COP30 in Belém – issues for Australian business

When negotiators meet in Belém, Brazil in November 2025 for COP30, they will close the first ten-year cycle of the Paris Agreement with their first gathering since the United States’ second withdrawal from the accord. With the parties focused on garnering collective ambition for a 2035 emissions reduction target, the decisions made in Brazil will further shape carbon market rules, and influence capital flows and trade for the rest of the decade.

For Australian business leaders and ESG/sustainability managers, four issues warrant particular attention:

• updated nationally determined contributions (NDCs) including Australia’s new 2035 emissions target;

• the operational launch of Article 6 carbon markets;

• the New Collective Quantified Goal (NCQG) on climate finance; and

• Brazil’s “Belém Action Agenda”.

Australia's 2035 NDC

All parties must lodge new or updated NDCs covering 2035 by the first quarter of 2026, making COP30 the last multilateral checkpoint before the deadline.
Australia has recently announced its 2035 target of a 62-70% reduction of emissions based on 2005 levels. This target is included in Australia's updated NDC submitted to the UNFCCC.

Negotiations at Belem are expected to include ongoing debate around defining “common elements” of NDCs, such as base-year alignment and sectoral coverage. To the extent that some of these elements can be agreed, they would permit comparability of contributions, thereby increasing reputational risk for countries who are perceived as not making an adequate contribution to the global mitigation effort.

Australia's 2035 emissions target will likely come under scrutiny at Belem, but already the target will have a number of implications for Australian business. Any convergence on common elements of NDCs will similarly have an impact, including:

1. Sustainability reporting: With the commencement of mandatory sustainability reporting in Australia, reporting entities will need to incorporate the announced 2035 target into their scenario modelling and, in particular, into any transition plan.

2. Clearer metrics: If COP30 agrees on guidance that standardises NDC information, investors and other stakeholders may be better able to benchmark corporate transition plans.

3. Policy signaling: Australia's 2035 target will necessarily translate into tighter domestic regulations, especially for the energy, transport and heavy industry sectors. It's estimated as much as one-third of the emissions reduction target will come from recalibrating baselines for those entities caught by the Safeguard Mechanism to be consistent with the 2035 target. Australia's 2035 target includes sector plans and identifies initiatives for those sectors, such as agriculture, which business will need to respond to.

4. Supply-chain pressure: Multinational buyers increasingly embed “Paris-aligned” clauses in procurement contracts. Australia's 2035 target will increase demand for suppliers in export sectors such as resources and agriculture to align with the expectations of the markets they supply.

Article 6 Carbon Markets

COP29 produced high-level guidance on many issues relevant to operationalising Article 6 including the Article 6.4 mechanism. There is a clear need for COP30 to finalise technical standards and guidance for baselines, additionality tests for carbon reduction and removal activities, double-counting rules and grievance mechanisms. Without this work, credits under the Article 6.4 mechanism cannot be issued.

Nearly every country has indicated it intends to use carbon credits to help meet its NDC. The United States’ withdrawal from the Paris Agreement, however, removes a potential major source of demand for credits, which could have the effect of depressing early prices. Countering that, the US' withdrawal could give the EU greater influence over rule-setting, with the consequence that supply is more constrained because of tighter integrity standards. How will these developments affect Australian business?

1. Export opportunity: Subject to any export controls, Australian project developers could tap a larger pool of foreign buyers of offset credits once the Article 6.4 market opens, although developers will need to consider how they might meet potentially more prescriptive EU influenced quality standards.

2. Compliance obligations: Facilities covered by the Safeguard Mechanism may look to use Article 6.4 units for compliance, if the Australian Government allows for importation of such units. Whether this is allowed may well depend on the unit integrity standards discussed at COP30.

3. Legal exposure: Purchasers of voluntary offsets may be exposed to “green-washing” claims down the track if units are later found to not conform with Article 6 mechanism rules. Business should be thinking now about clauses in purchase contracts which permit changes if credits do not meet those rules.

The New Collective Quantified Goal (NCQG)

COP29 endorsed an ambition of at least US$300 billion per year by 2035 for developing countries, while “striving towards USD1.3 trillion” per year over the same period.

COP30 will need to focus on achieving agreement on how this burden is shared, the extent to which funding from the private sector can be counted towards a country's contribution, and reporting requirements. A threshold issue is whether the NCQG is a binding “collective obligation” or a purely political pledge; the answer will likely affect the status of any private-sector commitments governments seek to use to meet their contribution.

The US absence is also likely shift the finance burden towards the EU, Japan, Canada and the Gulf states. Again, this may result in tighter standards and metrics than might otherwise be the case, particularly those for accounting for private finance.

