COP28 launched its first ever Trade Day on the 4th of December 2023.
This theme was launched at this year’s COP28 in order to dedicate a day to making global trade greener and more sustainable.
During the day, Rebeca Grynspan, the eighth Secretary-General of United Nations Conference on Trade and Development, also known as UNCTAD, carried out a speech in order to highlight the importance of trade and why it should be a main priority when considering climate action.
Grynspan stated that:
“Climate and trade policies need to work together. As the world is coping with the devastating effects of global warming, it’s time for trade to play its role in shaping
climate action that fosters inclusive and sustainable development.”
It appears that trade has been overlooked, due to it not being a theme during previous COPs, however COP28 has changed that. The trade sector contributes to almost a quarter of the worlds carbon emissions globally, due to the production of goods and services and then their distribution around the world. This figure shows that trade should be a priority when considering climate action.
Trade can however be an important tool to making the world much more sustainable, and the sector has the power to significantly reduce its greenhouse gas emissions. This can be done through the trade of green and sustainable goods and services, and through making it easier for countries around the world to access technologies and the knowledge needed to transition to a better future that contributes far less emissions than today.
COP28 saw organisations, businesses, world leaders, and governments come together to discuss trade policies, strategies, and potential options for tackling climate change within the trade sector. Many of the topics included ways to decarbonise supply chains around the world, increase the securing of value chains that are linked to the transition to renewable energy, include meaningful environmentally responsible practices into trade finance, and increase the incentives that will attract businesses to invest in practices that will increase the rate the world moves towards net zero.
To make the trade sector and any new policies viable, Rebeca Grynspan announced that they must not become a complicated ‘Spaghetti Bowl’. What she means by this, is that new policies must be easy to navigate, especially for those in developing countries that suffer from climate change the most, as well as for those that are vulnerable or those that run small businesses.
She also stated, at COP28, that it is important that those in developing countries that rely on their mineral rich commodities can access these new policies to work towards a low carbon transition through diversifying their economies. This overall will help developing countries to limit their dependence on the commodities they export, whilst increasing the value of the goods and services they trade.
UNCTAD, before COP28 had begun, had stressed the importance of greener trading, showing an example within their Critical minerals: Supply chains, trade flows and value addition Report.
This report states that there are several developing countries, mainly in Africa, that contain 19% of global reserves of the minerals needed to produce electric vehicles, or EVs, such as lithium and cobalt.
In the report, UNCTAD claims that the value added to the production of an EV battery could allow the mineral rich areas within these developing countries to benefit from an increase in profits caused by the green technology.
The organisation also states that as trade stands this is not the case as the mineral rich countries in Africa, and also in Latin America, are not currently playing a major role, if any, in the production of electric vehicle batteries. This is leaving a large gap within the trade sector that can increase the shift towards a greener and more sustainable future. This is environmentally as moving towards electric vehicles will lower greenhouse gas emissions, and socially and economically as those in developing countries will have increased opportunities within the trade and transport sectors.