COP29’s financial focus shows private capital holds the key to reaching net zero

2. Insurance: unlocking the capital needed

The insurance industry’s role in the transition to net zero cannot be overstated. Without insurance, the infrastructure necessary for decarbonisation—whether it’s renewable energy projects or carbon markets—simply won’t be able to scale. At COP29, we saw a significant shift in how the insurance sector engages in the climate finance dialogue. From insuring infrastructure to providing risk mitigation for nascent technologies, insurance is the linchpin in unlocking the capital that will power the net zero transition.

Our insurance-focused roundtable at COP29 highlighted innovative products and cutting-edge research that will enable the industry to play a central role in scaling sustainable finance. It was clear from the discussion that insurance needs to be brought to the table earlier in the development of sustainable finance products and new technologies. The sector’s involvement is also essential in ensuring that the right capital flows where it’s most needed, including emerging markets and developing economies.

3. Carbon markets: a breakthrough on Article 6

COP29 marked a historic breakthrough on Article 6 of the Paris Agreement, resolving long-standing issues that have hindered the development of global carbon markets. The UK has long been a leader in establishing carbon markets, and this summit provided the momentum to further scale high-integrity carbon markets globally.

To support this, in the UK, the Government’s announcement of principles for carbon markets sent a powerful signal to the market, laying the groundwork for the future development of these markets. With a supportive regulatory environment, the UK is well-positioned to lead the scaling of carbon markets—an essential component of achieving global climate goals.

4. Nature and adaptation: an integrated approach

Finally, COP29, held just after COP16 on biodiversity, reinforced the need to integrate nature into the sustainability agenda. The summit placed a strong emphasis on coordinated public and private action to support nature and adaptation, with a clear focus on mitigating the impacts of climate change while also protecting biodiversity. One important outcome for adaptation from COP29 was the establishment of a support programme for the implementation of National Adaptation Plans (NAPs) for the Least Developed Countries. Undertaking transformational adaptation requires more technical support for these countries to develop NAPs, and this should in turn allow more adaptation investment to flow to these regions.  COP30 in Brazil will be pivotal in maintaining this momentum, as we move towards a more holistic approach that integrates both mitigation and adaptation strategies.

Negotiated outcomes: mobilising finance

One of the most important outcomes of COP29 was the agreement on the New Collective Quantified Goal (NCQG), which triples finance to developing nations, increasing the goal from $100 billion annually to $300 billion by 2035. This decision will scale up finance to $1.3 trillion per year by 2035, with a focus on increasing the proportion coming from private sources. UN Climate Change Executive Secretary Simon Stiell called this new finance goal “an insurance policy for humanity,” and the private sector must rise to meet this challenge, bringing the necessary capital and innovation to the table.

Looking ahead: the time to act is now

With countries due to submit updated NDCs by February 2025, COP30 in Belém, Brazil, will be a defining moment for increasing ambition and accelerating global emissions reductions. While some government commitments at COP29 may have lacked the ambition many had hoped for, this has only strengthened the resolve of the private sector to lead the way.

The time to act is now. The challenge is enormous, but the opportunity for leadership has never been greater. As the world’s financial centre, we must continue to drive progress, foster innovation, and unlock the capital needed to shape a sustainable future. London and the UK are uniquely positioned to lead this change—and the world will be watching.

Chris Hayward, 
Policy Chairman of the City of London Corporation