Finance bosses to skip COP29; new carbon market rules approved

This week’s climate finance wrap begins with a round-up of all the COP29 news first. Host Azerbaijan is facing increasing heat over its alleged crackdown on dissidents ahead of the UN summit. One of the country’s top officials called the criticism a “smear campaign and dirty propaganda” against Azerbaijan. “Overburdening the COP agenda with issues not having direct and immediate linkage to climate change is not helpful but detrimental,” Azerbaijani foreign policy chief Hikmet Hajiyev told Politico. COP29 is being dubbed as the “Finance COP” as several key decisions, including on the New Collective Quantified Goal (NCQG), are expected to be taken at the summit.

Some potential good news is also coming in from the region ahead of the important summit. Armenian president Vahagn Khachaturyan told FT that a peace deal may be signed with Azerbaijan before COP29 begins. Negotiations have been tense over the years, but Khachaturyan told FT, “It would be good to sign it by COP29,” he said. “But let’s not run ahead of time.”

Top financial bosses from Bank of America, BlackRock, Standard Chartered and Deutsche Bank, among others, are expected to skip COP29. The reasons cited are “difficult logistics” and fewer business opportunities compared to last year. FT quoted one finance executive as saying, “You only go to the party if everyone is going.”

Is this pessimism warranted? It may be, because a key meeting ahead of the summit ended with little to no progress on the climate finance issue. The two-day ‘Pre-COP” in Azerbaijan was attended by fewer countries so there was hope only for modest gains. The major sticking point is donor countries have still not revealed how much climate finance they are willing to pay.

Some progress, however, was made by technical experts in Baku. They adopted new rules for the UN’s new carbon market. Developers of projects that fall under Article 6.4 will have to undertake a detailed risk assessment to identify and address any potential social and environmental impacts, according to the new rules. Developers will also have to explain how their projects contribute towards sustainable development goals such as reducing GHGs, and improving health, among others.

Moving away from COP, India’s finance minister Nirmala Sitharaman said the EU’s Carbon Border Adjustment Mechanism (CBAM) would hinder developing countries’ attempts to transition away from fossil fuels. She called it a “trade barrier” that was “unilateral” and “not helpful”.

Neighbouring Pakistan, meanwhile, secured $10 million from the Adaptation Fund. According to a PTI report, this money will be used to back the Sustainable Actions for Ecosystems Restoration in Pakistan (SAFER) project. This project aims to tackle challenges related to water, sanitation, and hygiene with a focus on women and children.

Reserve Bank of India (RBI) governor Shaktikanta Das said they are aiming to create a data repository for risks related to climate change. “Climate change is emerging as a significant risk to the financial system world over. This makes it necessary for regulated entities to undertake robust climate risk assessment, which is sometimes hindered by gaps in high-quality climate-related data. To bridge these data gaps, the Reserve Bank proposes to create a data repository, the Reserve Bank – Climate Risk Information System (RB-CRIS),” Das said in his monetary policy address.