Ignore the gloom – why COP30 is a success

Sentiment around COP30 in Belém has been decidedly downbeat. As delegations return from the Brazilian rainforest, the outcome of the latest round of climate negotiations been mostly interpreted as hard-fought, if uninspiring, compromise.

In reality, the 30^th Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) must decidedly count as one of the ‘good ones’ since the agreement was first signed in Rio in 1992.

2025 was always set to be a pivotal juncture for global climate talks. When countries gathered in 2015 in Paris for COP21, 2025 was earmarked as the year for countries to submit new, more ambitious emissions-reduction pledges for the period beyond 2030.

These NDCs are what matters most to markets – and to climate change. At LSEG, we have been tracking NDCs closely as the clearest signal yet on the actual emissions pathway policy makers are envisaging for their countries post-2030. They shape the transition risk environment for investors and companies and, ultimately, in aggregate will also define global emission trajectories, making them key to gauging future physical risk.

Yet the year was off to a challenging start for the NDCs. In January, the US, the world’s second largest emitter and world’s largest economy, signalled it would withdraw from the Paris Agreement. In February, 95% of signatories missed the deadline to submit their new targets; by the end of August this still stood at 85%. In other words, just three months before COP30, the NDC process was teetering on the brink of failure.

However, a late rally in the eight weeks before COP30 shifted the picture – a fact that perplexingly seems to have been lost on journalists and delegates alike. Two thirds of countries had announced or formally submitted their new 2035 targets. Once – as expected – India announces its new NDC before the end of the year, three quarters of global emissions will be covered by the new 2035 targets, with only two G20 countries lacking concrete new targets.

Our data shows that these new emission reduction commitments are substantive. China, the world’s largest emitter, has pledged absolute economy-wide emission reductions for the first time – an anathema for Beijing in previous negotiations rounds. Other key emerging economies have also committed to peaking emissions and absolute reductions – including Indonesia, Turkey, Brazil and Mexico – signalling that development and decarbonisation can go hand in hand.

Several advanced economies, too, have set material new targets. After eleventh-hour negotiations, the EU agreed its NDC days before COP in the form of a legally binding commitment. This will require the bloc to half its emissions in the space of 10 years – and then to half them again in the 5 years thereafter. The UK’s target is even more ambitious, while Japan, South Korea, and Australia too have made significant new commitments. This will have momentous consequences for industry, as meeting these new targets will require tackling emissions in so-called hard to abate sectors in earnest for the first time.

Cynics may argue that these are just empty promises, but the track record suggests otherwise. In 2015, the EU originally set a 40% reduction target for 2030, before increasing it to 55% in 2020. The EU’s latest projections show the bloc’s trajectory is off this goal by a whisker, at 54% emissions reduction. China too, has consistently outperformed its own climate targets, and the G20 are in aggregate not far off hitting their goals (for a detailed analysis, see the LSEG COP30 Net Zero Atlas).

In aggregate, these new national targets point to significant acceleration in emissions reductions beyond 2030. We estimate that across the 17 G20 countries with announced targets, they imply emission reductions of 2.5-3.4% per year from 2030-2035, compared to 0.5-0.7% for the same countries for 2023-30. This is not enough to put the world on track for goal of the Paris Agreement to limit global warming to well-below 2°C, but it is material progress and, for investors, signals that transition risk will accelerate in many key markets.

Focusing narrowly on the dynamics of the COP30 summit distracts from the fact that the Paris Agreement just passed a critical stress test – with broad-ranging implications for key sectors, from the growth of the green economy to companies’ transition plans. COP30 demonstrates that the NDC process at the core of the agreement continues to deliver real progress – and can do so even in an age of political fragmentation and geopolitical turbulence.