The Conference of the Parties of the UNFCCC,* better known as COP, meets yearly and this year COP 27 convened in the Egyptian resort town of Sharm El-Sheikh. The aim of COP is to get the 194 signatories of the Paris Agreement to commit to a workable framework to achieve net zero carbon emissions by 2050.

As the leading early stage investor in climate tech, SOSV decided to send a senior team to observe COP 27 with an eye to understanding better how high level deliberations at COP will shape the market for climate tech in the years ahead. 

Mohan Iyer (SOSV / IndieBio general partner) Susan Schofer (HAX chief science officer) and Ben Joffe (SOSV partner) made the trip to Sharm El-Sheikh for the first week of the COP proceedings.  

They came away with a sense that political negotiations around the carbon neutral “target” have mostly played out. Yes, there are new issues to tackle such as “loss and damage” (e.g. how rich countries are going to compensate and pay for poorer countries’ efforts to reach net zero.) At the same time, there’s a sense that the focus is moving to a fragmented set of discussions amongst a loose “coalition of the willing” that is less about targets and timelines than it is about how humanity will get there. 

So how will the world’s economies make that 2050 goal, in particular when the latest analysis suggests that we may need to achieve net zero five years earlier, by 2045 to keep global warming to just 1.5*C? 

Our impression is that governments, multi-national organizations and politicians, long the sole actors at COP, know they need help, especially from the private sector finance and innovation. Stated differently, until now, private financial players, innovators and the private sector, as a whole, didn’t really have much of a place at COP, except of course for companies such as Shell, Exxon, and Coca Cola, who were there mostly for PR purposes.  

Starting now, we can envision how “innovation” is going to increasingly move to the center of the discussions. There is clear recognition that we can’t get there without serious investments in innovations of many types, with financial backing and creative financing structures to enable these to scale rapidly and efficiently.

As Jigar Shah, director of the Loan Programs Office at the US Department of Energy, recently told the Washington Post, “I think it’s important to recognize that we’re private sector-led, government-enabled in the United States. And so, all of the planning in the world is super important, but ultimately, the private sector is the one that has to champion those sectors.”

As one small example, for the first time, there is a “Climate Innovation Zone” set up around the COP congress site. It is likely here to stay for future COPs. There are now hundreds of corporations, innovators, banks, and other private entities representing and presenting on what they are doing to help achieve net zero.

For large corporations, it is table stakes to have a plan to achieve carbon neutral operations.  If you are a private bank and you are not talking about creative financing structures to help with the carbon transition, you’re making yourself irrelevant in this global conversation (and perhaps even an unwelcome target of climate action). 

Perhaps the least understood dynamic at COP is the role innovation must play to develop the technologies and businesses we need to work with corporations and big finance to hit the 2050 goals. That’s the world SOSV understands best, and where we work to help climate-driven founders in categories ranging from energy, to materials, food and agriculture build the companies that will reduce the carbon footprint in practically every category. This generation of companies will be decisive. 

As they left COP 27, the team felt a renewed sense of mission that what we have been doing and what we will continue to do — at SOSV — is exemplary of exactly what is needed! 

*United Nations Framework Convention on Climate Change