Countdown to COP27: recent developments

Insights / / London

The Conference of the Parties 27 (COP27) kicks off on 6 November 2022 in Sharm El Sheikh, Egypt. Climate change, energy and the energy transition, are at the forefront of people’s minds globally and the pressure is on to be seen to be climate-centric.

This article is written by Deborah Ballaster, trainee solicitor.

There have been a number of interesting developments relating to climate and environmental policies over the last couple of weeks ranging from the insurance sector, banking, regulatory changes and government u-turns. This article summarises some of the key developments.


In the insurance sector, Munich Re announced new decarbonisation targets for its investments, (re)insurance transactions and business operations, including a pledge to stop insuring or investing in new oil and gas projects. This pledge will come into effect on 1 April 2023.

It commits Munich Re to refuse to insure or invest in contracts or projects which exclusively relate to the financing, planning, construction or operation of new oil and gas fields, midstream oil infrastructure or oil-fired power plants. Munich Re will also cease any new direct investments in companies solely focused on oil and gas.

This announcement has been well received by climate campaigners, although some campaigners have suggested that bolder steps on gas should be expected.

Banking and finance

In the banking sector, Lloyds Banking Group announced an updated climate policy which bars project financing and reverse-based lending to developments of new oil and gas fields. Lloyds Banking Group will not provide financing to new clients in the oil and gas sector unless the projects are for renewable energies and transition technologies. However, the new policy still allows Lloyds to provide general lending support to oil and gas companies.

Lloyds is the first UK lender to commit to stop funding the oil and gas sector, and the policy has been welcomed by climate groups as “setting a new standard for the UK banking industry”. How this plays out will no doubt be keenly observed by many.

On 19 October 2022, the Advertising Standards Authority (ASA) banned two adverts from HSBC bank due to “misleading environmental claims”.

Complaints were made against two posters advertising HSBC’s climate commitments, in the run up to COP26 in October 2021. HSBC were told to ensure that “future marketing communications featuring environmental claims are adequately qualified and do not omit material information about its contribution to carbon dioxide and greenhouse gas emissions”.

This is the first time the watchdog has banned adverts by a bank on greenwashing grounds and may set a new precedent for the financial sector and other corporates that any statements relating to sustainability, net-zero or other climate change communications will need to be qualified or supported by sufficient evidence.

Following this ruling, the FCA has also proposed new rules to clamp down on greenwashing. The FCA has expressed concern over the growth in the number of investment products which are being marketed as ‘green’ or making sustainability claims. The proposed rules aim to “help consumers and firms build trust in this sector”. The rules cover a variety of proposed changes, including sustainable investment product labels, restrictions on the use of certain sustainability-related terms such as ‘ESG’, ‘green’ or ‘sustainable’ and consumer facing disclosures to help consumers understand the key sustainability features of an investment product. The consultation is open until 25 January 2023 with the final rules due to be published by mid-2023.

UK Government

The UK Government’s reinstatement of the fracking ban within England was announced last week by Rishi Sunak (a reversal of the short-lived but controversial lifting of the moratorium introduced by Liz Truss). Many environmental groups continue to push for a total ban on the practice. The re-introduction was one of the first official actions of the UK’s new Prime Minister to reassure the public that climate policy is a focus for the Government.

Just yesterday, Rishi Sunak announced he would attend the COP27 summit in Egypt “hoping to make progress on the commitment to halt deforestation by 2030, and to agree new partnerships on clean and renewable energy”. The “screeching u-turn” on attending was made despite previously being “too busy preparing for the 17 November budget” to attend the event.

The pressure to be seen to be climate-centric is widespread and not even the UK Government is immune. It remains to be seen how this will play out next week at COP27 and in the coming months and years.

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