“Money talks, and as we enter the second quarter of this century, it’s saying loud and clear: there’s no stopping the clean energy juggernaut, and the vast benefits it brings: stronger growth, more jobs, less pollution and inflation, cheaper and cleaner energy,” 

—UN Climate Change Executive Secretary, Simon Stiell, from “Transformational NDCs are not Optional” | UNFCCC )

Following the trend of previous years, the Nationally Determined Contributions (NDCs) this year are ambitious. (NDCs are the GHG emission reduction targets made by individual countries.) Major economies like the UK and Brazil have updated their NDCs to support the global target of reaching net zero by 2050. 

What this means for businesses is stricter GHG emission regulatory policies and increased costs associated with compliance, including investments in cleaner technologies, potential penalties for non-compliance, and potential pressure to restructure operations. However, they also allow businesses to capitalize on the rising carbon trading market and plan long-term more confidently. 

Under Article 6.4 of the Paris Agreement (creation of carbon credits), the international carbon market framework was further agreed upon, offering businesses opportunities to trade emissions credits. 

Businesses, including the Alliance of CEO Climate Leaders, advocated for more investable climate plans, aiming to translate them into long-term policies that would attract private investment.

Article 6 of the Paris Agreement will establish reliable and transparent carbon markets to support countries, while markets that comply with Article 6 will help increase investment to developing countries.

However, stricter rules on transparency and double-counting mean companies must ensure compliance with rigorous reporting standards.

The pathway created on climate finance opens new opportunities for funding sustainable projects and transitioning to low-carbon operations. Developed nations pledged a minimum of $300 billion annually to support global climate initiatives, including funds for developing nations. Businesses operating in these regions may access new funding opportunities for clean energy transitions and adaptation projects. 

Alongside this, the International Energy Agency expects global clean energy investment to exceed USD 2 trillion for the first time in 2024.

The activation of the Loss and Damage Fund provides financial support to nations affected by climate change. Businesses in vulnerable regions should anticipate policy shifts and opportunities for collaboration in climate-resilient infrastructure and solutions.

Summary

Regulators, investors, and consumers are increasing their demands for transparent and ambitious ESG strategies. The outcomes of COP29 highlight heightened scrutiny and expectations, making it crucial for businesses to integrate sustainability into their value chains.

With the increasing complexity of compliance and climate strategizing, businesses may struggle to keep up– which is where CeroED comes in, with our product #ARRO. Through our SaaS platform, we help our client’s measure, manage, and improve their ESG performance. We can help your business remain compliant (and competitive), refine sustainability strategies, and ultimately, better align with global climate commitments. 

To learn more, click here.

Article by: Bhoomika Makwana, CeroED