COP25 has proved to be a disappointment for both negotiators and observers with little progress noted. For many, this outcome is worrying as we move into 2020 – a key year for both the revision of national climate policies and the finalization of the Paris Agreement rulebook at COP26. On the road to Glasgow, a number of challenges clearly remain.

Nevertheless, the annual negotiations were an opportunity for the broader climate community to come together to discuss progress and continued challenges to move forward collectively to achieve the goals of the Paris Agreement. As the ‘critical’ decade begins, many financial institutions have signaled their ambitions to continue discussions on climate risk management, Paris Alignment and Adaptation, among other key issues in 2020.

This post presents an overview of a number of the principal issues discussed among financial institutions at COP25. A month after the end of the COP, it then provides a round-up of reactions from experts from what we should take away from 2019 as we move into 2020.

On the sidelines of climate negotiations: Positive Signals that Climate is starting to be integrated in Mainstream Finance

“This COP was not only about negotiations. The multiple events under the Global Climate Action Agenda and the active participation by Non-Party stakeholders show that they are crucial allies in implementing the Paris Agreement. Their expertise and enthusiasm is valuable and we look forward to working with them in increasing ambition and action.” European Union Closing Statement

The Initiative at COP25

The Initiative organized events at COP25 around its two principal focus topics in 2019: Climate Risk Management and Paris Alignment. These discussions brought together Supporting Institutions, experts, government representatives and other stakeholders to exchange on progress to date and the challenges ahead.

The Coalition of Finance Ministers for Climate Action released its Action Plan

read the santiago action plan

In Madrid, 51 finance ministries reinforced their commitment to fighting climate change together through the Coalition of Finance Ministers for Climate Action. Established in April 2019, the Coalition is aimed at driving stronger collective action on climate change and its impacts on 6 key areas for policy engagement, presented in its 6 guiding “Helsinki principles”:

  1. Align our policies and practices with the Paris Agreement commitments;
  2. Share our experience and expertise with each other in order to provide mutual encouragement and promote collective understanding of policies and practices for climate action;
  3. Work towards measures that result in effective carbon pricing;
  4. Take climate change into account in macroeconomic policy, fiscal planning, budgeting, public investment management, and procurement practices;
  5. Mobilize private sources of climate finance by facilitating investments and the development of a financial sector which supports climate mitigation and adaptation;
  6. Engage actively in the domestic preparation and implementation of Nationally Determined Contributions (NDCs) submitted under the Paris Agreement.

The Coalition’s Action Plan presents the workstreams and deliverables for 2020 aimed at making progress on each of those principles.

Actions targeting financial institutions directly include:

  • Exploring approaches to encourage financial institutions to align their practices with the NDCs and the goals of the Paris agreement.
  • Sharing experience on the issuance of green bonds and use of other financial instruments.
  • Identifying strategies to incorporate climate risks and opportunities into investment decisions, such as supporting global efforts for transparency and disclosure of climate-related financial risks and impacts, identifying risks to financial stability posed by climate change, and considering ways to manage these risks. Institutional Partners are undertaking stress tests on climate related risks and developing tools for supervisors that will also help Members manage risk.
  • Identifying measures to address the issue of high cost of capital for adaptation and mitigation investments in developing countries.
  • Supporting the efforts of multilateral development banks in mobilizing climate finance, and accelerating the dissemination of international best practices.

Some have noted that this Coalition is by itself an important milestone:

“A highlight in Madrid has been the first gathering of the Coalition of Finance Ministers for Climate Action at a United Nations climate change summit. The leadership of finance ministers will be critical to the economic transformation that we need. The leadership of International Monetary Fund under its new Managing Director, Kristalina Georgieva, will add valuable support and momentum.” Professor Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science

 “This important announcement shows that a growing number of finance ministers are taking climate action seriously. Finance ministries must step up as champions of climate action at this critical moment in history. Climate change will touch everything finance ministers care about: economic growth and productivity, financial stability, fiscal health, and social equity. As key players in national policymaking, finance ministries should, among other things, play a central role in enhancing Nationally Determined Contributions (NDCs) and help their countries build resilience against the impacts of climate change. They should also learn from one another. This Coalition is well positioned to make these changes happen.” Leo Martinez-Diaz, Global Director, Finance Center, World Resources Institute

