The upcoming 29th Conference of the Parties (COP29) in Baku, Azerbaijan, from November 11 to 22, promises to be a pivotal moment in the global fight against climate change. With a focus on establishing a new climate finance goal and encouraging countries to update their national climate commitments, this conference holds the potential to catalyze a transformative shift in the way the world approaches the climate crisis.

Mobilizing Finance for Climate Action: The Crucial Role of COP29

Defining a New Climate Finance Goal

The COP29 agenda is set to be dominated by the discussion of a new climate finance goal, dubbed the "New Collective Quantified Goal (NCQG)." This goal will be instrumental in mobilizing the necessary resources to accelerate climate action in developing countries, replacing the previous target of $100 billion per year by 2020, which developed countries struggled to meet. Leaders will debate how to fund the resources required for developing countries to mitigate and adapt to climate change, as well as transition to low-emissions and resilient economies. The success of the NCQG will depend on the mobilization of significant and ongoing contributions from various sources, including the private sector.

Engaging the Private Sector in Climate Finance

The NCQG presents an opportunity to increase the quality and quantity of public finance provided by developed countries to support climate action in developing nations. Crucially, it can also unlock critical private finance by clarifying the role of the private sector in achieving global climate goals. Strong political signals from COP29, such as recognizing the private sector's role in the NCQG, would provide investors with a clear direction for climate ambition post-2025 and demonstrate a commitment by countries to address finance gaps.

Aligning National Climate Commitments with Investment Opportunities

COP29 also comes at a pivotal time for national climate commitments, as countries are expected to update their Nationally Determined Contributions (NDCs) ahead of COP30. The updated NDCs offer an opportunity for countries to produce more comprehensive and investable plans that attract long-term private investment. By providing investors with insights into technological and sectoral opportunities, as well as the policy landscape, updated NDCs can help facilitate engagement and secure additional finance to meet climate goals.

Bridging the Climate Finance Gap

Studies suggest that climate finance needs to scale up to $2.4 trillion annually by 2030 for developing countries, excluding China, with $1 trillion required in clean energy investments alone. Failing to meet this demand could cost up to $1,266 trillion by 2100 under a 1.5°C scenario, warns the Climate Policy Initiative. The NCQG and the improvement of NDCs must progress in parallel, with COP29 serving as a platform to ensure that private finance is an integral part of these discussions.

Opportunities for Investors at COP29

COP29 presents a unique opportunity for private finance to engage with policymakers, government representatives, and other key stakeholders. This collaboration can shape a path forward, allowing investors to voice their challenges and concerns in decarbonizing their portfolios. With finance at the heart of the COP agenda, there is an opportunity to more effectively engage the private sector and help close the climate finance gap, particularly in emerging markets and developing countries.The decisions made at COP29 will set the tone for how public and private sectors collaborate to fund sustainable projects, ultimately determining the success of global efforts to address the climate crisis. Commitments have been made, and now the time has come for the right policy signals to stimulate new action in this decisive decade.