Key takeaways from COP 29

In November 2024, almost 200 nations and thousands of attendees gathered in Baku, Azerbaijan for COP29, the annual United Nations climate summit. The two-week conference concluded on 24 November, following intense negotiations. Delegates agreed they will: 

• Triple finance to developing countries, from the previous goal of USD 100 billion annually, to USD 300 billion annually by 2035.
• Secure efforts of all actors to work together to scale up finance to developing countries, from public and private sources to the amount of USD 1.3 trillion per year by 2035.

Overall, COP29 made progress on climate finance and carbon markets, but critical issues like scaling up the financing gap and transitioning away from fossil fuels was deferred to COP30. The conference highlighted both the challenges of global alignment on climate action and the growing drive toward a green economy, underscoring opportunities amid uncertainty. 

This article will look at the key outcomes and how this may impact your organisation.

Green Financing Goals

• At COP29 there was an agreed USD 300 billion annual new collective quantified goal (NCQG) set to catalyse significant funding flows to developing countries, creating numerous opportunities for financial institutions. The importance of grants versus loans was recognised, additionally simplified application processes, and ensuring finance reaches the most vulnerable nations was a focus for climate financing discussions¹.
  • Infrastructure companies must embrace innovative PPPs and scalable financial models to drive low-carbon urban development. By leveraging governance and policy improvements, they can unlock investment, ensuring financial viability and advancing both climate and economic goals ². 
  • AIA, BlackRock, IFC, MAS, MUFG and other investors at COP29 signed a Statement of Intent (SOI) – this aims to explore collaborative efforts on a blended finance debt initiative. The initiative is designed for global investors who are looking for opportunities to finance large-scale decarbonisation projects in Southeast Asia, tackling the region's USD 170 billion clean energy investment shortfall.
• Delegates at COP29 emphasised the need for substantial financial resources to combat climate change. They called on "all actors" to scale up funds from "all public and private sources" to "at least USD 1.3 trillion" by 2035 ³. The call for funds from both public and private sources highlights the necessity for a collaborative approach. Governments, international organisations, private companies, and financial institutions are all expected to contribute to this target.  The ambitious goal underscores the urgency and scale of the financial investments required to mitigate and adapt to climate change effectively.

Carbon markets & risks

• COP29 saw consensus on a set of standards to boost the global carbon market with cross-border cooperation (Article 6 of the Paris Agreement). It could unlock USD 1 trillion annually by 2050 in private and public climate financing.

• A consistent approach and pricing in carbon markets would help high-emitting sectors better account for carbon costs while enabling financial institutions to price carbon risk more effectively, driving increased scrutiny and incentivising decarbonisation efforts.
• Clearer rules on upfront information and restrictions on post-transfer changes to carbon credits provide greater certainty, encouraging private sector participation in carbon trading. Limited consequences for inconsistencies in cooperative approaches mean private investors must remain vigilant about the quality and credibility of the credits they purchase.

Technology and industry collaboration

• COP29 discussed innovations like renewable diesel for heavy-duty trucking and wind-assisted propulsion for shipping demonstrated pathways for decarbonising hard-to-abate industries. The event underscored the need for global collaboration, inclusive financing, and policy support to drive these transitions and enable even the toughest sectors to achieve low-carbon goals.
• Initiatives announced at COP29 included a new declaration of support for the Green Digital Action, endorsed by global tech leaders and governments, aiming to catalyse climate-positive digital development. IBM also unveiled two AI-powered tools to advance sustainable urban planning and energy infrastructure in emerging markets ⁴.

Innovative investment strategies

• Building on COP29's focus on advancing green transition financing for infrastructure companies, the urban green transition emerges as a significant untapped business opportunity—especially through neighbourhood-scale regeneration projects that deliver high environmental and social returns while addressing housing and resilience needs.
• COP29 emphasised the vital role of blended finance in decarbonising real estate, highlighting the need for private sector contributions. The EIB's "intermediated loans," exemplify this approach, channelling debt to financial institutions that support the value chain—energy-efficient technology providers, building materials, and architects—ensuring financial stability drives sustainable transformation ⁵.