“This is a necessary change in the architecture of climate change finance … to be successful, you will need to go through the finance ministries,” Axel van Trotsenburg World Bank managing director

The release of the Action Plan was largely welcomed by both the financial sector and the NGO community. However, moving towards 2020, it will be important to follow up on the concrete outcomes of the Coalition, keeping on mind the words of Petteri Orpo, Minister of Finance, Finland at the launch of the Coalition “The Coalition will be successful, if it helps us plan concrete, effective policy measures to address the climate crisis nationally, regionally and globally”.

The Investor Agenda: More than 600 investors with $37tn in assets sent the largest ever joint call for climate action

read the call to action

At COP25, 631 institutional investors with more than $37 trillion in assets released a Call for Action that “urged governments to implement the actions that are needed to achieve the goals of the Paris Agreement, with the utmost urgency”.

The call highlighted among others that:

“It is vital for our long-term planning and asset allocation decisions that governments work closely with investors to incorporate Paris-aligned climate scenarios into their policy frameworks and energy transition pathways.”

“It is vital that governments commit to improve climate-related financial reporting standards by publicly supporting the adoption of the TCFD recommendations”

The call to action was highlighted by United Nations Secretary-General António Guterres in his remarks to Heads of State and Government at COP25 and was generally well received. 2020 will be an important year for the Investor Agenda to signal to governments their support and willingness to work cooperatively to move this Agenda forward in practice.

The Central Banks and Financial Regulators Confirm the Relevance of Climate Stress-Testing

At the end of 2019, both the French and British central banks both made announcements confirming that that assessment of climate-related risks is becoming part of business as usual for banks and insurers.

Building on work that the French Central Bank has conducted regarding climate risk exposure within their own portfolio, Francois Villeroy de Galhau announced during the Climate Finance Day, organized a few days prior COP25 that “France has decided to carry out climatic stress tests next year. We will publish the methodology in the first quarter and apply it to all major French banks and insurance companies”.

The Bank of England will test the resilience of the largest banks and insurers to the physical and transition risks associated with different possible climate scenarios, and the financial system’s exposure more broadly to climate-related risk. The Bank of England published a discussion paper on the 2021 Climate Stress Test.

Read the Discussion Paper

In addition, on the eve of COP25, Kristalina Georgiva, Managing Director of the International Monetary Fund indicated that Central banks and regulators should also help banks, insurers, and non-financial firms assess their own exposures to climate risk and develop climate-related ‘stress tests.’”

Read the Full Statement

She continued that: “Such tests can help identify the likely impact of a severe adverse climate-driven shock on the solvency of financial institutions and the stability of the financial system. The IMF will help push forward efforts around climate change stress testing, including through our own assessments of countries’ financial sectors and economies. Careful calibration of stress testing for climate change will be needed, because such testing requires assessing the effects of shocks or policy actions that may have little historical precedent.”

Mark Carney Appointed as UN Special Envoy for Climate Action and Finance

Read the Press Release

Mark Carney, who finishes his term as Governor of the Bank of England at the end of January will be taking up a new role on climate action and finance.

The Governor said: “I am honoured to have been asked by the Secretary-General to take on this important role to help transform climate finance ahead of the COP26 meetings in Glasgow next November. This provides a platform to bring the risks from climate change and the opportunities from the transition to a net zero economy into the heart of financial decision-making. To do so, the disclosures of climate risk must become comprehensive, climate risk management must be transformed, and investing for a net-zero world must go mainstream. The Bank of England, the UK government and the UK financial sector can play leading roles in making these imperatives happen.


