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With COP29 now concluded in Baku, Azerbaijan, business leaders must now consider the ramifications for their organizations, especially as they relate to the quickening pace of the global energy transition, worsening portfolio of climate risks, uncertainty of the future of U.S. climate policy, and growing pressure on private financing to bolster climate resilience and adaptation. Although many have called the latest COP a disappointment, the short- and medium-term consequences of the latest climate negotiations should be evaluated thoroughly by both Chief Sustainability Officers (CSOs) as well as C-level management teams.
Key takeaways:
- COP29 has been called a “step back” in global progress on advancing a shared roadmap for financing the energy transition and improving climate resilience globally
- Business leaders will see more opportunities to be involved with climate financing opportunities given growing public sector hesitancy and conflict
- Climate risks continue to intensify, which necessitates a greater push from business leaders to understand their climate risk profile (both for physical and transition risks) and most effective mitigants
- Although U.S. leadership on the global climate stage is still uncertain, corporates should not waiver on their climate goals to avoid climate risk litigation
COP29 comes to an inconsequential close
Just last Friday the UN’s annual climate negotiation concluded and once again focused on the climate crisis and the integrated, cooperative actions needed to address it. The prior COP, COP28, was held last year in Dubai and was the largest attended climate COP in history, convening 97,000 delegates, and more than 150 heads of state, along with negotiation, business leaders, and non-state actors. The conclusion of the first ever Global Stock Take (GST – a mid-term review of progress towards the 2015 Paris Agreement) was the event’s key outcome and the conference emphasized the need for determined action to make progress on renewable energy, a just transition, climate financing, and more.
The emerging role of businesses in COP
For long-time COP observers, increasing participation from global corporations is a well-timed addition. To meet global emissions targets, climate talks need to move beyond negotiation halls to catalyze the real economy and will require participation from investors, multi-nationals, and civil society. And, accordingly, some companies come to COP having earned green credentials, not only by decarbonizing their businesses, but also by supporting government policy to push others to do the same.
COP29 leadership has also come out and made a push for more corporate engagement, “our task is to invite as much as possible the private sector for climate finance – it’s a very good source for new initiatives, new formats, [and] new mechanisms for finance,” Mukhtar Babayev, COP29 President shared during the conference. The role of businesses on the global climate agenda will be increasingly salient as U.S. climate policy goes under a material revision.
What were key takeaways from COP29?
1. Limited progress was made on global financing goals, even as G20 as leaders urge for scaling up climate finance from billions to trillions. G20 leaders met last week in Rio and sent a signal to negotiating teams at Baku on the need to rapidly and substantially “scale up climate finance from billions to trillions.” Global leaders were under intensifying pressure to establish a new global finance framework, also referred to as the New Collective Quantified Goal (NCQG). This goal is intended to be more ambitious in outlining the relative contributions from different states, timeframes, and in-scope activities for financing. Despite these calls to action, the climate conference ended with a bare minimum agreement on a new public finance goal of $300 billion USD by 2035. This new goal will start in 2026 and replace the existing annual target of $100 billion, which was met two years late, and was already seen as insufficient. UN Climate Chief Simon Steill had described a more ambitious climate financing goal as “an insurance policy for humanity.”
Why this matters. Experts have suggested that $300 billion USD by 2025 will be a gross shortage to support global adaptation and resilience efforts, which will cause harm, damage, and loss to hundreds of millions globally. Businesses operating with a global portfolio must be aware of the intensifying climate threat that vulnerable countries will have to face. UN reports have stated that emerging countries (excluding China) need investments well beyond $2 trillion USD annually by 2030 if the world is to halt global warming.
2. Future of U.S. leadership was called into question and remains uncertain. With COP29 taking place immediately after the election of President-Elect Donald Trump, who has expressed plans to withdraw the U.S. from the Paris Agreement, many questions remain about the future role the U.S. will play both at COP and leading the energy transition globally. Darren Woods, the Chief Executive of Exxon Mobil, has warned President-Elect Trump against withdrawing from the Paris agreement to curb climate-warming emissions and has said the risk of leaving an empty seat at the negotiation table is too great for the U.S. Darren Woods is joined by others, including Pedro Pizarro of one of the largest U.S. power utilities, and a host of major businesses and investors who urged Trump to remain in the agreement during his first administration and some signed on the “We Are Still In” pledge.
