‘COP30 marks the turning point for global climate action’

The 30th edition of the United Nations Framework Convention on Climate Change (COP30) taking place in Brazil is set to mark a turning point in the movement for global climate action, writes Miguel Chavarría, Head of Advisory for Latin America at South Pole.

The world is facing a climate change crisis progressing faster than what some scientific projections predicted 10 years ago, and in the middle of rising geopolitical tensions and numerous economic challenges getting in the way of what should be an efficient international cooperation.

The success of fighting climate change falls on the decisions we make now and implement over the following five years, making this COP a pivotal moment to demonstrate an increasing ambition, but more than anything, progress.

Nationally Determined Contributions

A key element of this coming COP will be the third generation of Nationally Determined Contributions (NDC 3.0). This third edition of the contributions self-determined by the signatory parties of the Paris Agreement is expected to bring a new level of ambition compared to previous iterations. Through it, countries are expected to demonstrate how serious they are about tackling climate change, aligning their national policies to what climate science says is needed to avoid the worst future consequences of climate change.

Sectoral commitments and an increased ambition with a focus on key industries like energy, industry, agriculture, and waste management will be defining features of this new set of NDCs. Such an increase in ambition will certainly also have an impact on corporations worldwide, including those operating in Mexico and the Latin America and Caribbean region, as it will cascade down to them, directly influencing their strategic planning, regulatory compliance, and sustainability leadership positioning.

The NDC 3.0 is also expected to draw from the conclusions and recommendations of the first Global Stocktake completed in 2023. This Global Stocktake works as a five-year cyclical assessment of the global collective process toward meeting the Paris Agreement ambitions, providing information to countries with the expectation that it will serve as input for future climate action. It also intends to foster cooperation, transparency, and accountability.

Controlling the temperature

Unsurprisingly, an important outcome of the past Global Stocktake is that we are collectively falling short of doing what’s necessary to limit global temperature increase to 1.5 degrees Celsius compared to pre-industrial levels. The “good news” is that we are no longer on the way to a temperature increase of 4 degrees Celsius.

The bad news is that, provided parties implement what they’ve committed to do in their previous versions of their NDCs, we’ll likely fall in the range of 2.1 to 2.8 degrees Celsius of temperature increase at the end of the century. However, while this news is not enough to warrant anything more than a reserved outlook, it does provide more precise feedback for course correction.

For example, it reinforces the short-term need for triple renewable energy and double energy efficiency, as well as the urgency to transition to net-zero energy systems and to preserve and restore ecosystems and nature, which, among a number of different environmental services, also keep carbon captured and stored.

As we get closer and closer to Belém, more countries are submitting their NDC 3.0, and a new synthesis report is expected to be published by the UNFCCC Secretariat in October, which will give us more insights about the persisting gap to the Paris Agreement objectives for 2030 and also some new ones for the year 2035.

Financing the journey

In order to materialize and accelerate the deeply needed decarbonization, sufficient financial resources need to be channeled in the right direction, and climate finance remains a critical topic in the COP agenda. Last year at COP29 in Baku, nations established the New Collective Quantified Goal (NCQG), a target to mobilize at least $300 billion per year by 2035 from developed countries to support climate action in developing nations.

Furthermore, the ‘Baku to Belém Roadmap to 1.3T trillion’ was launched to enable the scaling up of financing to at least $1.3 trillion annually by 2035 to developing countries from all sources (public and private) to contribute to development pathways that are both low in GHG emissions and climate resilient.

Though these targets represent a major step forward from the previous $100 billion goal, challenges persist. For example, adaptation finance remains notably underfunded relative to needs, and it’s important to achieve a balance between mitigation and adaptation finance. Also, parties will likely work to enhance transparency, address systemic inequities, and integrate climate finance within broader sustainable development financing frameworks.

For Latin American countries, including Mexico, it is also important to obtain international support combined with strengthened domestic financing mechanisms to drive climate initiatives. 

Carbon markets

Carbon markets will also capture a lot of attention, as they typically do. To start, some new Emission Trading Schemes are expected to be officially launched (or more precisely, relaunched) in the context of this COP. While its basis was officially established in 2024, Brazil is expected to publish the secondary regulation needed to get going with the first phase of its scheme. It may also be the case that Mexico finally moves to the operational phase of its ETS, too.

However, due to its high impact potential, Article 6 of the Paris Agreement will remain at the center of the conversation. On the one hand, there has been important progress on the operationalization of the Paris Agreement Crediting Mechanism (PACM) as part of Article 6.4. On the other hand, there have been some pilots for early ITMO transactions as part of Article 6.2 cooperative approaches.

Therefore, COP30 is set to represent a critical moment in realizing the potential of Article 6 as a driver for enhanced international climate cooperation and ambition.

Key decisions at COP30

If by now you are wondering about businesses, let’s address a few key points.

At COP30 in Brazil, several key decisions are expected to impact corporate operations significantly. The conference is anticipated to advance measures that require companies to enhance transparency on aspects such as climate-related risks and emissions, aligning with evolving international country-level reporting standards based on the Paris Agreement’s Enhanced Transparency Framework (ETF).

The ETF comprises aspects of climate risk reporting, although not as directly as frameworks like TCFD or IFRS S2. The ETF requires parties to report on GHG sources, on their progress toward their NDCs, and adaptation efforts, which at the same time comprises information related to climate change impacts and adaptation.

Furthermore, COP30 may introduce more stringent rules on corporate involvement in carbon markets under Article 6, seeking to ensure environmental integrity and reduce risks potentially linked to greenwashing.

As climate finance remains vital for future talks, corporations must significantly increase their investments to help decarbonize the economy. Also, decisions on operationalizing the NCQG on climate finance may increase financial flows to sustainable projects, impacting corporate financing and sustainability initiatives. 

All these outcomes collectively point to an increasing expectation of corporates to integrate climate action into core business models, corporate governance, investment decisions, and supply chain management.

NDC 3.0 presents a transformative opportunity for corporations across Mexico and Latin America to embed climate ambition into core business strategies. By staying informed about policy updates, advancing sustainability investments, and fostering inclusive approaches, companies can drive in parallel climate resilience, tap emerging green markets, and contribute to a sustainable future for the region.

Conclusion

The COP30 represents much more than government pledges. It is about how every part of society, including businesses, investors, and society in general, translates ambition into action. COP30 will be a decisive moment to turn lessons from past shortcomings into commitments that accelerate real-world transformation.

For Latin America and Mexico, it represents both a challenge and an unparalleled opportunity to align economic growth with climate resilience and inclusive prosperity. The choices made in the next few weeks will determine whether this generation delivers on the promise of the Paris Agreement: a more sustainable, more resilient, and more equitable future for all.