Round-Up of Commitments and Announcements from Supporting Institutions

  • The MDBs presented an update on progress made in the development of their joint alignment approach.
  • The Islamic Development Bank officially announced its Climate Finance Target: 35% of its total financing by 2025.
  • The Asian Development Bank (ADB) announced the achievement of its commitment to double its annual climate investments from $3 billion in 2014, with more than $6 billion in climate-related financing in 2019.
  • Eleven international organizations, including the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the Islamic Development Bank and the World Bank launched the Alliance for Hydromet Development. The members of the Alliance commit to ramp up action that strengthens the capacity of developing countries to deliver high-quality weather forecasts, early warning systems, water, hydrological and climate services.
  • The European Investment Bank presented and discussed its recently adopted Energy Lending Policy that includes ending financing for fossil fuel energy projects by the end of 2021 with a focus on clean energy innovation, energy efficiency and renewables.

If we have missed any announcements from Supporting Institutions, please do not hesitate to let the Secretariat know by contacting


Selected Reactions of Experts and Officials to the Outcomes of COP25 Negotiations

COP25 was the longest COP ever held with, unfortunately, only limited outcomes. Conclusions were reached on a number of issues, including the review of the Warsaw International Mechanism on Loss and Damage associated with Climate Change Impacts, the adoption of an Action Plan on Gender, and some finance-related issues – such as guidance to the Global Environment Facility (GEF) and Green Climate Fund (GCF). However, talks did not advance significantly on a number of other areas seen as critical, pushing decisions into 2020. This included topics such as the guidance for Article 6 of the Paris Agreement (market and non-market mechanisms), reporting requirements for transparency, long-term finance and “common timeframes” for climate pledges.


The ‘Road to COP26 in Glasgow’ is expected to be long as in addition to these continued areas for negotiation, countries are also expected to raise the ambition of their individual and collective efforts.

Overall Outcomes

UN secretary general António Guterres said he was “disappointed” with the results of COP25 and that “the international community lost an important opportunity to show increased ambition on mitigation, adaptation & finance to tackle the climate crisis.”

“We came to Madrid to make the planet safer. Unfortunately, the new text we adopted this morning does not reflect anything near what we would have wanted […] it is the bare minimum.”  Tina Stege, the Marshall Islands’ climate envoy.

“Urgent action is needed to rebuild the foundations for strong collective action if we are to avoid the rapidly increasing dangers of climate change.” OECD Secretary-General Angel Gurría

“Major players who needed to deliver in Madrid did not live up to expectations, […] but thanks to a progressive alliance of small island states, European, African and Latin American countries, we obtained the best possible outcome, against the will of big polluters.” Laurence Tubiana, CEO of the European Climate Foundation and a main architect of the Paris Agreement

National Climate Ambition

“Global greenhouse gas emissions are continuing to rise – with 2019 marking a new record year. Unfortunately, none of the major emitting countries used the occasion in Madrid to announce that they were going to strengthen their climate protection contributions. It was also not possible to agree on planning for the further process in 2020. In order to facilitate an initial global evaluation before the next conference in Glasgow in November 2020, all contributions should be submitted by the middle of next year at the latest.” Prof. Dr. Manfred Fischedick, Vice-President of the Wuppertal Institute

“The can-do spirit that birthed the Paris Agreement feels like a distant memory today. Next year will be a key test. The final decision urges countries to “consider” the gap between current ambition and where we should be, and to reflect this in the national commitments they put forward in 2020. While this language should have been stronger, it is an important signal that countries must heed. […] There were some important signs of leadership. Eighty countries, mainly the smaller and most vulnerable ones, have committed to ratchet up their climate ambition in 2020. And encouragingly a few major emitters — including the European Union and Canada — have started to move in the right direction. […] The demand for action is loud and clear outside the negotiation halls, where a wave of youth activists, city leaders, CEOs, investors, and others are hungry for a global transformation that responds to the climate crisis. Nearly 400 cities, over 780 businesses and 16 investors, with over $4 trillion in assets, have committed to net zero targets by 2050. But we cannot push off action into the future. Now is the time for countries to step up.” Helen Mountford, Vice President for Climate and Economics, World Resources Institute

