November 8 – The imperative to reach net zero is not based on ideology or political worldview, but on the hard and fast laws of nature. Carbon neutrality is essential to ensure long-term resilience and prosperity. The good news is that the energy transition is unstoppable. The questions are simply: how can we accelerate this transition and how can we achieve a just transition that strengthens global stability?

At present, the COPs provide the best forum we have to answer these questions. As with all COPs, this year’s climate summit in Baku will see a clamor from civil society for groundbreaking agreements, as well as pessimism about special interest lobbying, political posturing and to smokescreen initiatives as governments seek to share the costs and responsibilities of climate action.

After the US election, this is now taking place in the shadow of the United States’ looming withdrawal from international climate agreements and fossil fuel development projects. There is no way to view this seismic shift in American politics as anything other than a major setback, precisely when we need our political leaders to roll up their sleeves to determine how we will coexist on a finite planet.

But amid political upheaval and difficult intergovernmental negotiations, the summit’s focus on climate finance places COP29 at another critical crossroads: the future relationship between the public and private sectors in the fight to reach net zero.

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Whatever is negotiated between governments, whether at COP29 or subsequent international summits on trade and security, it will ultimately be businesses that mobilize and allocate resources to achieve climate change goals. clean energy and reduce greenhouse gas emissions.

The private sector can act quickly when the market demands it. The problem is that in too many sectors and regions, markets continue to punish rather than reward corporate actions towards sustainability.

At this critical inflection point, two stories could be playing out. In one, governments lock themselves into short-term political and economic interests, taking only incremental, crowd-pleasing measures that push difficult compromises to tomorrow and expose economies and businesses to a spiral of costs and risks.

In the other, governments are charting a bold path forward that speaks honestly with citizens about the difficult choices they face, addresses the consumer challenge, and unleashes the power of markets – spurring a transformation that strengthens economies and gives businesses confidence needed to invest in a sustainable future.

The story that emerges depends on the decisions made at COP29 but also in the months to come, as newly elected leaders, including Donald Trump, show their hands and demonstrate whether they will commit to the inevitable energy transition and how, and how. In the United States, the Inflation Reduction Act showed that clean energy creates real jobs and value – and did so proactively in Republican states. These gains will not be easily given up.

Many companies recognize that the lack of forward-looking governance limits their ability to invest for the future. However, there is a distrust of regulation and a lack of confidence that increased government action will lead to more real-world change. And many of those who benefit from the status quo continue to defend outdated economic models, fueling fears about the economic and security risks of a rapid transition.

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But the role of government is not to appease businesses or consolidate all current economic models. True leadership lies in proactive, coordinated and forward-looking economic, industrial and innovation strategies, prioritizing long-term resilience and economic competitiveness over short-term opportunism. And there is a major and growing international movement of businesses mobilizing to support governments as they strive to implement effective market reform.

This trend is led by companies that have worked, in their own long-term strategic interest, to push the boundaries of what is possible, but are reaching the limits of what today’s markets can support.

Investment in infrastructure is just as crucial, including targeted improvements to energy networks, storage networks and green transport. Support for small and medium-sized businesses (SMEs) and workforce development is also essential. SMEs, often at the forefront of green innovation, need access to tools and resources, financial assistance and regulatory support to address scaling issues and barriers to market entry. At the same time, reskilling programs are needed to equip workers for positions in emerging green industries.

A transition to a circular economy would further strengthen resilience and resource efficiency, helping to stabilize resource costs and secure supply chains. Finally, effective international collaboration is vital. By harmonizing standards and fostering favorable trade agreements, governments can remove barriers, boost global demand for sustainable technologies and enable businesses to grow sustainably across borders.

The issues at COP29 are at the heart of what global businesses need from governments to achieve net zero emissions. As we find ourselves at a crossroads, Baku offers governments a chance to unleash the power of markets and the private sector to lead the transition.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence and freedom from bias. Ethical Corporation Magazine, part of Reuters Professional, is owned by Thomson Reuters and operates independently from Reuters News.

Lindsay Hooper is interim CEO of the Cambridge Institute for Sustainability Leadership, which activates leadership globally to transform economies for people, nature and climate. She brings more than 20 years of experience at the forefront of trade and sustainability, working with leaders of multinational companies, financial institutions and influential organizations to accelerate progress towards a sustainable economy.