While the outcomes reflect incremental rather than transformative progress, the agreements reached provide a critical framework for future action.

The decisions taken at Baku offer a foundation to build upon at COP30 in Belém, focusing on scaling up mitigation and enhancing implementation mechanisms.

Key achievements

Despite negativity surrounding what was known as ‘The Finance COP’, there were some great achievements and agreements made during the conference which will go a long way to combating climate change and sustainability.

1. New Climate Finance Goals (NCQG)
The $100 billion annual target was replaced with an ambitious framework: $300 billion annually for developing countries by 2035, supported by a broader target of $1.3 trillion globally from public and private sources. Although this falls short of the demands of vulnerable nations, it represents a step forward in scaling climate finance.

2. Advancements in Carbon Markets (Article 6)
After nearly a decade of discussions, the framework for Article 6 was finalized, introducing the Paris Agreement Credit Mechanism (PACM) and a unified UN registry for carbon credits. While this framework requires further refinement to ensure robust safeguards and environmental integrity, it signifies progress in the contentious area of carbon markets.

3. Progress on Adaptation
COP29 concluded with an agreement to use no more than 100 indicators for reporting on adaptation progress, offering flexibility for countries to tailor approaches to local circumstances. The Baku Adaptation Road Map was also established, emphasizing the integration of scientific knowledge and the IPCC’s role in advancing the Global Goal on Adaptation (GGA).

Challenges and future needs

The outcomes of COP29 highlight persistent challenges in addressing the global climate crisis. Climate finance remains insufficient, with current flows falling short of the vast needs for a successful climate transition and the demands of developing countries.

Key issues were deferred, including the implementation of the Global Stocktake and clearer guidelines for future Nationally Determined Contributions (NDCs), leaving these vital topics for future negotiations. Moreover, no new commitments on emissions reductions were made, even as the escalating costs of climate-related losses emphasize the urgent need for proactive mitigation efforts.

But encouragingly enough, and despite the mood music in much of the popular press, the global economy is steadily transitioning toward sustainability, propelled by increased commitments from state and non-state actors. Notable initiatives at COP29, such as the Global Energy Storage and Grids Pledge, aim to accelerate renewable energy deployment, targeting a sixfold increase in energy storage capacity and a massive expansion of renewable grids by 2040.

While 670 GW of renewable energy were added to grids last year, capacity constraints blocked 3,000 GW of untapped renewable potential, highlighting the urgency of infrastructure expansion.

Additionally, accountability and transparency are becoming central to green initiatives, with private sector actors increasingly aligning financial performance with sustainability targets. Regulatory momentum is also growing, as over 100 countries now have green or sustainable finance regulations, a 40% increase since 2020.

Looking Ahead

The outcomes of COP29 lay the groundwork for COP30 in Belém to advance critical issues, including scaling mitigation efforts and improving adaptation mechanisms.

Achieving transformative change will require stronger commitments, enhanced transparency, and coordinated global efforts to align financial flows with climate goals.

While challenges persist, the incremental progress made at COP29 provides hope for a more sustainable and resilient future.

By Allegra Ianiri, research analyst at MainStreet Partners

Over the last few years, there have been questions about whether the COP summits actually achieve anything – and when they take place in oil-centric countries – scepticism is rife.

But the COP summits do contribute to huge changes in government policy, regulation and investment into sustainability. Last year, COP28 sparked momentum in climate and sustainable finance.

This year, climate finance is set to take centre stage even more prominently, with COP29 often being referred to as “the finance COP.”

Key talking points

A key measure of success will be the progress made in the New Collective Quantified Goal (NCQG) negotiations, especially if they lead to a strong post-2025 climate finance framework that addresses the specific needs of developing nations in terms of mitigation, adaptation, and loss and damage. The NCQG aims to significantly increase and improve climate finance directed to these countries, replacing the previous $100 billion annual target, which is widely seen as inadequate.

One desired outcome this year is that climate finance is not only increased but also clear timelines, terms, and mechanisms to ensure transparent and effective delivery to vulnerable communities are defined. However, there is still no agreement on the NCQG’s overall target or how to determine it.

