2024 United Nations Climate Change Conference

Baku, Azerbaijan

Introduction 

‍The following memo includes a deep dive into the outcomes of Article 6 and carbon markets, the New Collective Quantified Goal, and key international pressures that will affect their implementation, as well as a high-level overview of linkages between COP29 outcomes and select global markets represented within the UNGC and CFO Coalition.

COP29, which centered around finance and investment, concluded on November 24 – two days later than expected. While several key decisions were reached, the conference left significant uncertainty and disagreement among country delegates. The conference had a long list of expected outcomes and decisions, with some of the most highly anticipated including potential impacts on global businesses and markets, including:

1. A New Collective Quantified Goal (NCQG): This climate finance target aims to channel $300 billion annually from developed to developing countries by 2030, increasing to $1.3 trillion annually by 2035. It replaces the previous goal of $100 billion per year by 2025, established at COP21 in Paris; and
2. Article 6 – Carbon Market Mechanism:  After nearly a decade of negotiations, delegates reached an agreement on frameworks for country-to-country trading under Article 6.2 and established the mechanism for an international carbon market under Article 6.4 of the Paris Agreement, a critical step in advancing global carbon markets.

The outcomes of COP29, its numerous side events, and other climate-focused forums are increasingly shaping the global business and sustainable finance landscape, particularly as countries address the call for $1.3 trillion in climate financing by 2035. 

Financial mechanisms, such as bonds and blended finance, were discussed in numerous high-level panels, and commitments were announced to unlock capital flows and public-private collaboration. For example, USAID announced $53.7 million in blended finance partnerships to boost climate finance, building on over $30 billion mobilized since 2021. These catalytic investments aim to address critical development needs and accelerate climate action in vulnerable regions. Similarly, the UN Global Compact hosted numerous events at COP29, one of which focused on Blended Climate Finance, Adaptation & Resilience in Africa, and the barriers and opportunities to bringing climate action to life on the Continent. 

Additionally, the Climate Investment Fund’s Capital Markets Mechanism (CCMM) bond issuance fund was listed on the London Stock Exchange. This launched a platform to raise private-sector capital within international markets to increase climate and sustainable development finance globally. These efforts to increase and mainstream global climate financing and public-private collaboration highlight the relevance of COP’s outcomes to an increasingly globalized sustainable finance strategy among private sector leaders in social and environmental performance. This memo examines select markets that cut across global geographies and the CFO Coalitions membership, including the United States, Japan, Brazil, China, India, and South Africa, and how they engaged at COP29 and the implications of key outcomes for the private sector. 

COP29: Context and Key Outcomes

2024 U.S.Election

The Conference and its outcomes were overshadowed and complicated by internal disagreement and major external events, namely the U.S. election results returning former President Donald Trump to office. Trump, who pulled the U.S. out of the Paris Agreement early in his first term, is expected to do so again, overturning President Biden’s re-entry to the Agreement in 2020. While the measurable impacts of this shift on global climate progress are difficult to predict, it is largely agreed that it will significantly jeopardize the scale and speed of global financing for climate action and progress on mitigation/emissions reduction. Some hope for continued action came when senior representatives from the EU, UK, and China suggested that their nations (representing some of the largest historically and current emitting countries) would be willing to take on larger leadership roles in the absence of the U.S., though the specifics of what that would look like remain to be seen. 

The New Collective Quantified Goal (NCQG)

The New Collective Quantified Goal (NCQG) emerged as the most anticipated and contentious outcome of COP29, reflecting intense negotiations around climate finance. With finance as the conference's central theme, the NCQG agreement sets ambitious targets but also reveals persistent divisions over the scale, sources, and governance of climate funding. Developing nations and climate activists say that the deal was far below what is needed, with some even arguing that no deal would have been better than this one. 

