COP30 – what we’ll be looking out for

As nations gear up for COP30, which will be held from the 10-21 November in Belém, Brazil, Eva Cairns, Head of Responsible Investment at Scottish Widows, reflects on why it’s important for investors and what outcomes she’s keen to see.

COP30 refers to the 30th Conference of the Parties (COP) which brings together the signatories to the United Nations Framework Convention on Climate Change (UNFCCC) in the largest annual global gathering on climate change.

COP30 is often referred to as the ‘implementation COP’ and is significant in a number of ways. Firstly, it marks 10 years since the signing of the Paris Agreement. This saw countries commit to keep global temperature rises to ‘well below’ 2°C above pre-industrial levels, aiming for the more ambitious 1.5°C where possible.

Every five years, these signatories are asked to submit national climate action plans with updated, more ambitious targets, known as Nationally Determined Contributions (NDCs). The NDCs setting out 2035 targets are due this year. In the case of the UK, for example, its latest NDC targets the reduction of all greenhouse gas emissions by at least 81% by 2035 compared to 1990 levels and sets out measures to achieve this. The UNFCCC then uses these collective plans to assess progress on meeting the targets set out in the Paris Agreement – which are not on track to be met.

Ahead of COP30, there have been a number of announcements of areas of focus or themed days. NDCs will of course be a key focus as will progress on the pledges made at COP29. Six themes with 30 key objectives have been highlighted as part of the COP30 Action Agenda. These cover areas such as mitigation, adaptation, technology, finance, and capacity-building. Deforestation and the interconnection of climate and nature issues are also fundamental to COP30, acknowledging the critical role of natural resources in achieving climate targets.

The annual COPs signal to investors how policy is evolving and what updated ambitions are emerging in a global context.

The annual COPs signal to investors how policy is evolving and what updated ambitions are emerging in a global context. They are valuable for several reasons:

1. Supporting net zero transition plans – many business transition plans highlight their dependency on global policy being supportive. It is therefore important to understand global progress and gaps in relation to the goals of the Paris Agreement. This has also been highlighted in our recently launched Scottish Widows Transition Plan.

   Our Transition Plan recognises that climate change presents a systemic risk to economies, industries and financial markets, and that there are both risks and opportunities that will impact the financial outcomes for customers. It builds on the foundations of the Paris Agreement and the priorities emerging from successive COPs to evolve our approach. It includes:

   • Investing in climate leaders aligned to the goals of the Paris Agreement, while influencing climate laggards that are not.
   • Seeking new opportunities in climate and nature solutions, particularly through private markets.
   • Taking a more holistic approach to net zero that connects climate, nature and social issues.
2. Setting financial incentives for low carbon investments – these could include tax incentives, subsidies or guarantees for investments as set out in the Global Climate Finance Framework at COP28. These measures help enhance the financial viability of investing in climate or nature solutions, which is often required at early stages of new technologies.
3. Providing certainty for longer-term investment decisions – COP30 will also provide investors with insight into sentiment, challenges and opportunities on the topic of climate change. In an environment where actions and attitudes to climate change are increasingly polarised and uncertain, setting long-term investment plans can be challenging. The agreements reached at COP30 can help provide certainty for investment decisions and asset allocation, while stronger NDCs will demonstrate that countries aim to step up and deliver on the goals of the Paris Agreement, underpinning long-term investment pathways and climate targets for investors.

The outcomes of COP30 are critical for shaping investment opportunities and managing the risks that climate change poses to customer outcomes.

Success can be hard to define when it comes to COPs, but there are some key issues that we hope to see.

1. Raised ambition – updated NDCs were due to be submitted in February 2025, setting targets for emissions reductions by 2035, but many countries missed the deadline. As of October, only 59 out of 193 countries have submitted updated targets – and of these, only two are consistent with a 1.5°C pathway. Some of the largest emitters, India and China, are yet to provide submissions.

