Punki Modise, Group Chief Strategy and Sustainability Officer
The UN Framework Convention on Climate Change (UNFCCC)’s 29th Conference of the Parties (COP29) concluded in a swirl of debate, promise and disappointment on 24 November in Baku, Azerbaijan. The outcome was criticised for lacking ambition and providing limited action to resolve the challenges faced by developing countries. It reinforced the need for countries like South Africa to focus on adaptation and resilient infrastructure.
The discussions at COP29 focussed on increasing national climate ambitions and carbon markets and, crucially, agreeing on financial flows to developing countries to manage climate change in what is known as the New Collective Quantified Goal on Climate Finance (NCQG). Reflecting on my earlier thoughts about how finance, inclusivity and accountability would define this pivotal conference, it’s clear that while two weeks of intense and polarised negotiations made some progress, significant gaps remain.
The need for more climate finance
Ahead of COP29, I emphasised the criticality of mobilising climate finance to bridge the widening gap between pledges and real-world action. Disappointingly, the conference did not secure a commitment to scale up climate finance adequately. According to the London School of Economics, the delivery of the promised $100bn per year set at COP15 was inconsistent and was only recently met in 2022. The new collective quantified goal, which was tripled to $300bn per year at COP29, remains insufficient to address the scale of the climate crisis. It has been termed “weak” and not reflective of Global South realities. Moreover, there is criticism that this goal will remain aspirational rather than binding.
At the last minute, parties committed to efforts targeting $1.3tn annually by 2035 – with support from the private sector and multilateral development banks. While this figure aligns more closely with expert recommendations and proposals from the Global South, significant uncertainty surrounds whether these funds will ultimately be mobilised. So far, the African continent has received very little of the funding promised by previous climate finance commitments, raising doubts about whether higher ambitions will lead to meaningful, directed support. Much of the $100bn annual commitment was provided as loans, adding to debt burdens. South Africa’s Just Energy Transition Plan exemplifies this, with only 4% of funding received as grants.
COP29 prioritised improving climate finance delivery, focusing on reforms to global financial institutions like multilateral development banks. Key decisions aim to unlock resources efficiently, remove access barriers and simplify funding processes. Our hopes going into COP29 were partly for agreements around climate finance to do just this. While less attention-grabbing, these measures address long-standing delays and inefficiencies for developing countries, potentially marking one of COP29’s most impactful outcomes. However, without greater accountability and more grant-based or concessional funding, these mechanisms may also fail to address the needs of vulnerable nations.
Focus on adaptation and resilient infrastructure
With limited climate action coming from COP29, the need to resolve the adaptation funding gap of R92bn per year in South Africa becomes crucial. That is why Absa’s revised sustainability finance target will aim to balance mitigation and adaptation efforts. Adaption efforts – particularly through resilient infrastructure development – should have the same focus as mitigation efforts. Years of neglect have left South Africa’s public infrastructure system on the verge of collapse. The lack of infrastructure maintenance, particularly in stormwater systems, roads and buildings, exacerbates the impact of extreme weather events. This neglect leads to more severe flooding, structural failures, and undermined rescue efforts during disasters.
This reality necessitates immediate action from both public and private sectors to enhance resilience against climate impacts. Delayed responses to climate challenges not only escalate costs but also complicate adaptation efforts, leading to more expensive and complex projects in the future. As economic strains mount, the ability to allocate resources for adaptation may diminish, further increasing borrowing costs and limiting financial options for necessary infrastructure improvements.
In response to the challenges of climate change, South Africa enacted its Climate Change Act earlier this year, prioritising adaptation strategies. It empowers the Minister of Forestry, Fisheries and the Environment to set national greenhouse gas emissions trajectories and allocate sector-specific targets, promoting coordinated action across all government levels. While it lacks strict emission reduction targets and penalties for non-compliance, it provides strong provisions for adaptation and cooperative governance. The private sector is essential for implementing climate adaptation policies, while collaborations with the government are crucial for funding projects that align with the Act’s goals.
Collaboration and accountability
One can identify a prominent theme of COP29 – the need for sustained ambition and collaborative efforts to address financial shortfalls. Absa and other private sector actors have a responsibility to step up here. Businesses must address the financing gap through innovative instruments like blended finance and green bonds. At Absa, we’re exploring mechanisms to drive sustainable investments across Africa through a revised sustainable finance target, having met our R100bn target a year early in 2024. COP29 reinforced the urgency of accelerating this work.
After years of stalled negotiations, COP29 delivered a breakthrough on Article 6, setting the stage for carbon markets to drive deeper emissions cuts and mobilise urgent climate finance. Under Article 6.2, countries can now trade emissions reductions bilaterally with recognition by the UN, supported by transparency provisions to ensure environmental integrity. Article 6.4 establishes a centralised mechanism to transition credits from the discredited Clean Development Mechanism (CDM) to the new Paris Agreement Crediting Mechanism (PACM), though critical fixes are needed to ensure high standards and practical applicability for nature-based solutions.
While some hailed the strengthening of carbon market standards, others decried the absence of firm deadlines for fossil fuel phase-outs despite agreements at COP28 to “transition away from fossil fuels”. Centralised carbon markets are presented as a solution to address the climate finance gap in developing economies. However, as African nations, we must remain vigilant, working for promised funding to be delivered and ensuring that the burden of unmet commitments does not fall disproportionately on our shoulders yet again.
COP29 underscored the interconnectedness of climate challenges and reinforced the need to leverage public-private partnerships (PPPs). Finance is the enabler, inclusivity the principle and accountability the measure of success. But none of these can be achieved in isolation. The private sector, governments, and civil society must break down silos to foster truly collaborative solutions. Where public leadership faces challenges, the private sector must rise to support, not as a replacement but as a catalyst for change.
As we look to COP30 on the border of the Amazon rainforest in Brazil, the urgency of mobilising climate finance cannot be overstated. The challenges faced at COP29 should serve as a wake-up call, not a reason to retreat. For Africa, the stakes are particularly high, but so too are the opportunities.
* Punki Modise is Chief Strategy and Sustainability Officer at Absa Group. For more information on Absa Group’s Sustainability story visit www.absa.africa/sustainability
This article was first published in the Daily Maverick on 12 December 2024
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