Judicial leadership in climate

• COP29 highlighted the increasing importance of courts in climate litigation, with global judges and legal experts discussing innovative legal solutions and mechanisms for addressing climate-related disputes ⁶.
• In discussions there was a call for judges, courts, and legal experts to collaborate on a proposed 5-year program to strengthen the global judicial capacity needed to adjudicate climate and environmental cases and accelerate the environmental rule of law.

Is 1.5°C staying alive?

The year 2025 will be the tenth anniversary of the historic Paris Agreement and efforts to reach a global consensus on achieving net zero emissions by 2050. The agreement aims to keep the global temperature rise this century well below 2°C above pre-industrial levels, and to pursue efforts to limit the increase to 1.5°C.

Over the last ten years, we have been going in the wrong direction. The IPCC's sixth assessment report published in 2021 warned that concentrations of carbon dioxide in the atmosphere are higher - and rising faster - than at any time in the past two million years. Scientists are concerned about early warning signs that human activity may cause temperatures to exceed the 1.5°C threshold before 2030 ⁷. The impact of this acceleration is becoming more rapid, interconnected and unpredictable across every continent. The economic, environmental and social consequences mean that, within the next decade, mitigation efforts could be dwarfed by adaptation.

Many companies have set targets aligned with 1.5°C under the Science Based Targets initiative (SBTi) for 2030, and several jurisdictions have set Paris-aligned legally binding national emissions targets for 2050. That leaves a mere five years to meet the 2030 target, which is now within the current investment cycle of many companies. 1.5°C is baked into the sustainability reporting requirements of many large and listed organisations, including the Task Force on Climate-related Financial Disclosures (TCFD) and climate Transition Plans. The SBTi has faced controversy over the use of carbon offsets to achieve absolute emissions reduction targets and climate change litigation has been successfully deployed in connection with offsets.

What does this mean for you?

• Shareholders, financial regulators and other stakeholders now expect companies to take risk management measures, including carrying out climate-related stress-testing and integrating sustainability risk into their wider operational resilience and risk management framework. It is more important than ever to consider:

1. how climate risk impacts your people, assets, markets and supply chains;
2. what your organisation's material climate-related risks and opportunities are;
3. how you might address the risks and opportunities; and
4. who will lead the implementation of your climate transition plan.

To Conclude

The evolving landscape underscores the importance of proactive engagement in climate finance, carbon markets, and innovative investment strategies to drive sustainable transformation and resilience in the face of accelerating climate impacts. Following COP29, companies can anticipate heightened expectations from shareholders, financial regulators, and other stakeholders to integrate robust climate risk management measures into their operations. 

Here are some actionable steps for the private sector to consider: 

• Increase climate finance contributions: Engage in public-private partnerships and innovative financial models to meet the new climate finance goals. 
• Adopt carbon market standards: Implement consistent carbon pricing and ensure the credibility of carbon credits when/where used.
• Invest in technological innovations: Support and adopt new technologies for decarbonising hard-to-abate industries.
• Utilise blended finance models: Participate in blended finance initiatives to support sustainable real estate and infrastructure projects.
• Prepare for climate litigation: Strengthen your legal frameworks and be prepared for increased judicial scrutiny. Undertaking a review of your ESG-related disclosures and conducting risk assessments and compliance controls uplift now, will help you to prepare and mitigate future risks. Stay on top of the evolving risk of greenwashing and how to manage it here.
• Accelerate climate transition plans: Integrate climate risk into your business operations and develop comprehensive climate transition plans – this is crucial to meet the 1.5°C target embedded in sustainability reporting requirements. Contact us now for support on your transition plan journey. 

_References

<sub>1. Euromoney: Building on Progress - What COP 29 outcomes mean for financial services. 
2. COP29: Financing the green transition of cities is critical to global climate goals and future competitiveness 
3. Listen for more: Outrage + Optimism podcast on COP29: from Billions to Trillions - G20 calls for ambition in climate finance
4.  Green Digital Action -Partnership-driven. Impact-focused.
5. Real Estate's 'mind blowing' climate financing need and other COP29 takeaways
6. COP 29 Events Discuss Article 6, JCM, Climate Litigation, LEDS – SDG Knowledge Hub
7. 1.5°C: what it means and why it matters | United Nations</sub>