocating communities and inhabitants to different and less vulnerable locations. Some increases in funding were announced at the conference, but these fell well short of anything that would make a meaningful contribution to enhancing the resilience of the most at-risk locations. 
 

6. Security of and Access to Food 

For the first time ever formal discussions took place at a COP about food security. If a more equitable transition within the food system is to take place, a cultural shift will be needed in the way food is produced and the value we place on ensuring more equality in access. As many as 828 million people External Link around the world experience hunger in 2021 and 2.3 billion people were moderately or severely food insecure. Following discussions in Egypt, the UN Food and Agriculture Organization (FAO) announced it intends to launch a plan External Link in the next year to reduce the impact of food and agriculture systems on the environment. 
 

An After-Hours Agreement Was Reached 

COP27 ended with an agreement. This may not seem much of an achievement but even this required an extension of 36 hours beyond the official end date of 18th November.  

In a video message External Link issued shortly after the agreement was announced, UN Secretary-General António Guterres said, “This COP has taken an important step towards justice. I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period.”  

After more than two weeks of discussion and negotiation, the agreement was signed by almost 200 countries. Here are the main points of the COP27 Sharm el-Sheikh Implementation Plan (read the advanced unedited version here External Link): 

1. Science and Urgency 

• Reiterates that the impacts of climate change will be much lower at the temperature increase of 1.5⁰C compared with 2⁰C and resolves to pursue further efforts to limit the temperature increase to 1.5⁰C. 

2. Enhancing Ambition and Implementation 

• Resolves to implement ambitious, just, equitable and inclusive transitions to low-emission and climate-resilient development in line with the principles and objectives of the Convention, the Kyoto Protocol, and the Paris Agreement. Taking into account this decision, the Glasgow Climate Pact and other relevant decisions of the Conference of the Parties and the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement. 

3. Energy 

• Emphasizes the urgent need for immediate, deep, rapid, and sustained reductions in global greenhouse gas emissions by Parties across all applicable sectors, including through increase in low-emission and renewable energy, just energy transition partnerships and other cooperative actions. 

4. Mitigation 

• Recognizes that limiting global warming to 1.5 °C requires rapid, deep and sustained reductions in global greenhouse gas emissions of 43 percent by 2030 relative to the 2019 level. 
• Emphasizes the importance of protecting, conserving and restoring nature and ecosystems to achieve the Paris Agreement temperature goal; including through forests and other terrestrial and marine ecosystems acting as sinks and reservoirs of greenhouse gases and by protecting biodiversity, while ensuring social and environmental safeguards. 

5. Adaptation 

• Notes with serious concern the existing gap between current levels of adaptation and levels needed to respond to the adverse effect of climate change. 
• Urges Parties to adopt a transformational approach to enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change. 
• Also urges developed country Parties to urgently and significantly scale up their provision of climate finance, technology transfer and capacity-building for adaptation so as to respond to the needs of developing country Parties as part of a global effort. 
• Highlights the role of the Least Developed Countries Fund and the Special Climate Change Fund in supporting actions by developing countries to address climate change. Welcomes the pledges made to the two funds and invites developed countries to further contribute to the two funds. 

6. Loss and Damage 

• Notes with grave concern the growing gravity, scope and frequency in all regions of loss and damage associated with the adverse effects of climate change, resulting in devastating economic and non-economic losses— including forced displacement and impacts on cultural heritage, human mobility and the lives and livelihoods of local communities. Also underlines the importance of an adequate and effective response to loss and damage. 
• Expresses deep concern regarding the significant financial costs associated with loss and damage for developing countries, resulting in a growing debt burden and impairing the realization of the Sustainable Development Goals. 
• Welcomes the consideration, for the first time, of matters relating to funding arrangements responding to loss and damage associated with the adverse effects of climate change, including a focus on addressing loss and damage. 
  
  

7. Implementation – Pathways to Just Transition 

• Affirms that sustainable and just solutions to the climate crisis must be founded on meaningful and effective social dialogue and participation of all stakeholders. 

8. Finance 

• Highlights that about US$4 trillion per year needs to be invested in renewable energy up until 2030 to be able to reach net zero emissions by 2050, and that, furthermore, a global transformation to a low-carbon economy is expected to require investment of at least US$ 4–6 trillion per year. 
  
  

Specific Built Environment Commentary and Action 

The conference saw little detailed formal dialogue at a country level, and the major outputs came from non-government organizations. The final text of the signed agreement contains no mention of the built environment or real estate. 

Operational emissions from the built environment increased by 5% in 2021 External Linkcompared to 2020. Unlike COP26, there was no day dedicated to the built environment. However, there were over 200 events and several new climate initiatives launched at COP27.  Because real estate is now widely recognized as responsible for approximately 38% of global greenhouse gas emissions, the focus on the built environment will not abate and actions and initiatives will continue to evolve. 

Several key announcements were made during the two-week event, including: 

• Launch of the Presidency initiative Low Carbon Transport for Urban Sustainability (LOTUS) External Link aimed at decarbonizing the global urban mobility landscape.   
• Launch of the Presidency initiative Sustainable Urban Resilience for the next generation (SURGe) External Link which aims to build on commitments of cities and provide a holistic framework to achieve sustainable and resilient urban systems. 
• The Presidency in collaboration with UN Habitat and ICLEI is convening the first ever Urbanization and Climate Ministerial on November 17 bringing together Ministers and Mayors to discuss the key challenges facing cities. 
• The human settlements technical report External Link, in support of the Sharm el-Sheikh Adaptation Agenda, explores the adaptation outcomes specific to human settlements—for example urban infrastructure, urban nature, and safe housing—as well as highlighting action underway to achieve them. 
• The First Movers Coalition (FMC) has set ambitious targets for purchasers and specifiers of cement and concrete, which has implications for real estate developers and advisors. “We commit to ensuring/specifying that at least 10% (by volume) of the cement/ concrete procured for our projects per year is near-zero carbon cement/concrete inclusive of any SCMs by 2030 and excluding fossil-based SCMs by 2035.” 

One of the major successes of the conference was the launch of a new report: Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions External Link.  This report brings into focus non-country efforts and commitments related to our changing climate. There are several recommendations related to cities, and naturally, many of these are highly applicable and only achievable via the engagement of the private sector and all those engaged in the real estate industry. 

As the event closed with muted applause for the final agreement, thoughts turn to COP28 which will be hosted by the United Arab Emirates commencing on November 30, 2023.  

Many hope that the built environment takes its rightful place on the main agenda of the conference and much needed focus is given to this key part of our global economy and indeed our collective way of life.