   Ahead of COP30, the UNFCCC will publish its synthesis report estimating the level of emissions suggested by the NDCs. Its 2024 report stated that implementation of the reported NDCs would see a 5.9% reduction in emissions by 2030 versus 2019 levels.¹ That’s almost 40% lower than the reduction the UN Intergovernmental Panel of Climate Change believes is needed by 2030 to meet the 1.5°C target.

2. Climate finance – before COP29, a report indicated that US$1 trillion of public and private finance was needed annually by developing countries by 2030 to support climate action.² In the event, just US$300 billion was pledged. A Baku to Belém roadmap, however, set out plans to increase the amount to US$1.3 trillion by 2035.³ At COP30, we need to see how this will be achieved.
3. Credible implementation action – we’re expecting to see this targeting three key themes in particular:
   • Deforestation – COP30 is set to see the launch of a US$125 billion global investment fund, mobilising significant private as well as sovereign investment.⁴ This is to secure lasting protection of tropical forests while providing income for communities and countries. This is part of a broad focus on nature, recognising the inextricable links between nature and climate.

     These links are one of the reasons for the focus on nature within our responsible investment approach, prioritising the sustainable management of natural resources. We are tacking this in three ways: by identifying nature-related risks and opportunities across our portfolio so that we can target our stewardship activity; by considering ways to incorporate nature-related metrics into our investment process, and by reviewing opportunities in nature-based solutions.

   • Carbon-pricing – COP29 saw agreement on the creation of international carbon market standards. Development remains ongoing, with Brazil advocating for global carbon pricing to establish clear financial incentives for decarbonisation.
   • Just transition – underpinning many of the themes and a stated focus of this year’s COP is the need for a just transition. This means supporting the move to a more sustainable economy without leaving people behind. It’s something we strongly believe in, having published our own paper on it back in 2022. It is integrated into our Responsible Investment proposition, focusing on enabling a real-world transition that’s inclusive, and forms an important strand of our Scottish Widows Transition Plan.
4. Adaptation – with physical risks from climate change intensifying, the need for funding to help communities and ecosystems adapt to the impacts of climate change is vitally important. The UN Environment Programme’s Adaptation Finance Gap report states that developing countries need between US$215 and US$387 billion per year by 2030 to adapt to climate change.⁵

   A more ambitious adaptation finance goal and a strategy to address the adaptation finance gap will be essential. Expectations are that COP30 could see some progress made on this, particularly as the previous adaptation finance goal is set to expire.

COP30 has the potential to deliver on these expectations, but it can also focus attention on climate change risks and opportunities in a world where we’re seeing higher levels of anti-climate change rhetoric and some rolling back of ambitions. This is our chance to not only re-establish focus, but to send a clear and certain signal to businesses and investors.

The outcomes of COP30 are critical for shaping investment opportunities and managing the risks that climate change poses to customer outcomes – not only in financial terms, but also how climate change will impact the world our customers will retire into. That’s why it matters to long-term investors like us.

¹ ‘2024 NDC Synthesis Report’, UNFCCC, 28 October 2024. 2024 NDC Synthesis Report | UNFCCC
² ‘Raising-ambition-and-accelerating-delivery-of-climate-finance, Third Report of the Independent High-Level Expert group on Climate Finance, Executive-summary’, Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, November 2024.Raising-ambition-and-accelerating-delivery-of-climate-finance_Executive-summary.pdf
³ ‘COP29 UN Climate Conference Agrees to Triple Finance to Developing Countries, Protecting Lives and Livelihoods’, United Nations Climate Change, 24 November 2024.COP29 UN Climate Conference Agrees to Triple Finance to Developing Countries, Protecting Lives and Livelihoods | UNFCCC
⁴ ‘Groundbreaking forest conservation fund from Brazil reaches Earthshot prize finals’, COP30, Brasil, 4 October 2024. Groundbreaking forest conservation fund from Brazil reaches Earthshot Prize finals
⁵ ‘Adaptation Gap Report 2024’, UNEP, 7 November 2024. Adaptation Gap Report 2024 | UNEP – UN Environment Programme