What do we expect from COP30?
Although some sobering messages are likely to come out of it, the direction of travel may hold more glimmers of hope than we may give credit.
As new NDCs are being submitted, shaping the trajectory to come, massive climate investments continue to be deployed globally. COP30 matters in this context and remains highly relevant to the green bond market as it provides an overall global policy direction for the green investment required to reach collective goals. Policy efficacy aside, it's a lighthouse for where we need to go.
At a headline level, there will be a number of discussion points on the table at COP30:
- Stronger NDCs to keep the Paris Agreement within reach
- Follow-up on pledges that have been taken and what remains to be done
- More emphasis on adaptation
- Baku-to-Belem roadmap should help raise $1.3tn per year by 2035 to support mitigation and adaption in emerging markets
More broadly, it is symbolic to hold a COP in Brazil, in the Amazon. That should put more emphasis on biodiversity and forests, putting a spotlight on nature’s place within the climate agenda.
But we all recognise the challenges. Many countries are under fiscal pressure, the financing gap remains huge, lobbying and public advocacy need to be better aligned with global aims and there is a need for progress to be better tracked and measured.
ESG Analyst, AXA IM Core
What will COP30 mean for green bonds?
Financing and delivery will be key parts of the discussion at COP30.
We hope this incites greater use of solutions-driven, climate financing instruments like green bonds. Green bonds can mobilise private sector capital to complement public funding and provide the transparency needed to track the contributions to and flows going toward global goals. That potential was demonstrated when the market took off after the Paris Agreement.
Green bonds are part of the toolkit needed to advance concretely on the pledges made at COP28:
- Countries committed to (1) tripling renewable energy capacity by 2030, and (2) doubling the annual rate of energy efficiency improvements until 2030.
- Countries also agreed to a resolution to take actions to 'transition away from fossil fuels in energy systems’.
While the green bond market has seen impressive growth over the last decade, climate negotiations remind us that large funding gaps prevail and financial instruments like these are actually well positioned to help close that gap.
It is important to note that green bonds are not just about renewable energy, energy efficiency or decarbonisation: they also help finance solutions to wider themes that are very much on the public agenda.
Climate adaptation, for instance, will be a major topic at COP30, reflecting the insufficient progress that has been made here. Although still a relative niche category within green bonds, typically representing 2-3% of overall project allocation, we believe there is a clear untapped potential to finance more projects related to resilience. Green bonds can serve as a vector to redirect private capital to emerging markets, which are key to the discussion on resilience.
Depending on the discussions that take place at COP30, we may see more adaption infrastructure projects emerge, particularly in terms of coastal resilience and flood protection. These could be funded by sovereign, agency or local government, or supranational green bonds.
Nature and biodiversity are other key areas where green bonds can help finance projects, particularly in relation to sustainable agriculture, reforestation, conservation, and water.
Sustainability bonds are a great complement to green bonds, allowing issuers to include social considerations. They have a higher share of emerging market funding, illustrating the importance of a more holistic approach in these geographies.
Challenges ahead, progress in hand
The way COP30 is seen reflects the way people look at a glass: half full or half empty.
We are in the half-full camp. Much needs to be done but a lot is being undertaken. In LATAM, for example, clean energy now exceeds fossil fuels with the region having major renewable energy assets.
Green bonds have a role to play in the transition: helping to close the funding gap through private capital, redirect capital from developed markets to emerging markets, and provide transparency, measurability and accountability. The green bond market was virtually non-existent 10 years ago; today it is worth $2.2tr[1].
Sovereign bond issuance is set to become increasingly key in emerging markets in particular. China issued its first sovereign green bond in April 2025, raising 6 billion RMB ($824 million). Many other countries – including the Philippines, Mexico and Brazil - have issued green or sustainability bonds. We expect this type of issuance to continue and there are already positive developments to share.
Chile, for instance, was the first country in LATAM to issue a Green bond, before it went on to issue sustainability and social bonds. It was a clear signal of the country’s environmental ambitions. Chile is now among the 10 countries that have reduced coal power the fastest over any eight-year period since 2000.[2]
Every COP focuses on flows to developing countries because they are hardest hit by climate catastrophes. That is why adaptation, not just mitigation, is so important. Yet funding to this category is far too low today. We hope COP30 can catalyse more investment here as the need is clearly evident.
The outcomes from COP30 are yet to be seen. But as a solutions-based instrument, we expect green bonds to play an increasingly important role as the world continues to transition to a more sustainable future.
[1] Source : Bloomberg as of 04/11/2025.
[2] Source: World Resources Institute: https://www.wri.org/insights/countries-phasing-out-coal-power-fastest
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