COP29: Businesses are outpacing governments in climate action
Global leaders in climate science and politics are struggling to reach a consensus over how much funding should be committed to climate action. Yet, the business community nonetheless has been exploring innovative ways of deploying capital to fund climate solutions.
Climate finance dominated the headlines at COP29 in Baku, Azerbaijan. The world was due to recalibrate its target amount for initiating climate action through the highly anticipated New Collective Quantified Goal or NCQG. This refers to the amount that countries are willing to pledge to address the climate crisis.
However, global leaders remain deeply divided over the basics, such as exactly how much money needs to be raised, who should fund it, what types of financing should be available, which salient issues should be addressed first, and for how long financial resources would be poured into certain initiatives.
Climate action: Mobilising capital from banks and the private sector
Development banks, such as the World Bank and Asian Development Bank, have been hard at work increasing the scope and amount of funding available for climate action. At COP29, these multilateral development banks, or MDBs, issued a joint statement presenting the range of financial support they are collectively offering different economies.
By 2030, MDBs’ collective financing – which is available to help low-income and middle-income countries address disasters in the short term and adjust to a warming world in the long term – is expected to hit US$120 billion, including US$42 billion for adaptation. This is in addition to US$50 billion allocated to high-income economies.
“While the scale of MDBs’ financial commitments is essential, MDBs’ most significant impact comes from our ability to drive transformative change,” they said.
MDBs are also ensuring more sectors are involved in climate action: they are tapping into the private sector to contribute US$65 billion.
Also Read: Climate crisis and the decline of productivity
Markus Steilemann, CEO of the chemicals manufacturer Covestro, holds the same view about mobilising capital from the private sector.
“Of course, all countermeasures come with immense costs – [that is] the central theme of the summit in Azerbaijan,” he said.
Steilemann is urging green businesses to demonstrate their recent advancements and to prove to investors why it is worth investing in their solutions.
“Investments in climate protection must, on the one hand, be viewed as avoidance costs; because the consequences of inadequate action result in much higher bills in the future,” he said.
“On the other hand, the private sector in particular – which is becoming increasingly important for financing in times of tight public budgets – must be convinced to invest more in climate protection.”
The frontlines of climate action are changing.
“First, technology is on our side in the fight against climate change, resource exploitation and environmental destruction,” Steilemann said.
“There are more and more innovative and inexpensive products, processes, and solutions here – from ultra-light plastics to high-performance batteries, from vertical farming to meat from plants. All supported by the power of artificial intelligence and enhanced by the concept of the circular economy.”
An equally important aspect of climate action, however, is the role that private capital plays.
“The second message to the financial community is that one can make money with climate protection. According to a study from last year, the experts at Roland Berger see greentech as an attractive growth market, the volume of which could more than double from 5 trillion to 12 trillion euros by 2030,” Steilemann said.
Creative capital raising for climate action
When different streams of climate finance converge, they create a river of opportunity.
Apple, for example, expanded its commitment to nature-based carbon removal projects by pouring US$200 million into a blended fund. This initiative – which marries investments in sustainable agriculture with ecosystem restoration – aims to pull 1 million metric tonnes of carbon dioxide out of the atmosphere annually, all while delivering financial returns.
Salesforce, meanwhile, uses a medley of philanthropy, venture capital, and sustainability bonds to bankroll climate solutions. This approach not only de-risks fledgling ideas but also fuels commercially viable solutions, squeezing every drop of value from available resources. It’s a prime example of how casting a wide financial net can capture a diverse haul of climate innovations.
For their part, Hartree Partners & Wildlife Works pledged over US$2 billion towards carbon credit projects. By protecting forests and biodiversity, the efforts generate a whopping 20 million carbon credits annually. This initiative highlights the power of pooling resources.
Also Read: Working in extreme heat: How to protect workers
Businesses can integrate multiple forms of capital for climate initiatives by blending a variety of financial tools. That is, by having a mix of philanthropy, venture capital, sustainability bonds, and carbon credits to support diverse climate projects effectively.
After all, different companies are at different stages of maturity in terms of taking climate action. But a few companies like Apple and Salesforce have already begun successfully integrating multiple capital streams into their framework of climate initiatives. It’s a matter of understanding your company’s goals.
“While companies may have access to similar corporate finance tools, it doesn’t necessarily mean every company will need or want to activate them,” said Naomi Morenzoni, SVP of Climate and Innovation Philanthropy at Salesforce.
“For example, when it came to green and sustainability-linked bonds, some companies found the instrument to be extremely relevant if they were in a growth and expansion phase. While others, who were highly liquid and didn’t need to raise new capital, had little to no interest in issuing a bond.”
Businesses leading inclusive climate action
In the process of raising capital and closing the climate finance gap, one question remains: how can businesses ensure investments in climate action produce effective and equitable outcomes?
For Geoff Gourley, founder and CEO of ESG&I, the success of climate protection and disaster resilience projects will depend on how inclusive these measures are. Do these climate solutions respond to the needs of the planet’s most vulnerable communities?
“For businesses, this is a cue to deepen investments in community-driven resilience and adaptation efforts. This approach isn’t just philanthropy – it’s risk mitigation and brand resilience,” Gourley said.
“The pledge by major development banks to ramp up financing to US$120 billion is a positive move, yet it demands scrutiny. As corporations, we must champion an inclusive approach to climate action that addresses the needs of underrepresented communities,” he said.
“True inclusivity isn’t just about financial support; it’s about engaging diverse voices in climate conversations and decisions.”
Also Read: The economic cost of a warming planet
Climate impact and business opportunity in APAC
And there’s no better place to see the direct impact of climate investments than in the Asia-Pacific region.
“We are looking at an agenda dominated by climate finance, the future of carbon markets, and delivering on ambitious climate goals. But for Asia-Pacific, these aren’t just talking points – they’re imperatives,” said Lauren Chung, APAC CEO, Strategy & Communications Advisory at Teneo.
“The Asia-Pacific region is at the epicentre of both climate impact and opportunity. With fast-growing economies and millions of livelihoods dependent on stable climates, we’re also home to some of the world’s most vulnerable communities,” Chung said.
“In many ways, businesses in Asia-Pacific are uniquely positioned to innovate solutions for both the region and the world. The creation of green finance instruments like green bonds, sustainability-linked loans, and carbon trading markets has begun in countries like Japan, Singapore, and China, but COP29 is the stage where these initiatives need to be scaled across the region.”