Key Agreements:

1. Funding Targets:
   • The agreed-upon target was $300 billion in public financing a year from developed countries for developing countries by 2035 and a call for “all actors” to scale up funds from “all public and private sources” to “at least $1.3 trillion” by 2035. There are bound to be accounting complications related to how the $1.3 trillion is tracked and divided as the COP29 decision gives little guidance. For example, there is a lack of clarity as to who qualifies as the “official” funder if funds come from a publicly traded company owned by numerous foreign investors. This may lead to confusion on how to fairly account and allocate credit for financing and associated emissions reductions at a global scale. 
2. Integration with National Commitments:
   • The NCQG is intended to shape the updates to Nationally Determined Contributions (NDCs), due in February 2025.‍
3. Voluntary Contributions from Developing Countries:‍

For the first time, the text encourages developing nations to contribute to the global climate finance goal “on a voluntary basis.” This reflects the growing role of major emerging economies that are also high emitters, like China, in funding climate projects globally. To date, these countries have provided billions of dollars every year in climate-focused projects in developing countries but this money has not been accounted for as “climate finance” under the UN/COP system

Challenges and Criticism:

1. Insufficient Ambition:some text
   • Many developing nations, who sought an agreement for $1.3 trillion a year, view the $300 billion deal as vastly inadequate, citing it as a continuation of developed countries’ failure to address their disproportionate responsibility for the climate crisis.
2. Debate Over Sources and Definitions:
   • Private Sector Inclusion: The inclusion of private investments within the NCQG pool sparked controversy. Developing nations argue that private investment should complement—not substitute—public finance commitments.
   • Unclear Separation: Disputes continue over how to classify the contributions of emerging economies, with climate finance from these nations often excluded from formal UN accounting.
3. North-South Divide:
   • Persistent tensions over the obligations of developed versus developing countries remain a barrier to consensus.

Implications for the Private Sector:

The NCQG places increased emphasis on the role of private finance, signaling heightened expectations and opportunities for the private sector:

1. Investment in LMICs:
   • The agreement creates pressure to scale investments in climate action within low- and middle-income countries (LMICs), particularly through blended finance mechanisms and financial instruments such as SDG-linked and green bonds.
2. Multilateral Development Banks (MDBs):
   • Major MDBs pledged to mobilize $65 billion in private financing for LMICs and an additional $65 billion for high-income countries, emphasizing their role in attracting private capital and deploying it to meet global climate targets.
3. Post-2025 Climate Finance Framework:
   • A coalition of global financial organizations released recommendations emphasizing the strategic use of public funds to unlock and reorient private finance for climate action.

Opportunities and Next Steps:

The NCQG provides a framework to deepen collaboration between the public and private sectors for climate finance. Companies operating in or investing in LMICs will find new opportunities to engage in climate-focused projects, especially through partnerships with MDBs and financial initiatives aligned with the post-2025 framework. Likewise, the mainstreaming and clarification of a global carbon market will open up new opportunities for the private sector, yet without improvements in regulation and transparency it will be difficult to track impact. 

Article 6 Agreement

The COP29 agreement on UN-backed carbon market standards under Article 6 of the Paris Agreement concludes nearly a decade of negotiations, finalizing critical rules for international carbon market mechanisms under the COP and Parties to the Paris Agreement. Countries agreed on frameworks for country-to-country trading under Article 6.2 and established the international carbon market under Article 6.4 through the new Article 6.4 mechanism (the “Paris Agreement crediting Mechanism” (PACM)), which is particularly relevant to the private sector. This milestone enables the design and implementation of a UN-backed mechanism to expand and connect global carbon markets.

1. The Paris Agreement Crediting Mechanism (PACM):
   • Environmental and Human Rights Safeguards: Mandatory Environmental and Human Rights Safeguards will “identify, evaluate, avoid, minimize and mitigate potential risks associated with projects.”​ 
   • Sustainable Development Tool: This tool will assess and monitor project impacts throughout their lifecycle, ensuring alignment with environmental and social standards.
   • Baseline Adjustments and Methodologies: New provisions include downward adjustments of baselines for carbon credit issuance, requirements for approved methodologies for carbon-cutting activities, and formal project registration processes.
   • Best Available Science: The latest scientific insights will guide All mechanisms and methodologies.
2. Transparency Enhancements:
   • Countries must publish detailed information when they approve Internationally Traded Mitigation Outcomes (ITMOs)—the units facilitating emissions trading—for use by companies and other non-state actors.
   • A potential role for regulated depositories in scaling carbon markets has been noted. These could enhance transparency, define credit eligibility for collateral, and support capital relief through insurance mechanisms.

