COP29 outcomes: Key insights for Chief Compliance Officers

The UN Climate Change Conference (COP29), held in Baku, Azerbaijan, concluded on 22 November 2024, offering a blend of advancements, reinforced commitments, and missed opportunities — with implications for businesses worldwide in the years ahead. Although the global outcomes fell short of the ambitious expectations many had, some relevant agreements were reached, particularly on climate finance, carbon markets, transparent reporting, adaptation, and social equity in climate action.

Despite the slower-than-expected pace of change, these results will still require businesses — particularly their Chief Compliance Officers (CCOs) — to refine corporate strategies and align with evolving regulations. These outcomes present not only compliance challenges but also an opportunity to drive climate action within their organizations, navigating a shifting landscape of environmental responsibility.

In this article, Enhesa expert Diletta Managò explores the top five points that CCOs should pay attention to as they plan for 2025.

1. New climate finance goals: The USD 300 billion target

One of the biggest takeaways from COP29 was the New Collective Quantified Goal on Climate Finance (NCQG), which set an ambitious target of USD 300 billion in annual financial flows to developing countries by 2035. Additionally, a broader goal was established to mobilize collective efforts from all actors — in both the public and private sectors — to scale up climate finance to reach USD 1.3 trillion annually by the same year. This is part of a wider push to support the clean energy transition and bolster climate resilience in the most vulnerable regions.

What this means for CCOs

As a result of these ambitious financial goals, the increased focus on climate finance may lead to heightened scrutiny around climate-resilient investments, with businesses facing growing pressure to ensure funds are properly allocated. This, in turn, adds to the ongoing pressure for companies to integrate Environmental, Social, and Governance (ESG) factors into their financial strategies and reporting.

Top three action points for CCOs

1. Update internal policies to align with evolving climate finance regulations.
2. Implement systems to track climate-related financial flows and ensure compliance with international climate finance commitments.
3. Ensure investment strategies reflect climate resilience, especially in developing markets.

2. Carbon markets and Article 6 of the Paris Agreement

COP29 solidified the framework for carbon markets under the Paris Agreement, finalizing Article 6 mechanisms and enabling country-to-country carbon credit trading (Article 6.2) while emphasizing the importance of environmental integrity. A centralized UN carbon market (Article 6.4) was also agreed upon, providing new opportunities for developing and least-developed countries to tap into climate finance.

What this means for CCOs

As carbon trading mechanisms keep evolving, companies will likely face new responsibilities related to purchasing carbon credits or engaging in offsetting programs to help meet their emission reduction targets. The pressure to ensure that carbon activities align with broader environmental and social expectations will only increase, especially in light of growing concerns about the integrity and real-world impact of carbon credits.

Top three action points for CCOs

1. Familiarize yourself with the new carbon crediting mechanisms and ensure compliance with carbon market frameworks.
2. Collaborate with sustainability teams to explore participation in carbon markets, balancing regulatory requirements with business goals.
3. Ensure your company meets transparency standards around carbon credit transactions and environmental reporting.

3. A push for transparent climate reporting

With transparency now taking center stage (among other things, a total of 42 events were organized under the UNFCCC initiative #Together4Transparency), COP29 made it clear that climate reporting will only become more rigorous. Thirteen countries have already submitted their first Biennial Transparency Reports (BTRs), which are due from all Parties to the Paris Agreement by the end of the year, paving the way for universal and transparent climate data.

What this means for CCOs

The emphasis on climate reporting expectations is critical for businesses, requiring them to disclose comprehensive data on air emissions, climate risks, and financial aspects related to adaptation efforts. Furthermore, companies cannot overlook aligning internal reporting practices with global frameworks, like the Paris Agreement’s Enhanced Transparency Framework (ETF), to stay compliant and transparent in an evolving regulatory landscape.

Top 3 action points for CCOs

1. Revise your company’s climate reporting processes to align with new transparency standards.
2. Invest in technologies and processes that support accurate emissions tracking and climate-related financial reporting.

Ensure senior leadership understands the growing importance of transparent climate reporting for both regulatory compliance and long-term business sustainability.

4. Adaptation and the global goal on adaptation

Another COP29 outcome was the launch of the Baku Adaptation Road Map and Baku high-level dialogue on adaptation to enhance the implementation of the UAE Framework. These new initiatives aim to provide concrete steps to support the implementation of National Adaptation Plans (NAPs) in vulnerable regions, particularly for Least Developed Countries (LDCs). As climate risks grow, the need for companies to develop resilience strategies in their operations becomes more urgent.

What this means for CCOs

With climate resilience now firmly on the agenda, companies are increasingly expected to incorporate it into their business strategies, especially in high-risk regions. This may require revisiting key areas such as supply chains, infrastructure, and disaster preparedness, as well as preparing for increasing demands to develop and share detailed adaptation plans addressing how they will respond to climate change challenges.

Top three action points for CCOs

1. Incorporate climate adaptation strategies into the company’s risk management framework.
2. Stay informed about international climate resilience standards and integrate them into business operations.

Engage with stakeholders to align the company’s climate adaptation efforts with both global and local goals.

5. Inclusion of Indigenous People and gender equality in climate policy

COP29 reaffirmed the critical importance of inclusive climate policies and the ongoing commitment to gender equality in climate action through:

• The adoption of the Baku Work Plan to elevate the voices of Indigenous Peoples and local communities in climate action
• The renewal of the mandate for the Local Communities and Indigenous Peoples Platform (LCIPP)
• The 10-year extension of the Lima Work Program on Gender and Climate Change

What this means for CCOs

Companies will likely see greater emphasis on ensuring they consider the broader social and environmental impacts of their practices, including the well-being of vulnerable communities and under-represented groups. They should also factor in an increasing focus on ensuring alignment with social and ethical standards when engaging in climate-related initiatives, particularly in areas where environmental and human rights concerns intersect.

Top three action points for CCOs

1. Review ESG policies to ensure they align with human rights protections, especially regarding Indigenous Peoples and gender equality.
2. Engage with affected communities and advocacy groups to understand their perspectives and needs on climate action.

Prepare for more stringent compliance and due diligence requirements related to social impacts in climate projects.

Moving forward: How CCOs can lead the change

While the results of COP29 were more cautious than transformative, clear directions for future climate action were reinforced, particularly in areas such as transparency, adaptation, and inclusivity. For CCOs, staying ahead of the curve in this slow-moving regulatory environment is essential to ensure your company remains compliant and competitive in the evolving landscape. To lead the change, CCOs should consider these three steps:

• Revamping compliance frameworks to align with the latest climate finance goals, carbon market mechanisms, and transparency standards.
• Actively managing both the risks and opportunities tied to climate, particularly across the supply chain and investments incorporating adaptation considerations.
• Ensuring the company’s climate policies are inclusive, prioritizing the needs of Indigenous communities and vulnerable groups, and fostering gender equality.

Though the COP29 results indicated that the road ahead may be longer than anticipated, businesses can and should follow these steps to work towards positioning themselves not just to comply with regulations but to lead in sustainable, responsible business practices.