Branding COP29 a success or failure may make headlines, but the big take away for attendees was that significant action and determination is required to unlock the vast sums of public and private capital needed. With its world leading position in green and sustainable finance and strong political leadership, the UK has a unique opportunity to play a key role in catalysing climate finance globally.
Private finance’s key role and the New Collective Quantified Goal on Climate Finance
The private sector showed up in force signalling its willingness to work with governments, multilaterals, and the development community, to address the climate finance challenge.
A significant New Collective Quantified Goal (NCQG) on climate finance was made committing developed countries to provide at least $300bn to developing countries annually by 2035, including private finance leveraged by that public money. While $300bn is triple the previous target, it is far from the $1.3trn needed to meet the demands of developing nations. Additionally, updated Nationally Determined Contributions (NDCs) due in February 2025, country level plans to reduce emissions - will need to be "investment ready" with as much specificity as possible – to send important market signals to investors.
However, turning these pledges into action will require a real and sustained effort at both a technical and political level from the public and private sectors, of which the can be a key contributor, to:
- Build bankable project pipelines.
- Crowd in private finance with concessional capital and grant funding (i.e. blended finance).
- De-risk investments and increase the resilience of new infrastructure to climate impacts.
- Help countries create stable and predictable investment environments for finance to flow.
- Reduce the real and perceived risks of investing in developing economies.
‘Britain is back’ in the business of global climate leadership
The presence of the Prime Minister alongside multiple Cabinet Ministers was a clear signal of the UK’s renewed commitment as a global climate leader. This was combined with a wave of domestic and international announcements that signalled serious intent from the new government, including:
- UK’s Nationally Determined Contribution (NDC): announced a headline target of reducing greenhouse gas emissions by 81% by 2035 compared to 1990 levels.
- Sustainable finance package: At Mansion House the Chancellor announced a package of sustainable finance measures to maintain and build on the UK’s leadership in sustainable finance.
- Global Clean Power Alliance (GCPA): Announced at the G20 to accelerate the global uptake of renewable energy – the Finance Mission, co-chaired by Brazil and the UK, aims to support countries in building investment platforms and provide the assistance needed to get finance flowing.
- £58bn climate finance tool launched on London Stock Exchange: The Climate Investment Funds (CIF) new Capital Market Mechanism (CMM) will issue investment-grade bonds on the London market, leveraging private sector funding to distribute funding for new projects such as wind or solar farms in countries struggling to raise enough cash to build them.
The UK’s political leadership combined with the expertise from across the financial and related professional services community, can play a leading role in creating the conditions for achieving global finance goals.
TheCityUK at COP29 and beyond
We organised a number activities as a platform for our members to contribute to debates, discussions, and create partnerships:
- Panel on scaling blended finance solutions in collaboration with EY in the UNFCCC pavilion.
- Roundtable with key UK government departments on how we can deepen engagement on delivering the UK’s and other NDC’s.
- Reception with the British Embassy Baku and key international partners on sustainable finance leadership, hosting the UKs Development Minister Anneliese Dodds.
Given the clear appetite for greater collaboration to realise real economy solutions, we look forward to engaging with members and government and building on the conversation from COP29 and as we look towards COP30, seeking to ensure we have the right frameworks for stronger dialogue with the UK government and other international partners to catalyse action.