Challenges and Criticism:

• Accountability Gaps: Concerns persist regarding the lack of enforceable repercussions for countries failing to comply with the rules.
• Transparency Issues: The complex system of checks and balances relies heavily on external stakeholders, which may undermine efficient tracking and oversight.
• Legacy Clean Development Mechanism Projects: Proposals for additional scrutiny on Clean Development Mechanism (CDM) projects (from the Kyoto Protocol) transitioning to the Article 6.4 mechanism were rejected. As a result, these projects can issue credits for emissions reductions between 2021 and 2025 with minimal additional verification.

Implications for the Private Sector:

The Article 6.4 mechanism provides opportunities for companies to engage in the international carbon market under clearer, albeit evolving, guidelines. While transparency enhancements like ITMO disclosures are promising, unresolved issues—particularly around credit quality and regulatory oversight—may pose risks. Businesses considering market participation should closely monitor developments in depository regulation and alignment with the agreed safeguards. 

Market Analysis 

United States 

The United States' leadership in climate action at COP29 was overshadowed by the election of former President Donald Trump, with many country representatives and commenters raising doubts about the country's willingness and ability to meet global mitigation and financing goals. That said, the outcomes of COP29 are still set to significantly influence the U.S. market, particularly if political shifts affect the climate commitments and energy strategies made at the conference. If the Trump Administration lowers its climate commitments or fully withdraws from the Paris Agreement, as it did during his first term, the responsibility of filling the resulting gap will likely fall on other major players, such as China. This shift will further alter global dynamics in emission reductions and financing and could alter the U.S.’s competitive capacity in growing “green” markets such as renewable electricity and EVs. 

Notably, the U.S. remains committed to its nuclear energy expansion, having reaffirmed its goal at COP28 to triple global nuclear capacity by 2050. This ambitious target is driven by the country’s rapidly growing demand for electricity, particularly from data centers and artificial intelligence, alongside the zero-emissions benefits of nuclear power. By 2035, the U.S. plans to add 35 gigawatts (GW) of new nuclear capacity, and by 2050, to deploy 200 GW of net new capacity. These developments underscore the U.S.'s focus on nuclear power as a critical part of its strategy to meet future energy needs and decarbonize the grid.

Japan

At COP29, Japan made a strategic move in advancing climate action by announcing a Mutual Recognition Agreement (MRA) for carbon trading with Indonesia under the Paris Agreement’s Article 6.2. This groundbreaking agreement is the first of its kind, establishing a new model for bilateral collaboration on carbon markets. The MRA aligns the carbon credit systems of both countries, ensuring equity in emission reduction methodologies, monitoring, and verification processes.

This agreement lays the groundwork for deeper integration of carbon markets in Japan, such as the Tokyo Stock Exchange’s carbon credit trading platform, launched in October 2023. As Japan and Indonesia move forward with joint emission reduction projects, companies engaged in carbon trading or sustainability efforts will find new opportunities for collaboration and market expansion in the region. This development signals Japan’s continued commitment to enhancing its role as a leader in global climate solutions, which could open up new avenues for businesses to engage in carbon markets and support emissions reduction initiatives. Approval of the legal framework and regulation of carbon markets is a priority issue within the new NDC for the first time. 

Brazil

Brazil announced details of its forthcoming Nationally Determined Contribution (NDC) update at COP29, setting two targets, the first a “less ambitious” target of cutting GHG emissions by 59% by 2035; and a more ambitious target of a 67% reduction by 2035 compared to 2005 levels. The country has been criticized for these goals falling short of the levels necessary to address its role as a major GHG emitter and oil producer. 

In addition to emissions targets, the NDC will include a new national adaptation plan and a “renewed emphasis on promoting sustainable development.” Reaching these targets will require cross-sector collaboration, namely through financing. Along with existing financial mechanisms, like the Amazon Fund, Climate Fund, and Tropical Forests Forever Fund, Brazil is rolling out sustainable sovereign bonds for projects such as curbing deforestation and funding renewable energy projects. 

China

At COP29, China – the world’s largest GHG emitter – continued to position itself as a key leader in global climate action, especially following Donald Trump’s re-election and promise to withdraw the U.S. from the Paris Agreement. This positioning came through in China’s nearly 1,000-strong delegation and continued focus on climate action and infrastructure development in low and middle-income countries. At the same time, China continued to emphasize its commitment to "common but differentiated responsibilities" in global climate financing, urging developed nations to uphold their obligations and take the lead in mobilizing climate funds. 