Why this matters: If the U.S. is not leading the pack on the energy transition, many will look to (or continue to look to) China to play a critical role in setting the pace, standards, and economics of the energy transition. This will have negative impacts for U.S. businesses in energy, industrials, transportation, supply chain, and other downstream sectors. Businesses reliant on U.S. incentives for renewable energy, infrastructure development, or energy efficiency should assess their potential exposure to claw backs from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure bill disbursements.
3. The latest science shows that climate change is an increasingly material risk. Climate change is not just an environmental or ethical concern, it’s financial. Businesses look to invest in climate-related efforts not only because it’s the right thing to do, but because they’re good for business and long-term viability. Since climate change is already recognized as a material risk to the financial system, central banks and regulatory bodies are issuing guidelines and formulating regulations to nudge commercial banks to integrate climate change risks into lending and risk management practices. In 2023, the U.S. faced a record 28 weather and climate disasters, each resulting in losses over $1 billion. With 22 such events in 2020 and only 5.7% per yearthroughout the 1990s, 2023 had the highest number of billion-dollar disasters in US history, highlighting a frightening reality for businesses: the climate crisis is no longer a distant concern, it’s an immediate business risk that could affect everything from financial health to operational resilience.
Why this matters: In conformance with global regulation and pressure from investors, corporations will have to disclose their climate-related financial risks in accordance with the TCFD framework (now incorporated into IFRS ISSB reporting). Corporate directors have a responsibility to ensure climate risks, both physical and transition, have been identified, evaluated, and measures have been put in place to mitigate.
4. Businesses call on political leaders to choose a path towards a livable Even with hesitation of top policymakers on the global climate agenda, more than 260 businesses have signed a letter as part of the We Mean Business Coalition’s Fossil to Clean campaign. This campaign has been driven by corporates and underscores their need for clear and robust policies to accelerate the shift from fossil fuels. Referencing the UAE Consensus from COP28, the letter calls for governments to triple renewable energy capacity and double energy efficiency rates by 2030, and urges policy certainty to enable businesses to invest confidently in clean energy alternatives.
Why this matters: More and more eyes are on the corporate sector to advance the goals set in the Paris Agreement in 2015. For companies who have not evaluated their participation in such campaigns, careful due diligence will be required to determine the risk and opportunities of doing so.
5. Leaders are already looking to COP30 with questions emerging on corporate commitments to climate goals. With all the criticism of COP29’s location, many skipped Baku with an intent to focus on COP30 in Belém, Brazil. Even as its oil production booms, Brazil has been trying to position itself as a global climate leader, and COP30 offers a welcome opportunity to set the agenda. Before COP30 in November 2025, the next round of NDCs (Nationally Determined Contributions) are due by mid-February for COP30. The Brazilian President Lula da Silva spoke adamantly during the recent G20 that COP30 will be “our last chance to avoid an irreversible rupture in the climate system.”
Why this matters: Eyes will increasingly look to corporates for clarity in their decarbonization goals, strategies, and how they incent the energy transition from fossil fuels to renewable energy. Corporate directors should continue to push for their management teams to hold firm on existing goals as to not expose themselves to climate litigation risks.
Actions management teams can take:
- C-level executives should call for comprehensive climate risk assessment to understand the portfolio of upside and downside risks to the business with the worsening climate crisis. This assessment should consider both physical and transition risks and be in alignment with global frameworks and lead by their Sustainability function
- From their Sustainability teams, management should expect a competitive assessment of COP engagement strategies, pre-competitive advocacy activities with sector peers as well as prioritized opportunities for climate finance investments that support the organization’s global operations
- Review exposure to potential claw backs to the IRA and Infrastructure Bill disbursements and how it may impact your supply chain, direct business operations, and decarbonization plans. Bring your Sustainability, legal, and government affairs teams to understand opportunities and exposures
- C-level teams should continue to push for consistency in implementation of ESG and emissions reductions goals and plan for enhanced mitigation of potential roadblocks
Additional Telesto Resources:
- Navigating corporate climate action under a second Trump administration – 7 focal points for business leaders
- Climate risk is business risk: How leaders can prepare for a changing world
- How CSOs can navigate the “Gray” in CSRD implementation
- Faros, our climate risk assessment tool, helps your organization identify emerging climate threats as they become more common and disruptive and position your assets to protect operational continuity, hedge against rising insurance costs, meet regulatory disclosure requirements, and incorporate climate risk into asset acquisition and disposal.
- Prism, our ESG benchmarking tool, helps your organization to rapidly strengthen its sustainability, climate, and ESG performance and disclosures through in-depth benchmarking of industry peers and identification of gaps and areas of distinction.
