Why the private sector must be at the Cop29 table

Almost 200 countries will spend the next 11 days trying to agree on a new financial plan to replace a promised $100 billion for developing countries. EPA

Today, tens of thousands of energy experts, business figures, national leaders, scientists and policy specialists will convene in Baku, the capital of Azerbaijan, for the Cop29 UN climate summit. The main question facing those attending is not the necessity for action to tackle climate change – the evidence that our planet is heating up is irrefutable. Instead, this summit has to answer the following question: how will the international community pay for the transition from fossil fuels to greener forms of energy?

It is not for nothing that the summit in Baku is being called the “finance Cop”. This “New Collective Quantified Goal” – if agreed – will be crucial to providing lower-income nations with the funding they need to mitigate the worst effects of climate change and move to a greener future.

The scale of the challenge should not be underestimated. Humanity is trying to completely change how it powers modern society in the space of a few decades, having relied on fossil fuels for the past 300 years of industrial development. Such change does not come for free, and it is right that Cop29 will focus on the burning question of how to shoulder the financial burden.

A key partner in this effort is the private sector. Cop29, like its predecessor in Dubai, is being held in a country that has benefitted from natural reserves of energy. It makes sense that countries and companies with an intrinsic understanding of how global energy works be at the table with NGOs, scientists and public policymakers. In June, the Cambridge Institute for Sustainability Leadership highlighted how “the private sector is key to the implementation of [Cop] outcomes, both on a global and a national level”.

“Businesses can take on the mantle through corporate climate commitments and investments and by advocating a stronger policy and regulatory environment from governments to enable a just transition. The finance sector also has a key role to play in ensuring private finance is helping deliver collective climate goals,” it added.

The private sector has the financial resources and know-how to inform the conversation on climate innovations. Therefore, business and finance must be at the table. Those voices that say energy companies or private finance have no place at climate talks fail to see that it is these actors that are often driving research into new forms of energy and climate-change mitigation. This is because it is in their interests to do so; energy firms understand that they are working with a finite resource, therefore developing greener, more sustainable energy means staying in business.

Cop28 in Dubai showed what can be achieved. There, a loss-and-damage fund was established after decades of unsuccessful efforts. The first global stocktake to assess collective progress towards achieving Paris Agreement goals was also agreed upon. These central outcomes were achieved with the participation of business, not its exclusion.

What Cop29 must achieve is a collective understanding of how to finance the kind of climate targets that were negotiated in Dubai. There are many creative ways to do so; the International Monetary Fund and World Bank, for example, have developed innovative forms of green finance to help developing nations. However, national governments and international institutions are but a part of the conversation and it is the technical and financial expertise of energy companies and the private sector generally that will be vital if Cop29 is to achieve a clear roadmap on how to pay the bill for a sustainable future and firm climate action.