While many countries believe China has the duty to fill the financial gap that will be left by potential U.S. pullback under the Trump administration, many developed nations, including the U.S. and the U.K., argue that China is not pulling its weight. In response, China continues to underscore the importance of South-South cooperation and voluntary support, aiming to balance its role as both a recipient and provider of climate finance, and argued that the country has already “provided and mobilized project funds of more than 177bn yuan ($24.5bn) for developing countries’ climate response.”

A critical aspect of China’s strong role in global climate action is its dominant position in the green technology market, where it leads in the production and supply chains of solar panels, wind turbines, batteries, and electric vehicles, from raw material processing to end-product manufacturing. These industries not only bolster China's climate ambitions but also enhance its influence in the global transition to a low-carbon economy. (At COP29, a ceremony was held to sign a “Project Implementation Agreement” with China’s BYD Company Limited which will build a factory to localize the manufacturing of electric buses in Azerbaijan). 

India

India was among the countries criticizing the outcome of the A New Collective Quantified Goal (NCQG) agreement, having pushed for the $1.3 trillion by 2035 goal along with many other developing economies. The Indian representative, Chandni Raina, gave a speech immediately after the decision was finalized, calling it “abysmally poor” and a “paltry sum” unable to “address the enormity of the challenge we all face.” Access to predictable, scalable, and concessional funding will be critical to support India’s emissions reduction efforts and adaptation measures, especially as it faces a projected rise in industrial emissions over the coming decades. 

India is in the launch phase of its Carbon Credit Trading Scheme (CCTS), originally announced in August and made all the more relevant by COP’s Article 6 agreement, CCTS is set to launch in 2026. The scheme emphasizes emissions intensity—reducing emissions relative to industrial output, the country’s second-highest emitting sector—to encourage industries to adopt cleaner, more efficient technologies without stifling development. Initially covering sectors such as cement, iron and steel, petrochemicals, and textiles, CCTS will expand over time, with plans to integrate power generation and other high-emission sectors. Entities exceeding their set targets will earn Carbon Credit Certificates (CCCs) tradable on regulated markets, while those falling short must purchase credits, creating a market-driven incentive for emissions reduction. The CCTS also includes a voluntary offset mechanism to boost market liquidity and incentivize reductions in sectors outside the compliance market. 

The CCTS signals India’s commitment to market-based solutions for climate action. As the government finalizes guidelines on credit issuance, pricing, and validity, the scheme is poised to become a cornerstone of India’s climate strategy, balancing economic development with environmental sustainability and private sector participation. 

South Africa

For South Africa, finance targets were top of mind at COP29. Highlighting the acute need for adaptation financing in the country due to severe flooding, prolonged droughts, and extreme weather events, the South African Presidential Climate Commission reports that to meet its 2030 climate targets, South Africa requires an estimated R535 billion annually in the short term and up to R10.9 trillion in adaptation financing by 2050. The country’s current financing landscape is heavily reliant on debt (75%), with negligible contributions from grants (1%) and concessional funding (2%), raising concerns about the country’s ability to achieve a sustainable and inclusive transition to net zero by 2050. The Commission highlights the need for concessional finance and grants to de-risk investments in priority sectors and technologies, enabling the country to implement mitigation and adaptation projects while attracting private investment. 

‍

Sources:

UNFCCC, Outcomes of the Baku Climate Change Conference - Advance Unedited Versions (AUVs). https://unfccc.int/cop29/auvs 

Carbon Brief, COP29 Baku. https://www.carbonbrief.org/policy/un-climate-talks/cop29-baku/ 

International Institute for Sustainable Development, COP29 Daily Readouts. https://enb.iisd.org/ 

McKinsey Sustainability, COP29: Climate finance and adaptation. https://www.mckinsey.com/capabilities/sustainability/our-insights/sustainability-blog/cop29-climate-finance-and-adaptation 

Brunswick Group, COP29 Summary: Key themes for business. https://www.brunswickgroup.com/cop29-summary-key-themes-for-business-i27226/ 

‍