In a few weeks, global leaders will land in Azerbaijan for COP, the world’s most significant climate summit. Now in its 29th year, the annual meeting will see signatories to the UN Framework Convention on Climate Change come together to discuss how to reach net zero.

At last year’s summit in Dubai, countries reached a landmark agreement to “transition away” from coal, oil, and gas. The deal was significant because it was the first time nations explicitly took aim at the use of fossil fuels. This year’s event is being billed as ‘finance COP’. Top of the agenda is agreeing on a New Collective Quantified Goal (NCQG) that sets a global target for how much financial support developed countries will provide to developing countries to help them tackle climate change.

Some of the other debates I’ll be watching closely are:

• A new ‘loss and damage’ fund to help low-income countries pay for recovery from climate-related disasters.
• Updated National Determined Contributions (NDCs), each country’s individual efforts to reduce GHG emissions, which they must submit every five years and are next due in 2025.
• Non-market and market-based solutions to meet climate goals, especially the carbon tax credits market.

While the headlines from COP usually focus on these kinds of intergovernmental topics, the event is equally important as a venue for corporations to share and learn. Despite claims that fewer private sector leaders will be attending this year after record attendance at COP28, there is still a great deal of value to be gained in joining the dialogue – both at COP29 and in wider net zero discussions.

There’s no net zero without the private sector

Private capital investors are in a unique position to push progress towards reaching the Paris Agreement goal of net zero emissions by 2050. The private sector already makes 81 percent of green investments in high-income countries, according to the Independent High-Level Expert Group on Climate Finance (IHLEG) – but the gap between what’s happening and what’s needed is vast. McKinsey estimates that the cost of reaching net zero by 2050 will be $275tn – about 7.5 percent of GDP every year. Spending would have to be highest in the next 10to 15 years to build out a net-zero economy.

Companies, from industry leaders to exciting young startups, can unlock a lot of value by accelerating innovation and scaling established green solutions. Improving sustainability practices and scaling or growing sustainable products and services is also a means of future-proofing a company. At EQT, this approach is a core part of the impact we want to create and drives how we seek to create returns for our investors.

COP as an acceleration platform

To contribute meaningfully to net zero, companies need to operate in a supportive policy environment. Our politicians must show long-term thinking that allows us to drive the transition successfully. COP is a useful opportunity to seek this.

We’re dedicated to helping make the case for long-term, stringent political frameworks, but there’s a second equally important reason we’re going to Baku: to have a dialogue with politicians, decision-makers, and the public. We believe exchanging first-hand experiences of managing sustainable transformation – what worked and what didn’t – can help accelerate change.

Going to COP29 is a big investment. To make the most out of the summit, we’re thinking about how we can contribute to the discussion, and considering which unique insights we could share. One example is our exposure across the investment cycle. With strategies ranging from venture to buy-out, EQT is positioned to spot early-stage solutions that could be leveraged to help solve later-stage climate topics, by helping them reach scale.

This is a thematic approach that transcends sectors. For example, a solution developed in a tech venture could be applied to a mature healthcare company, creating a powerful acceleration model for improving both sustainability and revenues across our portfolio. By leveraging our active ownership model combined with our global network of industry advisers, we can support the green transition in the companies we invest in.

We’re also excited to share our lessons from integrating sustainable practices across our portfolio of more than 300 companies and 2,000 real estate assets. As an active investor, we have an important role to play in driving the climate transition. In 2021, we became the first private market firm to commit to setting science-based targets – goals that align with the latest climate science to give a clear path to reducing GHG emissions. We’re ahead of schedule on our aim to help our portfolio companies* set their own targets by 2030 with companies making up more than half of our invested equity having already validated their targets. This exercise is the first step on a long journey, but the progress shows the power of active ownership.

Getting to net zero will be a huge challenge, and we’ll only succeed if the private and public sectors work together to share ideas and best practices. This is the first in a series of articles we’ll publish in the run-up to COP29 about how they can do that. Future deep dives will focus on topics including blended finance, climate tech, and transition finance.

If you’re a company, investor, or policymaker coming to Baku, please get in touch. We’re excited to convene our network and learn together.

*EQT funds’ portfolio companies within EQT Private Equity, EQT Future, EQT Infrastructure and BPEA VII-VIII, i.e. the investment strategies where EQT funds typically have control or co-control.