COP29: The business of climate finance

Global leaders in climate science and politics struggled to reach a consensus at #COP29 over how much funding should be committed to climate action. Yet, for years, the private sector has nonetheless been exploring innovative ways of deploying capital.

In Baku, Azerbaijan, the world recalibrated its financing target under the New Collective Quantified Goal. The NCQG refers to the amount that countries are willing to pledge to address the climate crisis.

However, even after the conference, leaders have remained deeply divided over the basics, such as exactly how much funding is needed, who should foot the bill, what types of financing should be available, which salient issues should be addressed first, and how long financial resources should be poured into certain initiatives.

Mobilising 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 for climate action. At COP29, these multilateral development banks, or MDBs, issued a joint statement presenting the range of financial support available to different economies.

By 2030, collective financing from MDBs – which is allocated to help low-income and middle-income countries develop climate resilience – is expected to hit US$120 billion, including US$42 billion for adaptation. This is in addition to the US$50 billion set aside for initiatives in high-income economies. 

MDBs are also tapping into the private sector to contribute US$65 billion.

While the sheer scale of these financial commitments is essential, MDBs believe their most significant impact comes from their ability to “drive transformative change” by collaborating across sectors and communities.

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The ROI of climate protection

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 businesses to demonstrate advancements in green tech and to prove to financiers why it’s 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.

One can make money with climate protection.

“According to a study from last year, the experts at Roland Berger see green tech as an attractive growth market, the volume of which could more than double from 5 trillion to 12 trillion euros by 2030,” he said.

Creative capital raising

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 $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. 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 $2 billion towards carbon credit projects. By protecting forests and biodiversity, the efforts generate a whopping 20 million carbon credits annually.

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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 $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 opportunity in APAC

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.”