“The governments of Italy and the U.K. now face a major challenge over the next 12 months in working to persuade all countries to bring forward more ambitious commitments to cut emissions of greenhouse gases, consistent with the Paris Agreement’s goal of holding global warming to well below 2 Celsius degrees. This work could be reinforced by the growing recognition of the great attractions of a transition to sustainable economic development and growth, with rising living standards, better health, greater social inclusion, a less polluted environment, and stronger ecosystems. The announcement of the European Green Deal is an important step in this new direction.” Professor Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science

The only glimmer of hope in Madrid came from the announcement of the European Green Deal and the EU’s political agreement to reach carbon neutrality by 2050. “For companies, this sends a signal that the transition to a carbon-neutral economy can start to accelerate,” Corporate Leaders Group, a coalition of European businesses supporting the transition to a net-zero carbon economy

“The mixed results of the Madrid negotiations also mean there will be extra expectations from COP26, which will be held in Glasgow from November 9 to 20, 2020. NGOs and civil society will heighten pressure on governments to raise the bar of their ambitions to challenge climate change. AFD and all public development banks have a crucial role to play in pushing everyone to align with the Paris Agreement and the Sustainable Development Goals (SDGs).” French Development Agency

“2020 must be different and we will fight even harder for people and nature. Governments will return home to face increasing frustrations from youth movements, citizens and vulnerable communities suffering from the impacts of the climate crisis, and will have to answer to them. Countries still have the chance to show they are committed to tackling the climate crisis by submitting enhanced climate pledges aligned with science as soon as possible in 2020.” Manuel Pulgar-Vidal, leader of WWF’s global climate and energy practice and COP20 President

Article 6 / Carbon Markets

“It is disappointing that no consensus was reached about Article 6 of the Paris Agreement on the trade of emissions permits and credits, which means this issue will still need to be resolved over the next 12 months. Although the COP process often seems frustratingly slow, it is important to remember that it proceeds through consensus among all 197 Parties to the 1992 United Nations Framework Convention on Climate Change.” Professor Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science

“Given the high risks of loopholes discussed in Madrid, it was better to delay than accept rules that would have compromised the integrity of the Paris Agreement.” Helen Mountford, Vice President for Climate and Economics, World Resources Institute

“Much negotiation time was spent preventing the creation of loopholes in the framework for the cooperative mechanisms under Article 6. It’s tragic that it needs to be seen as a success that it was possible to deflect the attacks on the integrity of the Paris Agreement and postpone the conclusion of the topic to the next meeting.” Lukas Hermwille, Project Co-Ordinator in the Research Unit Global Climate Governance in the Energy, Transport and Climate Policy Division at the Wuppertal Institute

After two weeks of negotiations, discussions on carbon markets took such a bad turn that seeing no agreement was actually a relief. We came here asking for urgent action and several countries only offered accounting tricks and cover for climate inaction. These loopholes are nothing but a way of cheating the planet and betraying the people.” Gilles Dufrasne, Policy Officer with Carbon Market Watch

Climate Finance and Loss and Damage

“The most significant discussions relating to financing mechanisms for climate change adaptation surrounded the climate finance goal and the related issue of long-term climate finance (LTF). The LTF workstream (which monitors progress towards scaling up of climate finance) is due to end in 2020. Most of the functions of the LTF are already replicated under the Paris Agreement, but with the US expected to withdraw from the Agreement, some parties saw merit in extending the LTF. The goal of mobilizing $100 bn annually by 2020 (for both mitigation and adaptation) was also discussed – with questions asked about whether it should be revised or extended. The outcomes of these discussions were unsatisfactory, with negotiators unable to agree even on when they should take a decision on the LTF agenda. This reflects the real concerns that the $100bn target will be missed this year, and points to very tricky negotiations in Glasgow on the issue.” Acclimatise

“Developed countries failed to provide sufficient assurance that they would mobilize adequate and predictable finance for vulnerable countries to respond to climate impacts. This resulted in acrimonious negotiations on loss and damage finance and on how to assess progress on the goal of mobilizing $100 billion a year in climate finance by 2020. The door remains open for more progress on these issues in the future.” Helen Mountford, Vice President for Climate and Economics, World Resources Institute