Thought Leadership, Research & CPA Spotlights

Key Takeaways from COP29 – What CPAs Need to Know

November, 2024

The United Nations’ annual Conference of the Parties (COP) 29 in Baku, Azerbaijan has wrapped up. While COP28’s biggest headline was the transition away from fossil fuels, COP29 was about how to finance climate action - securing new finance to support stronger climate action, reduce greenhouse gas emissions and build resiliency.

The headline from the COP29 was an eleventh-hour deal for wealthier countries to contribute US$300 billion yearly to support developing countries with climate action and adaptation.

Beyond this historic deal on climate finance, progress of countries towards their goals of the Paris Agreement, energy transition, water-related mitigation and adaptation and sustainable tourism were also on the agenda.

Below are two key takeaways for CPAs.

Two Key Takeaways for CPAs

Carbon Market - New Global Standards

COP 29 nations agreed on international carbon market standards under a voluntary, United Nations-run carbon market. The goal of the new standards under Article 6.4 of the Paris Agreement, is to improve the integrity and quality of carbon credits, creating trust in the carbon market. These standards are designed to attract more carbon credit projects, direct more financial support for developing countries and make it easier for countries to trade carbon credits.

CPAs can play a key role in building trust in carbon markets. Here’s how:

Ensuring accurate measurement and reporting of carbon emissions
Implementing robust internal controls over carbon accounting processes
Providing assurance to verify the accuracy, and completeness of carbon emissions data
Advising and guiding organizations in understanding and complying with the global standards

By leveraging their skills in accounting, auditing, and advisory services, CPAs can enhance the trust and integrity of carbon markets.

Reducing methane emissions

Canada and the United States are among the initial signatories to the new Reducing Methane from Organic Waste Declaration (“Declaration”) at COP 29. The initial signatories represent collectively 47% of global methane emissions from organic waste, such as from decompositions in landfills and in agricultural waste (livestock manure, crop residues). Of the greenhouse gases (GHG) contributing to climate change, methane emissions are second to carbon dioxide emissions.

This Declaration signals the importance of cutting human-caused methane emissions as supported by the 2021 United Nations’ Global Methane Assessment report. Organizations may soon need to measure and report methane emissions similar to the reporting of carbon dioxide.

APPENDIX: What is the Conference of the Parties?

What is The Conference of the Parties (COP)?

The annual Conference of the Parties (COP) is the main climate decision-making body which assesses progress on the goals set forth by the 2015 Paris Agreement – a legally binding international treaty on climate change under the United Nations Framework Convention on Climate Change (Convention).

What is the objective of the Convention?

The Convention aims to stabilize greenhouse gas concentrations at a level that would prevent harmful human-made disruption of the climate system. This objective gave rise to the 2015 Paris Agreement, which aims to limit global warming from greenhouse gas emissions to well below 2 degrees Celsius (2°C) – preferably below 1.5 degrees Celsius (1.5°C) – above pre-industrial levels by the end of the 21^st century.

How close are we to hitting the target set out in the Paris Agreement?

The most recent United Nations Emissions Gap report 2024, reports that unless countries deliver dramatically more ambitious revised GHG emission reduction commitments, known as NDCs (Nationally Determined Contributions), the preferred 1.5°C goal of the Paris Agreement will be gone within a few years and the world will be on course to a 2.6 to 3.1°C temperature increase within the century. However, it maintains that it is still “…technically possible to get on a 1.5°C pathway, with solar, wind and forests holding real promise for sweeping and fast emissions cuts. “

Under the Paris Agreement, countries must update their next NDC targets by February 2025. Some countries, like the United Kingdom, United Arab Emirates and Brazil have already announced their revised NDC targets during COP29. Notably, the United Kingdom announced an ambitious new target to cut emissions by 81% by 2035. COP30 will be held next year in Brazil, by which time all parties would have submitted their revised NDC.

To learn more about sustainability reporting standards and regulations impacting Canada, please visit CPA Ontario’s Sustainability Simplified.