From Carney to COP30

Climate leadership at the forefront of politics 

Climate Action welcomes the announcement of Mark Carney's appointment as Canada’s next Prime Minister, following his election as leader of the Liberal Party. As UN Special Envoy for Climate Action and Finance, following a career in finance that included serving as Governor of the Bank of England, Carney focused on mobilising private finance to the levels needed to align with the 1.5°C goal. In 2021, he formed the Glasgow Financial Alliance for Net Zero (GFANZ) at the 26th United Nations Climate Change conference (COP26). 

In an interview at Climate Action’s Climate Innovation Forum in 2023, Carney told the audience, “Finance is an enabler, it is a catalyst that can pull forward action...This is really a question of scale. We are not going to have this transition unless we have mainstream finance using climate as part of every decision that they are making.” 

As the world faces a race against globally accelerating global warming and the extreme weather events it fuels, 2025 must be a year of bold action and transformative progress. On the same day Carney took office as Canada’s leader, COP30 President-Designate André Aranha Corrêa do Lago published a comprehensive letter setting the stage for the climate summit in Brazil this November, inviting “the international community to join Brazil in a global “mutirão” against climate change, a global effort of cooperation among peoples for the progress of humanity”. His letter emphasised that now is the time for implementation of climate goals.  

Despite persistent negative press - such as the departure of major financial institutions from key alliances such as the UN-convened Net Zero Banking Alliance, driven by Trump’s stark exit from the Paris Agreement and cuts to climate funding both domestically and internationally - the global push for climate finance movement has already gained unstoppable momentum. 

As Corrêa do Lago states, “Lack of ambition will be judged as lack of leadership as there will be no global leadership in the 21st century that is not defined by climate leadership.” Mark Carney’s appointment presents an opportunity to reinforce this truth and drive ambitious, coordinated action on climate finance. 

The rise of climate and nature finance 

Climate finance refers to local, national or transnational financing - drawn from public, private and alternative sources of financing - that seeks to support mitigation and adaptation actions that will address climate change. It is not only imperative for protecting inhabitants and future generations in climate-vulnerable countries - it presents the path for a new era of global sustainable development.  

According to the Climate Policy Initiative, climate finance reached $1.46tn in 2022, having more than doubled from 2018 levels. CPI’s analysis shows climate flows are likely to have surpassed $1.5tn in 2023, however it notes a further fivefold increase is required to reach the $7.4tn needed each year through 2030 under the 1.5°C scenario. 

However, climate finance for developing countries represents a tiny fraction of these flows. Based on modelled projections using the United Nations Global Policy Model, developing countries need around $1.1tn in climate finance from 2025 and $1.8tn by 2030. 

The UN’s climate summit that took place in Baku, Azerbaijan, in November last year delivered a New Collective Quantified Goal (NCQG) to triple finance to developing countries, from the previous goal of $100bn annually, to $300bn annually by 2035. Evidently, this falls far short of the required finance. The NCQG also commits to securing efforts of all actors to work together to scale up finance to developing countries, from public and private sources, to the amount of $1.3tn per year by 2035. 

Sustainable bonds made up around 11% of the global total in 2024 and is expected this will remain broadly stable in 2025, with issuance at about $1tn, according to a recent report from S&P Global Ratings.  It states an expected increased issuance in low-income and emerging economies to address the climate finance gap.  

In January, the Climate Investment Funds (CIF) Capital Markets Mechanism (CCMM), rated by Fitch and Moody’s (AA+/Aa1), made its market debut. Its inaugural bond raised $500mn on the back of an orderbook totaling more than $3bn from investors around the world. CCMM supports CIF’s Clean Technology Fund (CTF) projects in developing countries, focusing on low-carbon technologies such as renewable energy and energy efficiency. 

Additionally, S&P Global Rating’s report shows that transition bonds had their strongest year on record in 2024, reaching $21bn in 2024 from $3bn in 2023. However, this was a result of the government of Japan's multiple issuances. 

The report also highlights nature finance and solutions to address the climate finance gap took centre stage in the latter half of 2024, with their importance expected to grow in 2025. 

At the end of last month, a major step was taken at the resumed negotiations of biodiversity COP16 as Parties adopted a Strategy for Resource Mobilisation, identifying important guidance, mechanisms, and institutions needed to scale up resource from all sources, for the implementation of the Kunming-Montreal Global Biodiversity Framework.  

The strategy will look to “close the biodiversity finance gap and achieve the target of mobilising at least $200bn a year by 2030, including $20bn a year in international flows by 2025”.  

This figure - $200 billion each year by 2030 – is crucially the ‘minimum investment required to truly shift the trajectory for biodiversity’, according to the UN Food and Agriculture Organisation (FAO). Bloomberg NEF recently reported that around $1.15 trillion in biodiversity financial flows will be needed in 2030 to restore and maintain biodiversity. 

Further, debt-for-nature swaps are a tool that can be used to support countries simultaneously facing significantly high debt, the impacts of climate change, and biodiversity loss. 

According to the International Institute for Environment and Development (IIED), more than US$100 billion of debt in developing countries could be freed up to spend on restoring nature and adapting to climate change. 

In January, the debt-for-nature swap between the United States of America, the Republic of Indonesia and several non-governmental organisations including Conservation International, Yayasan Konservasi Cakrawala Indonesia, Yayasan Konservasi Alam Nusantara and The Nature Conservancy enabled first-of-its-kind funding to flow to coral reefs totaling $35mn.  

At the end of February, Goldman Sachs Asset Management announced the launch of the Goldman Sachs Biodiversity Bond fund. It is one of the first fixed income funds available to investors seeking exposure to the thematic of biodiversity conservation and remediation. 

These examples show movement from all sides - governments, financial institutions, and civil society - towards integrating nature into mainstream financial systems.  

Ultimately, climate and nature finance should simply be ‘finance,’ as global capital converges with the needs of people and the planet in the coming decades. A truly sustainable financial system will no longer differentiate between economic growth and environmental stewardship - they will be inherently intertwined. 

The Tropical Forest Forever Facility 

Innovative financial mechanisms continue to emerge, bolstered by collective action. The Tropical Forest Forever Facility (TFFF) is an example of a new model of funding, presented by Brazil during COP28 in Dubai.  

The TFFF would address the market failure that has led to deforestation on a mass scale by rewarding developing countries that conserve their tropical forests. It will pay for each hectare of standing vegetation and includes penalties for each deforested or degraded hectare — also guaranteeing additional resources for the protection of biodiversity, traditional territories and the maintenance of environmental services.  At COP16, the TFFF gained initial support from Germany, Colombia, the United Arab Emirates, Malaysia and Norway to work together to define the architecture of the mechanism. 

This week, a workshop took place in London with the representatives from the participating countries – Colombia, the Democratic Republic of the Congo, France, Germany, Ghana, Indonesia, and Malaysia,  Norway, the United Arab Emirates, the United Kingdom and the United States  - as well as delegates from non-state actors including NGOs and financial institutions to iron out details of the TFFF ahead of its launch at COP30.  

Nature Finance Forum Europe (NFF-EU) 

Climate Action and UNEP FI will be joining forces the Wildlife Conservation Society, Institute for Climate and Society (iCS) and many more for the Nature Finance Forum Europe in Paris, where public officials will join leaders of the European capital markets to discuss TFFF as part of an exciting agenda focused on aligning capital markets with a nature positive future. 

Download the agenda today and join us for this pivotal milestone on the road to Brazil.