Impact Insights #7

Welcome back to the ESGI Horizon Newsletter! Today, we’ll dive into the key takeaways from COP29. Then we’ll look at some News & Trends and finish with the latest impact deals.

Focus Topic: Key Takeaways of COP29

The COP29 wrapped up last weekend with big expectations to find a climate financing agreement. Here are the main takeaways of the climate summit in Baku that reunited over 55,000 global delegates and climate negotiators during 2 weeks :

1. A criticized $300 billion climate finance pledge
   
   The conference agreed to triple current climate finance to help the most vulnerable nations to climate change in their mitigation and adaptation efforts, setting a new target of $300 billion annually by 2035 from public and private sources. The terms of the pledge are agreed upon under the New Collective Quantified Goal on Climate Finance (NCQG) which highlights that developing countries need $455-584 billion per year to implement their climate action plans (mitigation) and need $215-387 billion annually up until 2030 for adaptation measures. The deal states that developed nations would be “taking the lead” in providing the $300bn. The US and the European Union wanted newly wealthy emerging economies like China – currently the world’s largest emitter – to chip in. However, the deal only “encourages” emerging economies to make voluntary contributions.
   The 300 billion dollar commitment was found to be “too low“ by many environmental groups and vulnerable nations. The High-Level Expert Group on Climate Finance recommended a value closer to $1 trillion a year to meet development goals, accelerate the clean energy transition, and build resilience to climate-driven events.
   The conference highlighted the ongoing challenge of translating financial commitments into concrete action, as the UN Secretary-General, Antonio Guterres, observed, “I had hoped for a more ambitious outcome […] but this agreement provides a base on which to build. “
   

2. Carbon Market Progress
   
   Countries agreed on UN-backed global carbon market rules under Article 6 of the Paris Agreement. The agreement finalizes the rules for international carbon markets, enabling countries to trade carbon credits and collaborate on reducing emissions more cost-effectively. Proponents believe this could channel vital investment into developing nations, where many carbon credits are generated through activities like reforestation, protecting carbon sinks, and transitioning to clean energy. However, critics warn that without strict safeguards, these systems could be exploited to greenwash climate targets.
   

3. National Climate Action Plan deadline
   
   In early 2025, countries are expected to submit updated Nationally Determined Contributions (NDCs). During COP29, several countries shared their plans ahead of the deadline, like the UAE, UK, Brazil, and Switzerland. Brazil’s plan includes cutting emissions by 59-67% by 2035 relative to 2005 levels and reaching net zero by 2050, whilst the UK set an ambitious target to reduce emissions by at least 81% on 1990 levels by 2035. The NDCs are expected to be reviewed ahead of the next COP.
   

4. Loss and Damage Fund fully operationalized

   The Loss and Damage Fund, originally established at COP27 in Egypt, has been approved and will begin financing projects and distributing funds starting in early 2025. The fund has received financial commitments upwards of $730 million so far.
   

5. No progress on fossil fuel phaseout
   
   During the COP28, the Global Stocktake Agreement called for “transitioning away” from fossil fuels and aligning climate pledges with the 1.5°C target. Unfortunately, no agreements or references to a transition away from fossil fuels were included, so negotiations will have to be revisited at COP30 in Brazil. Azerbaijan’s President Ilham Aliyev even referred to fossil fuel resources as a “gift from God” during his keynote opening speech.
   

   

   The bigger picture: emissions are still on the rise

News & Trends

• 🇧🇷 Brazil’s Federal Government unveiled data showing a drop in deforestation rates in the Amazon and Cerrado biomes in 2024. The official deforestation rate in the Amazon is 6,288 km² for the period from August 2023 to July 2024 representing a 30.63% drop compared to the previous period, the largest percentage drop in 15 years. “The emissions avoided during this period are equivalent to all of Argentina’s GHG emissions.“ according to the Brazilian vice president. At the U.N. biodiversity summit, Brazil announced a plan to restore an area of degraded land about half the size of the U.K. by 2030, in a bid to combat climate change and biodiversity loss.
  

  

• 🐄 Still in Brazil, the environmental protection agency IBAMA fined meat ranchers and packers $64M for raising and purchasing cattle from illegal deforested Amazon rainforest. Cattle ranching is the biggest driver of deforestation in Brazil’s Amazon rainforest. Of the area cleared from 1985 to 2023 — 227,800 square miles, slightly larger than the size of France — 90 per cent was converted to pasture. Because of this, 14 per cent of the Brazilian Amazon is now grazing land. Brazil will soon begin tracing individual cattle from birth to slaughter, aiming to make the sector 100% traceable by 2032. This comes amid growing international demand for transparency, especially as the EUDR, a new European Union regulation requiring proof that certain imported commodities aren’t adding to recent deforestation, is set to come into force at the end of 2025.
  

  

• 🇩🇰 The Danish government plans to introduce a world-first carbon tax on livestock in 2030 as part of a plan to make agriculture greener and reduce fertilizer usage. From 2030, methane emissions from livestock will be taxed at a rate of 300 kroner (40.2 euros) per tonne of CO2 equivalent, rising to 750 kroner per tonne in 2035. About 60% of Denmark's land area is currently cultivated, making it the country with the largest share of cultivated land, alongside Bangladesh. Danish lawmakers have also agreed to return about 10 per cent of farmland to natural habitats and forests by planting 250,000 hectares worth of trees.

  

Latest Impact Deals

• The Australian government invested $125 million in Pacific Island off-grid and community-scale renewables to improve their energy security. $75 million investment through the REnew Pacific program and $50 million through the Australia-Pacific Partnership for Energy Transition (APPET) program.

• The Bahamas unlocked more than US$120 million to fund the conservation and management of its oceans and mangroves. The Bahamas will buy back $300mn of external commercial debt using a new “competitively priced” $300mn loan from Standard Chartered. The discounted loan is expected to generate $124mn in savings or new funding for marine conservation

• Acumen, a leading global nonprofit impact investor, announced today a $300 million climate finance commitment over the next five years to support agricultural adaptation founders, entrepreneurs, and social enterprises across East and West Africa, India, Latin America, and Pakistan.

• Ninety One from South Africa closed its $260 million Africa Credit Opportunities (ACO) fund. It aims to provide competitive return outcomes while simultaneously advancing economic development through sustainable capital deployment in Africa and other emerging markets