The latest insights from the We Mean Business coalition

COP29 takeaways: a turning point for climate finance, but falls short on fossil fuels

Climate negotiations at COP29 in Baku, Azerbaijan stretched long beyond the official conference end date of Friday 22nd November into the small hours of Sunday morning. Amid frantic diplomacy and frustration countries debated the scope of the climate finance package for developing countries, and, separately, text including language addressing the transition away from coal, oil, and gas – among many other crucial issues. 

Heading into COP29, We Mean Business Coalition called on governments meeting in Baku to make progress on the historic agreement from COP28 to transition away from fossil fuels to clean solutions and to agree an outcome on global finance to drive ambitious, investible and equitable national climate plans that will mobilize private sector action and unlock investment.

Building off the immediate reaction we released soon after the COP president’s gavel came down on the final texts – we outline how close the outcomes came to delivering on these priorities, and other key takeaways for business.  

Climate finance 

What was agreed: Countries agreed a New Collective Quantified Goal on Climate Finance (NCQG) of ‘at least’ $300bn per year by 2035 with developed countries taking the lead. Importantly this is framed within a larger goal of scaling up of financing to developing country Parties from all public and private sources to at least USD 1.3 trillion per year by 2035. For the near term, countries agreed to deliver a ‘Baku to Belém Roadmap’ – to be reported on by the COP30 presidency in Belém, Brazil next year – on how to scale up finance to the  total annual target of $1.3 trillion.

What it means: The $300bn is a modest step forward, marking progress under the Paris Agreement but falling short of the decisive action and timeline the climate crisis demands. Many developing countries were unhappy with the deal and trust about provision of finance remains low, potentially limiting the ambition of the new NDCs that countries need to put forward in the coming months, meaning that the “conditional” part of some NDCs may be larger than expected. However, the inclusion of a $1.3 trillion target by 2035 could be a turning point for global climate finance. This target offers a bold signal that climate finance will scale to meet the challenge of the climate crisis. The $1.3 trillion figure has been hailed as a science-led alignment of the financial resources needed to meet the demands of the energy transition and resilience-building in developing countries deeply impacted by climate change.

Achieving the $1.3 trillion will require massive mobilization of private investment globally, especially in developing countries. As new public finance is deployed, it will need clear focus on de-risking investments and creating the right conditions to successfully mobilize private sector finance globally.  

For businesses, this target needs to become more than just a number— they need governments to show that it will be a real signal that the financial ecosystem is on the path to aligning in a way that will unlock investment opportunities globally and especially in developing countries. The private sector is ready to invest where conditions allow.  Improving investment conditions with sound domestic policies and effective deployment of public climate finance to reduce risk premiums will help mobilize private investments at scale.

To get this going we will need governments to be clearer on how they will accelerate the mobilization of finance for an equitable energy transition globally:  

• By sending clear policy signals: globally, the private sector looks for certainty and coherence for where to invest. We need to see ambitious nationally determined contributions (NDCs) and clear plans that facilitate their implementation in all countries.   

• Through public finance playing a more catalytic role, leveraging mechanisms like blended finance and guarantees to de-risk investments, particularly in vulnerable and emerging markets.   

This evolution can create a predictable environment for businesses to engage in large-scale clean energy and resilience projects.

Companies poised to act early will find themselves at the forefront of the growth markets in the global economy. However, governments must rapidly translate these commitments into policies and measures that can encourage investment. This means addressing regulatory barriers, stabilizing risk factors, and creating frameworks that integrate public and private financing. As the $1.3 trillion roadmap unfolds, the private sector will be ready to seize this moment—not just to drive profit but to play a pivotal role in ensuring a sustainable future.

Fossil fuels  

What was agreed: Efforts elsewhere in the COP29 negotiations to include explicit references to the transition away from fossil fuel were repeatedly blocked or diluted. A Presidency-led draft decision published in the final hours of the conference which reiterated language from last year’s landmark UAE Consensus and Global Stocktake failed to achieve consensus. A number of progressive countries and country groupings objected to the draft decision as too weak, noting that it had been “watered down”. Previous versions of the drafts published in the days before had included stronger draft language on how the Global Stocktake outcomes would inform countries’ NDCs as well as recommendations about tracking and reviewing progress on implementation of these outcomes. As no consensus was reached at COP29, the text will need to be further worked on before being taken up for adoption by Parties once again at COP30 in Brazil.   

What it means: Responding to this outcome, our CEO María Mendiluce said: “The inability to secure explicit commitments on fossil fuels and instead delay decision-making until Belém is a failure of leadership. Many nations sought to include the critical language agreed in the UAE Consensus on transitioning away from fossil fuels, but pushback from a handful of key countries representing the vested interests of the fossil fuel industry, a poorly led process and accusations of diluted commitment, meant the final text could not be agreed and will be taken up again next year.”  