Implications for Australian business regarding negotiations around the NCQG include:

1. Trade agreements: While Australia already has a number of trade agreements with developing countries, future agreements (or renegotiation of existing ones), may look to account for private investments in those countries towards any NCQG obligation.

2. Export finance: Australian infrastructure, energy and agricultural sector exporters rely on multilateral or bilateral finance in emerging markets. Introduction of climate-screening criteria, potentially linked to the NCQG, could become preconditions for approvals.

3. Insurance and banking: Domestic insurers and banks with operations in the Pacific may experience new disclosure expectations if Australia counts private finance mobilised by those institutions towards its NCQG share.

4. Competitive landscape: Greater concessional finance for renewables for developing countries in the Asia-Pacific could accelerate decarbonization in the region, potentially impacting demand for Australian energy exports. Conversely, it could open market opportunities for energy efficient and renewable energy technologies.

Brazil’s COP30 Action Agenda

The COP30 Action Agenda aims to establish a framework to mobilise efforts to accelerate the implementation of what has already been agreed, based on the results of the first Global Stocktake. The first Global Stocktake recognised that progress has been made towards the Paris Agreement goals – shifted projected warming from nearly 4°C to around 2.1 to 2.8°C above pre-industrial levels – but that these efforts are insufficient such that the world is not on track to meet the long-term 1.5°C goal of the Paris Agreement.

The COP30 Presidency proposes translating the results of the Global Stocktake into six major thematic pillars:

• Transitioning energy, industry and transport;

• Stewarding forests, oceans and biodiversity;

• Transforming agriculture and food systems;

• Building resilience for cities, infrastructure and water;

• Fostering human and social development; and

• Unleashing enablers and accelerators including on finance, technology and capacity building.

The Action Agenda also provides an opportunity for COP30 to support the Sustainable Development Goals (SDGs) with solutions that promote climate justice, combat hunger and poverty, and address structural inequalities, including those related to gender, race, and socioeconomic conditions.

We see action in these areas as having the following implications for Australian business:

1. Supply-chain due diligence: Regulators particularly in the EU under its Corporate Sustainability Due Diligence Directive, as well as the UK, may look to embed just-transition requirements into domestic legal requirements, similar to modern anti-slavery obligations. Australian exporters to those markets could expect audits on workforce transition plans, Indigenous engagement and scope-3 emissions.

2. Forest-positive claims: Consumer-good brands sourcing products from Australia may need to benchmark their deforestation commitments against any standards emerging from the negotiations, increasing scrutiny of land-use change in Australia.

3. Litigation and disclosure: If COP30 language is incorporated by reference into overseas procurement or investment mandates, Australian businesses could face new contractual or securities-law liabilities for non-compliance.

Further challenges and opportunities for Australian businesses from COP30

Given the state of negotiations on these key issues, there are a number of further things for Australian businesses to consider to ensure that are in a position to meet new or emerging challenges – and identify opportunities. 

Carbon competitiveness

• Safeguard Mechanism compliance costs will likely rise if Australia tightens baselines to align with a 62-70% reduction trajectory by 2035 in the updated NDC. High-emitting facilities will need to update abatement cost curves, and develop strategies to meet projected compliance obligations at the lowest cost.

• Australia already has a well-designed carbon credit market in the ACCU scheme. The development of robust Article 6.4 unit integrity standards may differentiate high-quality Australian credits in a market potentially flooded with cheaper, lower-integrity units.

Capital access

• Investors already using EU-style taxonomies may accelerate divestment from assets that are not aligned to Paris Agreement goals. This would result in emissions-intensive industries finding it more difficult to access capital, or capital at a competitive cost.

• Companies planning IPOs or refinancing should prepare for enhanced climate-risk disclosure based on outcomes from COP30.

Trade exposure

• Carbon Border Adjustment Mechanisms (CBAM) remains a possibility both in and outside of the COP30 negotiations. As the most proactive when it comes to CBAMs, the EU may seek to use COP30 outcomes to support CBAM development and implementation. Australian exporters of emission intensive products may need to consider modelling CBAM tariff equivalents on those products.

• Supply-chain clauses referencing just-transition or climate-positive standards may find their way into contracts, particularly for agriculture and resource commodities. This will drive a need to document compliance with emerging standards to preserve market access and avoid contract renegotiations.

Legal and governance actions 

• Consider the appropriateness of including explicit “COP-decision” triggers in change-in-law clauses to avoid potentially unacceptable obligations from changes in markets expectations.

• Review current offset credit portfolios to determine to what extent they may not be compliant with expected Article 6 rules and identify disposal strategies.

• Review risk registers to see how they align with EU or UK taxonomies, particularly in light of the U.S. withdrawal from the Paris Agreement.

• Update transition plans to articulate how corporate targets align with the announced 2035 emissions reduction target as part of corporate climate related risk disclosures.