Every year, the momentous annual event—the UN’s Conference of Parties (COP)—is expected to deliver on global climate commitments. Bringing all countries to the table to address their climate challenges is no small feat. It’s a bit like trying to get your extended family to agree on a problem for a holiday dinner—each person brings their own tastes, opinions, and priorities to the table!
What is important to stress here, though, is that everyone at the table must be heard and the actors must work collaboratively for an equitable outcome. However, this has not always been properly addressed.
For years, there has been a strong effort to elevate the voice of grassroots and civil society organizations as well as the private sector. As with any development challenge, the most affected stakeholders are the best positioned to share the realities of the situation and tested solutions. While there has been progress, there are still clear gaps. With every passing year, we have seen increased participation of civil society organizations at high-level discussions and in project development. However, we continue to lack the direct involvement of communities themselves at these key moments. Similarly, the private sector has increasingly provided inputs to global policy conversations. However, the discussions remain limited and often result in minimal action.
Putting the money on the (negotiating) table
The world has already crossed the 1.5-degree Celsius threshold set in the Paris Agreement. The era of global boiling is already dangerous for millions around the world. The only way forward is to transform the systems we operate in and reduce the impacts of climate change.
Now, the million-dollar question remains how can that happen? We know the answer: with trillions of dollars.
However, the world is falling short of those trillions. While commitments like the Loss and Damage Fund and the New Collective Quantified Goal (NCQG) mark a step forward, it remains a mystery how the commitments can be funded. More importantly, it is also unclear how they will be deployed.
What is the New Collective Quantified Goal?
Let’s break down the fund and goal. Both have been longstanding topics and priorities. In fact, the Loss and Damage Fund was first discussed in 1991. It took over thirty years and thousands of climate catastrophes before its establishment. Then, while it was established at COP27, it wasn’t until the following year that it was operationalized at COP28. To date, countries have pledged about $720 million. However, this falls short of the estimated need. The estimated finance required for adaptation needs in developing countries alone is $121 billion each year. The total climate finance required is in the trillions.
Keeping this funding gap in mind, countries came together at COP29 to establish the New Collective Quantified Goal (NCQG). After two weeks of intense discussions and a walk-out from negotiators, parties finally set a new goal. The goal tripled the committed finance to developing countries to $300 billion annually. While it fell far short of the ask, it came with the written intent to scale up the financing to $1.3 trillion by 2035.
What’s next for climate finance?
It took two years to operationalize the Loss and Damage Fund and commitments are still far below the estimated need. Despite these efforts, there is still no clarity on how the funding can be deployed, who must contribute, and the system for tracking.
If it took three decades of planning and two dedicated years of policy meetings to create an agreement that avoided those key questions, how can we expect the most climate vulnerable communities to survive? The Loss and Damage Fund took two years to agree on a process that is still falling short of needs. How quickly can those communities expect the NCQG to operationalize and deploy?
This is why we need everyone at the table. These meetings could continue to overlook opportunities to scale deployment if only the same actors are invited time and time again.
Notably, the private financial sector has stepped up to work with governments to create and deploy financial solutions. From tracking data and metrics to developing instruments that can protect people and economies against climate impacts, the private sector has the ability to support global climate commitments. But they are not in the negotiating rooms as much as they should be. Instead, they are still on the sidelines. From participating in business forums at COP or engaged in public-private convenings in the lead up to these summits. While the private sector has enough opportunities to share their insights, there is still a barrier when it comes to changing the policy environment that can allow them to create a deeper impact.
Climate finance in the countdown to COP30
We must take advantage of what is already working. Leaders and policymakers must be practical about creating an enabling policy environment. Systems must be restructured to allow for financing models like NCQG and the Loss and Damage Fund to be effective.
By the time the world meets for COP30, parties must have worked to advance targeted actions that increase investments from the private financial sector. They must prioritize solutions that address the climate crisis and protect biodiversity. Significantly, they must also challenge existing policy processes to improve protection against climate disasters.
We have heard this too many times. But there is no time left to wait. The next heat wave or drought or wildfire could change your life, your business, or affect your loved ones.
