Another Climate Week NYC is behind us, and I’m feeling energized by my time there. It was fantastic to be part of so many vibrant conversations with business, government, non-profit, and climate sector leaders about the role private capital has to play in closing the net zero funding gap.

Now one of the largest climate events of its kind, Climate Week NYC sees finance leaders, policymakers, and activists descend on the city for a program of over 600 events. It starts with Hub Live; a two-day event uniting over 2,000 heads of government, business leaders, and senior decision-makers, with thousands more joining online. Now a staple in the calendar, Climate Week is a great chance to share our perspectives on climate and accelerate progress towards net zero.

With the event gathering momentum year after year, many commented that it felt like a ‘mini COP’ and the diversity of representation from across the ecosystem meant the discourse was lively and fruitful. From executive roundtables to large panels exploring big-picture solutions, the conversations united around a couple of key themes. Here are the top three takeaways that stood out to me across the week:

1. Climate finance in the Net Zero transition

Climate finance is set to be a big topic at next month’s COP29, and it was high on the agenda at Climate Week NYC, too.

There’s a big gap between where capital currently flows, and where it’s most needed to achieve Net Zero. The sectors with the most potential for value creation and holistic decarbonization are still significantly underfunded, and scaling private capital towards them remains a challenge.

Capital markets are certainly making progress in piloting solutions that increase understanding of sustainability implications with cash flow and capital deployment. While this is helping them make more informed risk-reward decisions, the larger philosophical question of deploying capital to the industries that will help us achieve Net Zero falls short. Chemicals and agriculture are still two sectors where large innovations and pivots are needed and are historically underfunded. Similarly, funding the just-transition in developing nations remained a hot topic.

High-quality data has a clear role to play in better-connecting finance flowing toward the energy transition. As private markets continue to grapple with how to build the needed fact base for some of the big bets, cross-collaboration through industry coalitions is also being explored as a way to create scale capital and insights. With data, came the interest in understanding the good, the bad, and the energy efficiency of artificial intelligence.

People were keen to find tangible solutions for decarbonizing business operations: Power Purchase Agreements (PPAs), supply chain procurement and carbon taxation were topics that came up repeatedly. There’s been little regulatory movement on the latter, but there was a sense that private markets would benefit from being pushed by both regulation and ambitious LPs, who are demanding to know how these tools, risks and opportunities are being explored.

Conversation about how to close the funding gap focused on figuring out the best mechanisms to de-risk investment and the importance of blended finance. The Inflation Reduction Act in the USA was one positive example of policy change incentivizing investment, and the sentiment was hopeful about how public and private finance could align to direct capital to the most impactful areas, like the built environment and heavy industry.

2. Valuing sustainability and impact

There’s now a general consensus that sustainability and impact data needs to be translated to financials in order to evaluate opportunities and mitigate risk holistically .

For instance, two collaborative bodies, the Sustainable Markets Initiative’s Private Equity Task Force (PESMIT) and the International Foundation for Valuing Impacts (IFVI) presented frameworks for how to start valuing sustainability and impact. This signals a move towards attaching a financial value to sustainability and impact potential, and growing sophistication in the way that investors evaluate opportunities.

PESMIT essentially put all the ways to evaluate carbon onto one page, taking a step towards standardization while enabling capital to be selective about the approaches and inputs that work best for their individual investment processes.

Some welcomed the frameworks and felt they’d be well received by investors navigating difficult calculations about how much capex and opex is required upfront for decarbonization efforts. However, models still rely on data, and GPs continue to test data and assumption quality to ensure the usefulness of such frameworks.

The prevailing sentiment is that quantifying sustainability and impact is still in the early innings – but momentum is undoubtedly building.

3. Climate transition planning

A noticeable difference at this year’s event was the shift away from tech innovation and individual target setting, to a focus on the governance and frameworks that are required to execute climate action over the long term.

With the UN’s National Determined Contributions (NDCs) up for a comprehensive review next year, the elephant in the room was whether high-level plans to decarbonize were actually feasible, and how they might change. There was widespread concern that we are not decarbonizing quickly enough: the global decarbonization rate in 2023 was only 1.02 percent, meaning we now need to decarbonize 20times faster to limit global warming to 1.5°C.

While ‘shiny’ tech innovations have been at the forefront in previous years, the tone this year was more sober. There was recognition that enablement through tech will only take us parts of the journey, and it's not yet clear whether AI is helping or harming our climate prospects. It’s instrumental that we clear the path for innovation by doing the less exciting foundational work. Rather than riding the wave of quick wins, the key conversations were around unlocking blended finance, enabling collaboration, and shifting the flow of capital toward developing nations and underfunded sectors.

I expect to see the same themes dominating the conversation at COP29, which is already being billed as ‘finance COP’. The agreement of a New Collective Quantified Goal (NCQG) to support developing countries in tackling climate change will be front and center. With updates to the NDCs fast approaching, all eyes will be on each country’s individual efforts at GHG emissions reduction. But equally important is how public and private interests can work collaboratively and financially to drive decarbonization where it’s most needed.