One proposal from the Independent High-Level Expert Group on Climate Finance suggests an annual target of $2.4 trillion by 2030, with $1.4 trillion from domestic sources and $1 trillion from external finance, including private and concessional sources.

During ongoing NCQG discussions, participants have highlighted the importance of increasing private sector contributions to climate action, even though the sector is not legally obligated under the Convention or the Paris Agreement. A proposed multilayered approach would have public finance as the foundation for stability, with private and international sources adding flexibility.

To facilitate this, multilateral development banks (MDBs) are encouraged to create strategies aimed at attracting private capital, such as de-risking investments and using credit enhancement tools. Clear policy signals from governments are also crucial to boost private sector engagement, building confidence for private investors to finance climate solutions.

Push for more ambitious NDCs

Nationally Determined Contributions are country-specific climate plans outlining emissions reduction and adaptation targets, updated every five years by Paris Agreement signatories.

The submission window at COP29 (November 2024-February 2025) offers a crucial opportunity to set more ambitious targets, particularly for high-emitting sectors like energy and transport, with clear, timebound goals.

NDCs must also address adaptation to build resilience and manage loss and damage. Financing remains a major hurdle. 91 developing nations estimated in 2023 that $4.5 trillion would be needed to meet their NDC goals, far surpassing the current $100 billion target, which is set to be revised at COP29.

Businesses are seeking NDCs that are both investable and actionable, calling for clearer, more consistent climate policies that provide certainty to unlock investment needed to deliver on climate goals. Achieving this requires a whole-of-society approach, involving the private sector in the development and financing of NDC implementation through public-private partnerships.
Financial sector focus

The Finance, Investment, and Trade day at COP29 on 14 November 2024 will include key initiatives:

• The Baku Initiative for Climate Finance, Investment, and Trade (BICFIT): BICFIT aims to connect climate finance, investment, and trade to promote green diversification and support policy development. It focuses on fostering climate-positive investments and ensures developing countries participate in global decarbonisation while addressing sustainable development goals through shared expertise, policy development, and enhancing the capacity of institutions to attract climate-positive investments.

• The launch of the Climate Finance Action Fund: The CFAF will be capitalised by contributions from fossil fuel-producing nations and companies. It aims to finance mitigation, adaptation, and research, with a focus on de-risking investments and providing grants for climate disaster relief. The fund will mobilise both public and private sectors, with 50% of its resources directed towards climate projects in developing countries and supporting NDCs. It will also include special facilities for highly concessional and grant-based funding to rapidly address the consequences of natural disasters in vulnerable countries.

• The second Business, Investment and Philanthropy Platform: The Platform is designed to convene global business leaders and philanthropists aiming to amplify the role of the private sector and philanthropy in climate action, fostering collaboration and innovation to achieve net-zero emissions and nature-positive goals. It will focus on driving cross-sectoral advancements and showcasing innovative initiatives that address climate and nature goals.

• Catalysing investment for the just transition: This will bring together energy, climate, and finance leaders to discuss how to support a rapid increase in clean energy investments globally. It will address the need for inclusive, equitable, and just pathways to a sustainable future, ensuring that communities are empowered, workers’ rights are protected, and opportunities in green industries are fostered.

Expected challenges

As with every COP, negotiations face friction due to the consensus-based process and the differing priorities of numerous delegations.

The outcome of the US presidential election (just one week before COP29) will heavily influence the tone of the negotiations. Depending on the results, the US could either reinforce or diminish its role in international climate finance, affecting the flow of funds and the pace of global climate action.

Azerbaijan’s status as a petrostate could attract criticism. Questions may arise about the country’s ability to lead on ambitious climate outcomes while maintaining its reliance on fossil fuel exports. Azerbaijan’s human rights record may also raise concerns and could complicate negotiations.

Overall, given the critical importance of climate finance, we anticipate increased involvement and engagement from the private and financial sectors in all discussions and negotiations at COP29. The COP29 President has underscored the necessity of involving the private sector in climate finance, emphasizing that mobilising private sector contributions is essential for launching new initiatives, formats, and mechanisms for finance.

By Allegra Ianiri, ESG Research Analyst at MainStreet Partners