November 2024
Will COP29 bridge the climate finance gap to fulfill its ambitions?
# Alex’s take: From pledges to action – Why investors need data-driven due diligence to navigate risk
Alexandra Mihailescu Cichon, Chief Commercial Officer
‘Over the last couple of years, we have moved from the era of pledges to one of implementation – and the transition is understandably thorny. As we eagerly anticipate what commitments will emerge from COP29 – dubbed the ‘Finance COP’- it is important that regardless of these pledges, investors must still have the tools and data to continuously monitor and manage the shifting risks to their portfolios. These range from climate to biodiversity, and beyond. Access to timely, objective data that keeps pace with rapidly evolving risks is essential to protecting and future-proofing investments in today’s complex landscape.
This is vital for investors’ due diligence processes and increasingly important for compliance with regulation. The Paris Agreement in 2015 was a milestone moment. Today, over 100 countries, 9,000 companies, and 600 financial institutions have pledged to get to net-zero emissions. Despite this, we must be under no illusions – we are failing the Paris Agreement. The global stocktake at COP-28 was a clear reminder of that. It is not only the responsibility of businesses and investors though.
Governments must step up and private capital will be crucial as well. The latter needs to clarify what must happen for capital flows to support the transition. The risk landscape is ever evolving, and regulators inevitably have to play catch-up. But investors cannot necessarily afford to wait, and the sooner they are empowered with the data to mitigate climate risk, the better it will be for their bottom line.
US financial institutions and investors who support the transition may face headwinds as President-elect Trump vows to cut federal green funding, but the shift to a low-carbon economy is unstoppable. While new spending may slow, existing projects are locked in and moving forward. This transition is bigger than any administration – there is only one direction of travel.
Emissions data is critical to supporting the transition, but also data on overall climate risks and related risks, such as greenwashing. Our October report reveals a 12% decrease from last year in the number of companies linked to greenwashing – the first decline in six years. However, this figure masks a 30% year-on-year increase in high-risk greenwashing cases. Risk-focused, due diligence-grade data can help investors, financiers, and companies fulfill their commitments by distinguishing between those that "walk the talk" and those that do not.’
# I. Overview
- The 29th Conference of the Parties of the UN Convention on Climate Change (COP29) will take place November 11-22, 2024, in Baku, Azerbaijan.1
- The event will be attended by government officials, climate experts, business leaders, civil society organizations, indigenous peoples and youth groups.
- The conference will address issues to advance the goals of the United Nations Framework Convention on Climate Change (UNFCCC) and the 2015 Paris Agreement, focusing on limiting global warming, adapting to climate impacts, and mobilizing financial support for these efforts.
- Dubbed the "Finance COP," COP29 will focus on negotiating a new climate finance target that ensures wealthy nations fulfill their responsibility to support climate-vulnerable countries in achieving a sustainable, low-emissions future.2
Taking place from November 11 to 22 in Baku, COP29 will center on negotiations for a new climate finance target. Image: COP29.az.
# II. Key themes
- Mitigation: Discuss ways to strengthen existing climate change commitments and set new ambitious targets to limit global warming.
- Adaptation: Outline a set of actions to help countries cope with the impacts of climate change, such as rising sea levels and extreme weather events.
- Climate finance: Mobilize additional funding from developed countries to help developing nations mitigate climate change and adapt to its effects.
- Just transition: Ensure that the shift toward a low-carbon economy will be fair and equitable, such as by supporting workers in affected sectors throughout the transition.
- Other topics: Additional priorities include scaling up nature-based solutions, promoting gender equality, advancing climate-related technology, engaging local communities and indigenous peoples, and building capacity in developing countries.3 Finally, hanging over COP29 is the fact that President-Elect Trump withdrew the US from the 2015 Paris Agreement and has promised to undo President Biden’s 2021 rejoin agreement. U.S. representatives may recognize that any agreements reached at the conference could be subject to reversal under a potential second Trump administration, which could impact the strength and effectiveness of future international climate agreements and financing efforts.
# III. Recap: Key achievements of COP28
COP28, held in December 2023 in Dubai, marked the completion of the first "global stocktake" assessing global progress in tackling climate change under the Paris Agreement.
- "Beginning of the end" of the fossil fuel era: The first global stocktake found that climate action is lagging across all areas and urges countries to adopt stronger climate plans by 2025, including cutting emissions 43% by 2030, tripling renewable energy capacity and phasing out fossil fuel subsidies, to stay within the 1.5°C limit.
- New funding for loss and damage: Launching with a landmark decision on a loss and damage fund, the conference secured over USD 600 million in pledges and set up the Santiago network secretariat to provide technical assistance to climate-vulnerable nations.
- Enhancing global efforts to strengthen resilience: Parties set global adaptation targets for the Global Goal on Adaptation framework, covering areas like water, food, health, ecosystems and infrastructure, while securing new pledges totaling USD 12.8 billion for the Green Climate Fund. Discussions also focused on setting a new climate finance goal, starting from a baseline of USD 100 billion per year.
- Linking climate action with nature conservation: Recognizing the connection between climate change and biodiversity loss, Parties agreed to include ecosystem protection and deforestation prevention in their climate plans. Efforts align with the 2022 Kunming-Montreal Global Biodiversity Framework’s4 goal to conserve 30% of the planet’s land and water by 2030.
- Ramping up practical climate solutions: At GOP28’s Global Climate Action space, governments, businesses and civil society showcased practical solutions to reduce emissions, strengthen resilience and improve climate adaptation. Key commitments included USD 1 billion for climate-health solutions, USD 2.6 billion for sustainable agriculture and EUR 175 million from the EU to reduce methane emissions.5
# IV. Reactions
COP28 elicited a wide range of reactions, reflecting the complexity of the climate crisis and global cooperation.
- Historic agreement: Many praised the overall package of commitments as a sign of growing global ambition on climate action. The establishment of the "loss and damage fund" was celebrated as a victory for vulnerable nations.
- Focus on fossil fuels: Some expressed concerns that some countries – especially oil and gas-producing nations – seek to achieve net-zero in large part by using carbon capture and storage (CCS) technologies instead of transitioning away from fossil fuel dependence. Critics also argued that the phrase "transitioning away from fossil fuels" was too vague and lacked the necessary commitment to a swift and complete phase-out.
- Role of O&G companies: The oil and gas industry's influence in the negotiations faced significant criticism, as many argued it weakened the ambition of the final outcomes.
Get in touch
At RepRisk, we view biodiversity risk as financial risk. Contact your RepRisk account manager or write us at contact@reprisk.com to explore how our data can help your business meet the growing demands related to biodiversity and ESG.
See United Nation’s website for further information about COP29.
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