What Happened at COP27
The 27th Conference of the Parties to the UNFCCC, held in Sharm el-Sheikh, Egypt, from 6–18 November 2022, will be remembered primarily for one outcome: the establishment of a Loss and Damage fund. This decision, reached after marathon negotiations that extended two days beyond the scheduled close, broke a political deadlock that had persisted since the concept of Loss and Damage was first raised in international climate negotiations in 1991.
Loss and Damage refers to the negative consequences of climate change that cannot be avoided through mitigation (reducing emissions) or adaptation (adjusting to changed conditions). These include both sudden-onset events (cyclones, floods, heatwaves) and slow-onset processes (sea-level rise, desertification, glacier retreat, ocean acidification) that cause irreversible harm to communities, ecosystems, and economies.
Key Elements of the COP27 Decision
- Transitional Committee: A 24-member committee was established to operationalise the fund, with recommendations due by COP28 in 2023.
- Funding sources: The decision did not specify the quantum of funding, the contributor base, or the disbursement mechanism — all deferred to the Transitional Committee.
- Eligibility: "Particularly vulnerable" developing countries are prioritised, though the precise eligibility criteria remain to be defined.
- No liability language: Developed nations secured language explicitly stating that the fund does not create liability or a basis for compensation — a critical legal distinction that enabled the agreement.
Why This Matters Historically
The significance of the Loss and Damage fund is less financial (at this stage) than structural. For the first time, the international climate architecture formally acknowledges that emissions already in the atmosphere will cause harm that cannot be prevented, and that there is a collective responsibility to address that harm financially.
This represents a philosophical shift from a framework focused on preventing future emissions to one that also addresses the consequences of past and present emissions. For developing nations — particularly small island developing states (SIDS) and least developed countries (LDCs) that have contributed minimally to cumulative emissions but face existential climate risks — this shift is profound.
GCC Nations: A Unique Position
The Gulf Cooperation Council states occupy a distinctive and sometimes uncomfortable position in climate negotiations. They are simultaneously:
Fossil Fuel Producers
The GCC contains approximately 30 per cent of the world's proven oil reserves and 22 per cent of proven natural gas reserves. Revenue from hydrocarbons underpins every GCC economy to varying degrees. In climate negotiations, this has historically aligned GCC states with positions that resist aggressive mitigation timelines — particularly language around "phasing out" fossil fuels.
Climate-Vulnerable States
GCC nations face severe climate risks. Summer temperatures are already approaching survivability limits. Sea-level rise threatens coastal infrastructure where the majority of economic activity and population are concentrated. Water scarcity is existential: Qatar, for example, has fewer than 30 cubic metres of renewable freshwater per capita per year — among the lowest in the world. Desalination, which provides over 99 per cent of Qatar's potable water, is itself energy-intensive and environmentally impactful.
High Per-Capita Emitters
GCC nations consistently rank among the world's highest per-capita CO2 emitters, driven by energy-intensive desalination, year-round air conditioning, and large petrochemical sectors. This metric — while partly reflecting the region's extreme climate rather than profligacy — complicates the GCC's positioning in Loss and Damage debates.
Potential Contributors — Not Just Recipients
The unresolved question of whether GCC states should contribute to, or receive from, the Loss and Damage fund reflects their hybrid status. They are classified as developing countries under the UNFCCC (and thus, in theory, eligible for climate finance), but their per-capita income levels and sovereign wealth position them closer to traditional donor countries in economic terms.
COP27's deliberate vagueness on funding sources leaves this question open. However, the political dynamics are shifting: there is growing pressure for high-income developing countries — including GCC states, China, and Singapore — to contribute to climate finance mechanisms that were historically the responsibility of Annex II developed nations.
Other COP27 Outcomes
Mitigation Work Programme
COP27 launched a mitigation work programme to "urgently scale up mitigation ambition and implementation." However, the programme is designed to be non-punitive and non-prescriptive — it can discuss mitigation actions but cannot impose new targets or obligations on parties. This was widely criticised as insufficient given the gap between current NDCs and the Paris Agreement's temperature goals.
Global Stocktake
The first Global Stocktake under the Paris Agreement is scheduled for conclusion at COP28 in 2023. Technical dialogues conducted through 2022 confirmed what the science has been saying: collective NDC ambition is not consistent with limiting warming to 1.5°C, and implementation of existing pledges is lagging.
1.5°C — Barely Alive
COP27 retained the reference to pursuing efforts to limit warming to 1.5°C, but the cover decision did not strengthen language from the Glasgow Climate Pact. Several major emitters resisted proposals to reference a "phase-down" of all fossil fuels (extending the Glasgow coal language to oil and gas). This was a significant disappointment for climate-vulnerable nations and drew criticism from civil society and scientific observers.
Implications for the Private Sector
The establishment of the Loss and Damage fund — and the broader direction of climate negotiations — has implications for GCC businesses:
1. Climate Finance Expectations Will Increase
As Loss and Damage funding mechanisms take shape, there will be pressure on high-emitting industries to contribute — either through direct contributions, carbon pricing mechanisms, or climate-linked levies. The proposal for a "climate damages tax" on fossil fuel extraction, while not adopted at COP27, has growing support and will resurface.
2. Adaptation Becomes a Business Imperative
The Loss and Damage discussion underscores that adaptation has limits. For GCC businesses, this means investing in climate resilience is not optional but existential. Infrastructure designed for historical climate conditions will fail under projected conditions. Supply chains dependent on climate-vulnerable regions face disruption risks that must be assessed and managed.
3. Disclosure Requirements Will Deepen
The trajectory from voluntary disclosure (TCFD) to mandatory reporting (ISSB, SEC, CSRD) continues to accelerate. COP27 reinforced the expectation that companies — particularly those in high-emission sectors — must provide comprehensive, verified climate data. GCC companies that have not yet established robust GHG accounting and reporting systems should treat this as urgent.
4. Transition Planning Is Now Expected
Net-zero pledges without transition plans are losing credibility. COP27's mitigation work programme, while weak in its current form, signals that scrutiny of corporate climate commitments will intensify. Companies must demonstrate how they plan to reduce emissions — with interim targets, capital allocation, and governance — not just where they hope to end up.
Looking Ahead to COP28
COP28, hosted by the UAE in 2023, will be a pivotal moment for the GCC. The first Global Stocktake will lay bare the gap between ambition and action. The Loss and Damage fund Transitional Committee will present its recommendations. And the GCC will host the global climate community on its own soil — creating both an opportunity to demonstrate leadership and a spotlight on the region's own emissions trajectory.
For GCC companies, COP28 is not just a diplomatic event — it is a deadline for demonstrating that the region's climate commitments are substantive. Those that arrive at COP28 with verified emissions data, credible transition plans, and independently assured sustainability reports will be positioned as credible participants in the evolving global climate architecture. Those that do not will face increasing scepticism from investors, regulators, and civil society.
GSustain, operating across the GCC as an ISO-certified environmental consultancy and PWA-approved consultant in Qatar, supports organisations in preparing for this intensifying scrutiny — from GHG verification and environmental impact assessment to strategic climate advisory that connects international commitments to operational reality.