Reflections on COP29: A Participant’s Call to Action for the Financial Sector

Key Insights:

From Promises to Action

The recently concluded UN Conference of the Parties 29 (COP29) cemented the financial sector's role as a catalyst for global climate action. As I observed in my time in Baku, Azerbaijian, the "Finance COP" moniker for COP29 is an accurate one, as finance has become a lead player in the drive toward global climate solutions. 

I clearly saw a shift in focus this year, away from making lofty promises, toward more actionable commitments – with various owners of capital, such as multilateral development banks (MDBs) and private equity players identifying significant opportunities and responsibilities for corporations, investors, and governments worldwide. 

The financial sector’s commitments played out in several ways at COP: 

• Developed nations pledged to mobilize at least USD 300 billion annually for developing nations to address climate change, part of a USD 1.3 trillion annual funding target to mitigate climate risks and enhance resilience in vulnerable regions. 
• MDBs committed to increase annual climate finance contributions to USD 120 billion by 2030, a 60% increase from the previous year, with an additional USD 65 billion from private investors, to support renewable energy, infrastructure resilience, and sustainable development in emerging markets.
• A landmark framework under Article 6 of the Paris Agreement to facilitate international carbon markets was introduced, to enable governments and corporations to trade carbon credits, unlocking billions for green projects.¹  
• Biennial transparency reports were introduced, requiring governments to disclose detailed data on emissions, reduction targets, and climate measures and reflecting growing demands for corporate accountability.
• Through the UN Sustainable Stock Exchanges Initiative, stock exchanges are embedding stringent ESG criteria to ensure that listed companies meet sustainability standards.
• The Climate Investment Fund launched its Capital Markets Mechanism, listing USD 75 billion in green bonds on the London Stock Exchange to fund clean energy transitions.

Turning Commitment Into Leadership

While the commitments we saw at COP29 are encouraging, corporate leaders and financial institutions must turn commitments into real leadership. Here are some ways organizations can lead on climate.

• Embed Climate into Strategy: Climate risk is financial risk. Senior management must integrate climate considerations into corporate governance, ensuring long-term resilience and shareholder value. Our Morningstar Sustainalytics Low Carbon Transition Ratings (LCTR) provide investors with a forward-looking assessment of a company's alignment with a net zero pathway, and aid reporting, scenario analysis, and portfolio alignment with net zero strategies. 


• Innovate for Impact: From developing green financial instruments to funding renewable energy projects, financial institutions need to innovate to deliver measurable climate impact while driving value.


• Prioritize Transparency: Financial stakeholders demand accountability. Companies should adopt proactive, transparent reporting practices that go beyond compliance to build trust and deliver material impact.

Funding Global Sustainability: Where We Go from Here

COP29 underscored a simple truth: achieving global climate goals requires the full engagement of the financial sector. Development banks, private capital markets, and corporations must collaborate to turn pledges into action and convert commitments into measurable outcomes. 

We witnessed the enormous potential of the financial sector this year at COP29. MDBs like the World Bank, African Development Bank, and European Bank for Reconstruction and Development announced commitments to scale green finance and enhance infrastructure resilience. Governments from Japan, Germany, the UK, and Canada each unveiled significant funding initiatives to support climate adaptation and energy transitions. Bilateral development finance institutions (DFI) and other financial institutions, such as Acumen and Norfund, pledged billions to fund renewable energy, climate-smart agriculture, and innovative green technologies in developing countries.  

Outside of the main negotiations, I counted at least 14 additional announcements from development-focused institutions such as the USD 1.26 billion commitment for Gaia, a blended finance initiative between FinDev Canada, MUFG, Green Climate Fund and Climate Fund Managers. Collectively, these efforts total over USD 200 billion in fresh commitments aimed at accelerating the global transition to sustainability.

Even without an official White House delegation, the United States was active through various institutions and programs. These included the Development Finance Corporation, which committed to USD 4 billion in new climate finance; the US Agency for International Development’s Climate Initiatives, which committed USD 53 million for private finance mobilization, early warning systems, and resilience-building; International Public Climate Finance, which reaffirmed and increased its allocation of USD 11 billion per year to the PREPARE program;² and the Agriculture Innovation Mission for Climate (AIM for Climate), co-led by the US and United Arab Emirates, which expanded to USD 29.2 billion.  

Commitments are a good thing, yet deploying capital is another matter. The challenge lies in turning these financial pledges into impactful, on-the-ground investments. During COP29 the Climate Bonds Initiative published an insightful report which highlighted many of the challenges and opportunities in effectively deploying green capital to make an impact.³ 

One green capital deployment strategy is to leverage labeled green, social, sustainable and sustainability-linked (GSSS) bonds and loans to increase private sector involvement and credibility. Of the 23 EU DFIs in the report, 39% have already issued GSSS labeled bonds.⁴ The report also mentions the Global Green Bond Initiative, a collaboration between global DFIs to provide anchor investments in labeled GSSS bonds. The initiative also advises emerging markets and developing economies on how to develop credible and interoperable green bond frameworks to identify a pipeline of green projects and attract private investors. 

For our part, as the leading provider of second-party opinions for GSSS bonds, it is great to see collaborative efforts to improve credibility and transparency at a global level. In 2025, Sustainalytics will launch its updated second-party opinion (SPO) methodology, our enhanced approach for assessing labeled bonds, bringing greater insights and transparency to GSSS bond market. 

The Financial Sector as Architects of a Sustainable Future

COP29 reinforced the imperative for the financial sector to lead, not just as facilitators of capital, but as architects of a sustainable future. The commitments made in Baku must now translate into measurable outcomes.

This is a pivotal moment for finance — a chance to redefine our role from being mere raisers of capital and generators of profit to becoming catalysts for global progress. Let’s rise to the challenge, embracing innovation, accountability, and impact as the pillars of a future-proof financial sector. Together, we can ensure that finance is not only a participant in the climate fight, but its most powerful catalyst.

References:

1. United Nations Climate Change. Paris Agreement Crediting Mechanism. N.d. https://unfccc.int/process-and-meetings/the-paris-agreement/article-64-mechanism.
2. The President’s Emergency Plan for Adaptation and Resilience (PREPARE) is a joint initiative co-led by the US Department of State and USAID to help people in developing countries adapt to and manage the impacts of climate change by 2030. To learn more visit: https://www.usaid.gov/climate/adaptation/prepare. 
3. Climate Bonds Initiative. 2024. The Role of Development Finance Institutions in Accelerating the Mobilisation of Green Capital. November 28, 2024. https://www.climatebonds.net/files/reports/the_role_of_dfis_in_accelerating_the_mobilisation_of_green_capital.pdf
4. Ibid.