3 key takeaways from COP29

Media coverage of the recent climate conference may have focused on the politics and challenges that emerged during COP29, but there was some important progress made too. 

It might have taken a while to get the final agreement over the line at the United Nations climate conference held in Azerbaijan in November 2024, and some of the outcomes may have proved disappointing, but as the UN Secretary-General said in his closing remarks, it “provides a base on which to build”.¹

The outcomes that mattered 

1. Adaptation finance – COP29 was billed as the ‘Finance COP’, with agreeing a new climate finance goal a key priority.  

Supporting developing countries to step up climate action was at the fore of discussions. In the end, agreement was reached to provide US$300bn annually – three times the amount previously agreed, but some way short of the trillion-dollar figure that many developing nations were hoping for.²

A big chunk of that US$300bn is expected to come from private finance, so there was also a focus on engaging the private sector, which was certainly well represented at this COP. 

2. Carbon markets – COP29 got off to a flying start, with agreement on the creation of international carbon market standards on the first day. Developing those standards and working out the practicalities is expected to continue through 2025.  

Carbon trading rules allow companies and countries to buy and sell credits to meet emission reduction targets, so it can be an important part of reaching net zero emissions targets. Creating international standards that provide trusted and transparent carbon markets will help that market to develop, providing confidence for participants and investors.³

3. Nature – climate COP29 followed nature COP16, the United Nations 16th Conference of the Parties to the Convention on Biological Diversity. With the line between climate and nature increasingly blurred, there was early discussion of the linkages between the two aspects, although these didn’t make it into the final agreement. 

What about the UK? 

Reflecting on COP29, UK Prime Minister, Keir Starmer, stated that “we must act on climate change and nature loss as some of the greatest long-term threats we face and in doing so we must seize the opportunities of the low-carbon economy for investment, for UK businesses and British workers”.⁴

The UK made a number of announcements, supporting action on both climate and nature. These included: 

• A commitment to reduce greenhouse gas emissions by 81% on 1990 levels by 2035. This aligns with the recommendations of the Climate Change Committee, and will be economy-wide, covering all greenhouse gases and sectors.⁵
• Along with other countries, a commitment to reduce methane emissions from organic waste.⁶
• Investment in a £1bn wind turbine project as part of its wider commitment to build new energy infrastructure and create jobs in the green economy.⁷
• The announcement of 20 projects that will benefit from funding through the Ocean Community Engagement and Nature grants programme.⁸
• Recognising the importance of carbon sinks in soaking up carbon to achieve climate targets, £259m of funding to support forest-rich countries to protect nature and tackle deforestation.⁹  
   

What does this mean for pension savers? 

Lack of major progress in tackling climate change mean that the physical and transition risks it poses remain, and pension companies must continue to assess these risks within their portfolios.  

Private finance will clearly play an important role in helping address climate change. There are opportunities here to boost the resilience of portfolios, but also to use responsible investment to open up the potential for growth in areas like the green energy transition and natural capital.¹⁰  

References 

1. ‘UN Secretary-General Statement on COP29’, United Nations, 23 November 2024. 
2. ‘2009, United Nations Climate Change, 24 November 2024. 
3. ‘COP29: Rules for Global Carbon Trading Offer Hope for Developing Nations’ Outlook Planet, 25 November 2024. 
4. ‘PM statement to the House of Commons on the G20 and COP29 Summits: 21 November 2024’, HM Government, 22 November 2024. 
5. ‘UK shows international leadership in tackling climate crisis’, Department for Energy Security and Net Zero, 12 November 2024. 
6. ‘Countries Representing Nearly 50% of Global Methane Emissions From Organic Waste Pledge to Reduce Emissions From Sector | Day Nine – Food, Water and Agriculture Day’, COP29, 19 November 2024.  
7. ‘Boost for UK clean energy growth as PM arrives at COP29’, HM Government, 11 November 2024. 
8. ‘Funding announced at COP29 for 20 projects to support marine protection and fight poverty’ Department for Environment, Food and Rural Affairs, 21 November 2024. 
9. ‘UK Government drives nature up the agenda at COP29’, Department for Environment, Food and Rural Affairs, 21 November 2024. 
10. ‘Making Finance Work For Climate’, United Nations Environment Programme Finance Initiative, November 2024