Without clear signals that align with last year’s commitments, including the transition away from fossil fuels, governments risk stalling critical private sector investment needed to achieve climate goals. The onus now rests with individual countries, the majority of whom supported stronger outcomes in Baku, to go home and put this in their new NDCs to ensure they send strong signals on how their policies will accelerate the clean energy transition and attract greater private sector investments.

What next: Fossil fuels remain at the heart of the climate crisis, and avoiding the subject only delays the energy transition – putting more lives, jobs and communities at risk. However, the issue is far from shelved. Critical decisions on fossil fuels are expected to take center stage in upcoming negotiations at COP30 in Brazil, where discussions on setting clear phase-out timelines could gain momentum. Ensuring that a just transition is a central part of these discussions will be of vital importance on the road to COP30 – especially as countries could not agree on text relating to the official Just Transition Work Programme at COP29. Additionally, platforms like the G20 and G7 will continue to provide influential forums where the global strategy to phase out fossil fuels can be shaped. We witnessed this during this year’s G20 summit which took place during COP29, when leaders reaffirmed their commitment to accelerating the clean energy transition in line with the outcome agreed in the Global Stocktake at COP28 in Dubai last year.

Aligning these strategic multilateral decisions with ambitious, investible Nationally Determined Contributions (NDCs) that prioritize the clean energy transition, will be the key to delivering progress. The leadership shown by the UK and Brazil, who both announced new NDC commitments during COP29, should act as a catalyst for others.

The UK committed to an ambitious new NDC target of reducing greenhouse gas emissions by 81% by 2035, compared to 1990 levels. This positions the UK as a leader in rapid decarbonization, setting a high benchmark for other developed nations.  The UK will deliver its full plans in 2025. 

Brazil pledged to reduce net greenhouse gas emissions by 59%–67% by 2035, compared to 2005 levels. This strengthens Brazil’s global leadership on climate action as it prepares to host COP30 and demonstrates the potential of emerging economies to set ambitious targets despite economic challenges.  Its new NDC has a strong focus on reducing deforestation, scaling up biofuels and accelerating electrification, reflecting its dual priorities of economic development and environmental stewardship.

By sending stronger signals to investors and businesses, NDCs will not only mobilize capital but also ensure that the global energy transition progresses at the necessary pace. We Mean Business Coalition will continue to work with business and policymakers, with a focus on key geographies such as Brazil, EU, Japan, India and South Africa, to support the delivery of new NDCs in 2025 that are both ambitious and investible.

Adaptation and resilience in developing countries

The lack of sufficient financial support for adaptation measures continues to place the most vulnerable nations at disproportionate risk. Developing countries face immediate threats from extreme weather, economic strain, and fragile infrastructure, yet climate finance flows remain heavily skewed toward mitigation. Adaptation projects often struggle to attract private sector investment due to higher perceived risks and lower immediate returns. 

To overcome this, targeted mechanisms such as blended finance, risk-sharing instruments, and insurance-backed investments must be scaled up. These tools can mitigate financial uncertainty, making adaptation projects more attractive to private investors. For instance, investments in resilient infrastructure—such as flood defenses, sustainable agriculture, or water management systems—offer businesses a means to protect critical supply chains and thereby avoid both local and global disruption from climate shocks.

Alongside adaptation, the clean energy transition in developing countries offers significant opportunities for private sector investment. However, these regions often face barriers such as unstable regulatory environments, currency risks, and underdeveloped infrastructure. Public finance needs to be deployed strategically to address these challenges, thereby cutting risk premiums and improving investment conditions. 

Tools like green bonds, concessional finance, and public-private partnerships can unlock large-scale private capital for renewable energy, energy efficiency, and grid modernization projects. The energy transition in these regions is not just essential for global emissions reductions—it is a vital economic opportunity for businesses looking to access rapidly growing markets in the clean energy sector.

Article 6 and the role of carbon markets

What was agreed: 9 years after the Paris Agreement established mechanisms to allow countries to cooperate in meeting their NDCs using market and non-market approaches, the final agreements operationalizing these mechanisms were agreed in Baku. A new crediting mechanism is now in theory operational, the Paris Agreement Crediting Mechanism (PACM, formerly known as the Article 6.4 mechanism) alongside a facility for government-to-government exchanges on mitigation outcomes known as Article 6.2.   A breakthrough was achieved already at the opening of the Baku conference, with Parties adopting new standards governing how methodologies will be developed for the PACM.  In the final texts agreed at COP29, other issues have now been clarified regarding technical issues such as use of registries and how credits will be issued and retired.

