How the announcements at COP29 may affect your company

COP29, the 29th meeting of the main decision-making body of the United Nations Framework Convention on Climate Change, came to an end last week. During the 12-day event, a number of announcements were made that could have an impact on UK companies in the coming years.

Climate funding

Dubbed the ‘finance COP’, it is no surprise that much of the discussion over the event surrounded the level of funding to be given by developed nations to developing countries in order to combat climate change. Whilst controversial, a figure of $300 billion annually by 2035 was eventually agreed. The funding, consisting of both public and private finance, is intended to fight the existing effects of climate change and decarbonise states to reach net zero.
 
Several different financing methods were discussed including ‘first-loss instruments’, where public finance institutions agree to absorb the initial losses of an investment in an attempt to encourage private sector investment in green projects. Depending on how the financing methods discussed at COP are implemented, there could be compelling investment opportunities in the near future for UK companies seeking to enter into, or expand, their portfolio of green projects.
 
With the UK’s headline £11.6 billion commitment to climate finance running until 2026, there is speculation that the Government may be looking for opportunities to increase support for private sector investment for future funding pledges and to meet the headline figure announced at COP.

Article 6.4 – Paris Agreement

After years of negotiation, the final sticking points of Articles 6.2 and 6.4 of the 2015 Paris Climate Accords were agreed at COP. Article 6.2 enables bilateral carbon credit trading between countries, whilst Article 6.4 establishes the framework for the creation of a global carbon credit market overseen by the UN. Whilst COP29 marks a significant milestone in the progress of Articles 6.2 and 6.4, the supervisory body tasked with developing the required mechanisms will meet throughout 2025 in order to finalise any details required before implementation.
 
In recent years, the voluntary carbon market has been criticised over a perceived lack of scientific oversight and validity of the sources of carbon credits, leading several companies globally to be hit with accusations of greenwashing. The implementation of Article 6.4 in the near future could create a path for UK companies to purchase scientifically-sound carbon credits from the international market in order to offset their carbon emissions, helping companies meet voluntary and external net-zero targets.

The UK’s 2035 NDC

The Government used COP29 to announce the UK’s 2035 Nationally Determined Contribution (NDC), a commitment to reduce emissions and make changes to combat the existing effects of climate change. Within the announcement, the Government restated the UK’s commitment to ensuring the global temperature does not rise beyond 1.5 degrees Celsius, extended the commitment to greenhouse gas reduction from 68% by 2030 to 81% by 2035, and further reiterated the UK’s goal of net-zero by 2050.
 
The announcement reiterates the importance of long-term environmental and sustainability planning for public and private institutions. 
 

Our content explained