The decisive moment for business to accelerate global climate action

World leaders gather for COP29 in Baku next month, and the stakes couldn’t be higher. Climate change is no longer an abstract issue confined to future projections – it is hitting now. Extreme weather events—charged storms, wildfires, floods, unprecedented droughts—are becoming more frequent and more destructive, affecting not only the environment but also economies, societies and businesses around the globe. The risks are real and they are escalating.

From a business perspective, climate change has become a material risk. It’s no longer just an environmental or ethical concern—it’s a financial concern. The concept of spin-off – where businesses invest in climate-related efforts not just because they’re good, but because they’re good for business – is central to how businesses are increasingly viewing climate risks and the long-term economic imperative. of climate action.

But companies, even with their significant influence, cannot solve the climate crisis alone. The transition to a low-carbon economy requires strong and sustainable regulatory frameworks that get everyone – governments, companies and individuals – on board.

While the science is clear and the way forward is widely recognized, meaningful action has lagged behind. At COP28, governments from around the world committed to a series of vital steps aimed at keeping global warming within reach of 1.5 degrees Celsius. These commitments include moving away from fossil fuels, tripling renewable energy capacity and doubling energy efficiency by 2030. Hundreds of companies, aware of the financial and reputational risks of inaction, have also publicly supported these goals.

However, despite these encouraging signals, the world remains at an inflection point. Decisions made and actions taken – or not – over the coming years will determine whether we ensure a livable planet for future generations. Translating these promises into reality requires a coordinated effort to increase the necessary actions and investments, especially when it comes to the transition from fossil fuels to clean energy sources. For this to happen, two main things are essential: ambitious, investable climate plans backed by clear policies and sufficient public funding to drive the transition forward.

The first priority for governments is to ensure that their national climate plans (NDCs), due by early 2025, accelerate the transition from fossil fuels to clean energy. These plans must close the gap between current policies and the goal of limiting global warming to 1.5C. Crucially, they should set sector-specific targets such as increasing clean energy capacity, improving energy efficiency, phasing out fossil fuels and halting deforestation. Governments made important agreements in Dubai, but the challenge now lies in translating these agreements into actionable and measurable results.

But it’s not just about having the right targets – without the right financial and regulatory framework, the private sector will continue to struggle to invest at the scale needed in developing countries. Public finance is needed to de-risk private investments and create favorable environments for the private sector to increase its involvement.

A critical element of this financial framework is expected to be dismantled at COP29 in Baku, where the new global climate finance target will be on the agenda. This new goal (called the NCQG) will set the basis for public climate finance flows to developing countries from 2026 onwards. These funds are essential not only for achieving the goals of the Paris Agreement, but also for catalyzing further private investment in the transition to a low-carbon economy.

The outcome of the negotiations in Baku will be of great importance for developing countries. But it will also be of great importance to businesses around the world, especially those that rely on global supply chains. Many companies are either headquartered or operate supply chains in developing countries. A climate finance agreement that includes adequate levels of mitigation and adaptation finance will be essential for these businesses, as it will support developing countries in transitioning from fossil fuels to clean energy, while also building resilience to climate impacts.

Mitigation financing, which supports the reduction of greenhouse gas emissions, is directly linked to business interests. Adequate mitigation finance flows can help expand renewable energy access, improve grid infrastructure and increase energy efficiency in developing countries. These improvements would reduce operational costs and help businesses meet their climate commitments. Companies are increasingly looking for opportunities to clean up their operations, and a robust public climate finance framework will help create the conditions for them to invest more in the fossil-to-clean transition in the Global South.

Equally important is adaptation finance, which is designed to help countries build resilience to the effects of climate change. For businesses, the ability of developing countries to adapt to rising sea levels, more frequent storms and extreme temperatures is critical. Supply chains are highly vulnerable to climate impacts and when crops are destroyed, production halted or transport routes disrupted, the economic consequences are felt globally. Without sufficient adaptation funding, businesses will face higher costs, more frequent disruptions and greater uncertainty.

The world is watching and the decisions made at COP29 will have long-term implications. A strong climate finance agreement in Baku that adequately addresses mitigation and adaptation needs can unlock the investments needed for a just and equitable transition to a low-carbon economy. It will also help create the stable policy environments needed to de-risk private investment and enable businesses to scale their involvement in the clean energy transition in developing countries.

As we look towards COP29, world leaders must recognize that the time for incremental progress has passed. The urgency of the climate crisis calls for nothing more than transformative action, backed by strong policy and financial commitments. The cost of inaction is too high – both for our planet and our global economy. It is time for bold leadership, clear accountability and coordinated global efforts. Only then can we hope to secure a sustainable future for all.