What this means:  Agreement on Article 6 after so many years of painstaking negotiations is a welcome boost for carbon markets internationally. However, having the market tools now operational does not guarantee that investment will flow and high-quality credits will be issued. To make these markets truly investible, we now need to see clarity in what will become the main sources of demand for these credits – whether to be used to count towards developed countries’ NDCs or other purposes – in order to provide a demand signal that will drive investment in the supply side, necessitating both development of methodologies and of course establishment of real, high-integrity projects.  As PACM comes into being, its relationship with voluntary carbon markets, whose methodologies can also be submitted for consideration for PACM approval, needs to be clarified. In parallel, as the voluntary carbon markets develop further, consideration of impacts on people and communities while prioritizing high integrity emissions reductions and transparency will be central.

The need for COP reform

While multilateralism is imperfect, it remains the cornerstone of global climate action. The agreements in Baku, despite their limitations, underscore the power of global cooperation to address challenges that no single country can solve alone. Multilateral forums like COP foster accountability, amplify the voices of vulnerable nations, and create space for collaboration across geopolitical divides.

However, the COP process must evolve to meet the urgency of the climate crisis. Too often, outcomes are hostage to the priorities of individual nations. The high integrity and neutrality of the presidency must never be in doubt. Reforms are needed to make the process more action-oriented, emphasizing implementation and holding countries accountable for domestic delivery of their international commitments.

The rotation of COP hosts presents challenges. The host nation’s domestic policies, resources, and geopolitical priorities can unduly shape the tone and focus of the talks. Future reforms must consider how to balance host nation influence with the global nature of the challenge, ensuring consistent ambition regardless of location.

Looking ahead to Belem and beyond

With the Amazon as a symbol of both opportunity and peril, Brazil’s stewardship of COP30 will be pivotal. Their role will be much more than maintaining momentum—it will require the rebuilding of trust and driving accelerated change.

COP30 must bridge the gaps left from Baku and turn what was achieved into actionable plans, focusing on nature-based solutions, innovative finance mechanisms, ensuring a just transition, and a clear framework for phasing out fossil fuels. Brazil’s leadership will be measured by its ability to rally nations toward implementing bold and pragmatic climate actions that exceed the promises made in Baku.

In parallel, we must also look beyond the COP process to new and innovative ways of international collaboration that can foster partnerships harnessing the transformational power of business and governments working together. In this vein, G7 and G20 provide increasingly important spaces for high level political direction setting. Signals from Heads of State and Government can provide mandates for their Ministers of Finance, Trade, Economy, Agriculture, and others, to work to ensure their portfolios are aligned with these high-level commitments for 1.5ºC-aligned development, in clear recognition that these are not simply environmental commitments but essential steps to safeguard our economies, communities, industries and livelihoods. Whether through supply chain disruption, food security issues or global financial instability, climate impacts in one country are felt throughout the world, and only by working together can we fully respond to the scale of the issue.

Core to this is the transition away from fossil fuels. With renewables often already outcompeting fossil fuels on cost and scalability, governments and businesses must double down on investments and policies to accelerate the transition. The Baku to Belém Roadmap provides an opportunity to align public and private sector efforts to unlock new markets for clean energy and reduce financial barriers in high-risk regions. We Mean Business Coalition and our business partners are looking forward to working with Brazil to meet this moment in 2025. 

Additional positive announcements at COP29   

• Indonesia’s bold ambition: At the G20 summit that took place during the COP, Indonesian President Prabowo Subianto announced plans to retire all coal and fossil fuel plants within 15 years, while significantly increasing renewable energy capacity. This provides a strong signal for other coal-dependent economies to transition to renewables and could catalyze private investment in Southeast Asia’s clean energy sector.   

• ‘Straight Line to Net Zero’ Initiative: A coalition of nations, including the EU, Canada, Mexico, Chile, Norway, Switzerland and Georgia committed to setting 2035 climate targets on a “straight-line or steeper” path to net zero. This guarantees steady emissions reductions, avoiding backloading of climate efforts to future decades and provides a replicable framework for other countries.   

• Launch of the Global Clean Power Alliance: Introduced at the G20 in Rio, this UK-led alliance unites countries like Brazil, Australia, Canada, and Germany to accelerate the clean energy transition. It reinforces collective action to meet COP28 goals of tripling renewable energy capacity and doubling energy efficiency and creates shared expertise and financing opportunities for global clean energy projects.   

• Global Methane Pledge: Governments and philanthropy announced nearly $500 million in new grants for methane abatement, bringing the total to over $2 billion. Further, more than 30 countries endorsed the COP29 Presidency’s Reducing Methane from Organic Waste Declaration. Methane reductions provide immediate climate benefits, helping to curb near-term warming. This aligns with global agriculture, energy, and waste management reforms.