What is COP29?

This year’s Conference of the Parties (COP), often referred to as the ‘Finance COP,’ was focused on setting new financial targets to mitigate climate change in developing nations. 

COP is an annual meeting where member states of the United Nations (UN) come together to discuss and negotiate global climate policies. Former discussions and debates have resulted in the formation of treaties to align with the UN’s Framework Convention on Climate Change (UNFCCC) as well as the Paris Agreement.  

Decisions made at COP events can shape the discourse around responsible investment practices and leave a lasting impact on countries, companies and financial markets worldwide. 

However, COP events can also be controversial. Disagreements among participants and criticisms that measures are ‘too little, too late’ are common and this year is no exception. Additionally, the absence of representatives from major polluting countries can hinder progress.  

This year the 29th COP and was held in Baku, Azerbaijan between 11 November and 22 November. As investors, it’s important to take note of these key issues. 

These are the main COP29 themes and outcomes, which may affect your investments and the impact of climate change on the environment in the future:

1. Climate finance deal 
Top of the news agenda towards the end of the conference was the last-minute $300 billion (£238 billion) a year climate finance deal cobbled together after dramatic, prolonged negotiations, protests and walkouts by some nations.

At previous COPs there was talk of securing $100 billion per year from rich nations to support poor countries suffering from the impacts of climate change. But this, as well as the $300 billion revision, was deemed insufficient with developing countries citing $1.3 trillion as a more realistic sum. 

The $300 billion sum, which needs to be pooled together by 2035,¹ shows the scale of the challenge as well as the opportunity. However, the question remains – who will fund it? It’s believed that the money will come from a combination of public sources (governments of industrialised nations in Europe and the US), private sources (such as banks) and investors, and multi-development banks such as the World Bank. 

The money is meant to help developing countries impacted by climate change to find ways to become better equipped to deal with it. The funds could be used to prepare for the anticipated adverse impact of climate change (for example flooding and droughts) or to fund projects that will transition away from emission producing fossil fuels. This could result in more investment in alternative energy production like wind or solar power production, which could provide investment opportunities. 

2. Loss and Damage fund commences
The Loss and Damage Fund was fully operationalised at COP29, reaching a significant milestone in climate justice. It was initially mooted at COP27 and aims to provide financial assistance to countries most vulnerable to the impacts of climate change. Over $730 million has been committed to this fund so far and it’s set to start financing projects in 2025. 

3. Carbon credit trading agreement
COP29 also reached an agreement on international carbon trading, but this comes after almost 10 long years of negotiations. The agreement, which was borne out of the 2015 Paris Agreement, will allow countries and companies to trade credits for cuts in carbon emissions to offset their carbon footprints. 

Despite this important milestone and a creation of the UN registry to monitor it, concern remains over how this will be regulated and what powers the UN will have to enforce it. The cost of compliance may also be high and there’s concerns that credit markets could still engage in greenwashing*. 

4. Updating NDCs
Nationally Determined Contributions (NDCs) could be another driver for clean energy investment. NDCs are commitments made by countries to reduce their greenhouse gas emissions and adapt to the impact of climate change. Updated NDCs must be submitted by February 2025 and should give crucial insights into each nation’s progress towards their net-zero targets.

Next year’s COP30 will be held in Belem in Brazil and there are already promises from the country’s climate ambassador, Ana Toni, that it would not “shy away” from “a just transition to ending fossil fuel use.”

However, Toni’s comments come at a time where Brazil could increase its domestic fossil fuel production, which raises questions over whether its climate change obligations can be achieved². This should be taken in context though as Brazil currently produces nearly 93% of its electricity from clean energy sources³.

There’s also concern about what President Donald Trump’s influence in future COPs will be, given his opposition to climate change and reluctance on the provision of generous foreign aid. It’s made some developed nations hesitant to make significant commitments fearing that if the Trump administration withdraws from COP, they will be left to shoulder the financial burden of addressing climate change without a major player like America.

Responsible investment (RI) involves considering material environmental, social and governance (ESG) issues when making investment decisions, alongside analysis of traditional financial risks and engaging, through active ownership, with companies and fund managers. It is at the forefront of our fiduciary duty to our clients, which is why we are signatories of the UK Stewardship Code 2020 and the UN Principles of RI.

You can learn more about our approach to RI through our guide. We offer a discretionary portfolio service, which can be tailored to your investment preferences and values. As with all investing, please remember that investments carry risk and you may get back less than invested.

If you have any questions, please contact your usual Evelyn Partners adviser.

1. APnews.com; Here's what to know about the new funding deal that countries agreed to and the UN climate talks; 24 November 2024
2. MSN.com, COP29 key moments: from $300 billion deal to controversial 'oil and gas are a gift from God' statement, November 2024
3. Reuters.com; Brazil set to widen lead as cleanest major power sector, October 2023

* Greenwashing: giving a false impression or providing misleading information about how a company’s products or policies are more environmentally friendly than they are.