The Challenges of COP 31: Implementation, Multilateralism, and Climate Compliance
Amid geopolitical impasses, the operationalization of Article 6 in the Brazilian carbon market, and pressure regarding NDCs, COP31 in Türkiye, starting on Monday 11/09, will test the conversion of diplomatic promises into regulation and climate investments.
Dear readers,
Between November 9 and 20, 2026, the eyes of global climate governance turn to Antalya, Türkiye, host of the 31st Conference of the Parties to the UN Climate Convention (COP 31 / CMA 8). If the historic COP 30, held in Belém do Pará, marked the transition of the climate regime from the "rules negotiation" phase to the "era of implementation", COP 31 is born under the sign of the Paris Agreement's stress test.
For the first time, the event will be led by a dual Presidency: Türkiye assumes the organization of the event and the Action Agenda, while Australia leads the conduct of formal negotiations. More than announcing new commitments, the central challenge in Antalya will be translating the robust “Belém Political Package” — and its emblematic Mutirão Decision (Decision 1/CMA.7) — into measurable and operational results.
The Bonn Thermometer and Pressure on COP31
As highlighted in the detailed and recently launched guide by the LACLIMA Institute (Heading to COP 31), the path to Türkiye accumulated severe tensions. In the intermediate session of the Subsidiary Bodies in Bonn (SB 64), held in June this year, political disputes stalled essential consensus. Vital issues such as the operationalization of adaptation, mitigation, and transparency indicators ended up deferred under "Rule 16" (when there is no agreement and the agenda is automatically pushed to the following session).
In a fragmented geopolitical scenario and in light of scientific warnings that the Paris Agreement's 1.5ºC limit will inevitably be breached, COP 31 must deliver political direction as well as institutional and legal certainty. For professionals working on climate change, sustainability, and the ESG agenda, four negotiation fronts warrant strict monitoring in the coming weeks:
1. Climate Finance and the Alignment of Financial Flows (Art. 2.1c) Following the setting of the New Collective Quantified Goal (NCQG) to mobilize at least US$ 300 billion annually and scale flows up to US$ 1.3 trillion by 2035 (the subject of the Baku to Belém Roadmap), the discussion is now about quality, access, and predictability of capital.
Gaining momentum at COP 31 are the Pathways Dialogue and the Xingu Finance Talks, created at COP 30 to discuss Article 2.1(c) of the Paris Agreement: making all financial flows — public and private — consistent with low-emission pathways. The debate on reducing the cost of capital, fiscal space, and reforming the international financial architecture knocks directly on the doors of banks, insurers, and investment funds.
2. Carbon Markets (Article 6): From Rules to Operational Sustainability While in Baku (COP 29) we saw progress in the rulebook, and in 2026 the issuance of the first credits by the Paris Agreement Crediting Mechanism (PACM - Art. 6.4) marked the definitive end of the old CDM system, the focus at COP 31 is on integrity and practical viability of the system.
Under Article 6.2 of the Paris Agreement (transfer of ITMOs between countries), the number of cooperative approaches registered on the CARP platform jumped from 39 to 53 this year, but the first technical reviews (A6TERs) exposed relevant inconsistencies in countries' reports, in addition to an estimated budget deficit between US$ 8 and 14 million to keep the registry infrastructure running.
For the corporate market, the message is clear: the demand for high integrity in carbon projects, transparency, and social and environmental safeguards (including indigenous peoples and local communities) will be the definitive filter for credit value.
3. International Trade, Climate, and Unilateral Measures (UTMs) The intersection between climate policies and trade barriers has become one of the touchiest points of climate diplomacy. The creation of border carbon adjustment mechanisms (such as the European CBAM) and other regulatory requirements by developed blocs sparked strong reactions from developing countries under the Response Measures agenda and the Mutirão Decision.
Although the next formal dialogue on Trade and Climate will only occur in 2027 (SB 66), the issue will cross the halls of COP 31 — especially on the Finance and Trade thematic day (coming up on November 13th) —, directly impacting global commodity chains and Brazilian exporters in terms of climate regulation.
4. Adaptation, Just Transition, and Roadmaps COP 31 will need to unlock the operationalization of the 59 Belém Climate Adaptation Indicators (BAI) under the Belém-Addis Vision (BAV), as well as design the practical functioning of the critical new Just Transition Mechanism (JTM), approved at COP 30 in Brazil.
Outside the formal UNFCCC track, but carrying strong political weight, the Brazilian Presidency will present the long-awaited global roadmaps to halt and reverse deforestation and for a just and orderly energy transition away from fossil fuels (the Transitioning Away from Fossil Fuels Roadmap - TAFF) — a movement that gained momentum at the Santa Marta conference in Colombia in April 2026.
The Bridge to Brazil: The Domestic Carbon Market Transition and Article 6
For companies operating in Brazil, the maturing of Article 6 of the Paris Agreement at COP 31 has an immediate and structural effect on the domestic market. We are experiencing a critical moment of regulatory and operational transition that demands redoubled legal caution across three dimensions:
The End of the CDM System Cycle and Migration to PACM (Art. 6.4): At COP 30, the deadline for host countries to approve the transition of CDM projects to PACM was extended to June 30, 2026, with a limit until December 31, 2026, for transferring legacy credits. This closes the Kyoto Protocol era for the sector in Brazil. UN carbon credit projects move to the Article 6.4 Supervisory Body (SBM), which at COP 31 will debate rules on reversal and non-permanence risk, conservative baselines, additionality, and mandatory fees for the Adaptation Fund (5%) and overall mitigation in global emissions (OMGE, minimum 2%).
Authorizations, Corresponding Adjustments, and NDC Sovereignty (Art. 6.2): The "4th Article 6.2 Ambition Dialogue" (coming up on November 9th) will address countries' sovereign decisions to authorize the international transfer of mitigation outcomes (ITMOs), amidst the advancement of the SBCE (Brazilian regulated carbon market) and credit exports from Brazil. Federal authorization for external use requires a corresponding adjustment in national accounting to avoid double counting, which means Brazil forfeits that reduction in its own inventory balance. As highlighted in Bonn, transferring outcomes without clear criteria could jeopardize Brazil's ability to meet its own NDC. Clear rules from the Designated National Authority regarding retention for domestic targets, compliance market supply, and exports via ITMOs are vital for legal certainty.
Forest Projects, REDD+, and Non-Market Approaches (Art. 6.8): For Brazil, with GHG emissions tied to land use and forests, linking Article 6 with mechanisms like the Tropical Forests Forever Facility (TFFF) and REDD+ is central to climate finance and integrity. The Non-Market Approaches platform (Article 6.8 of the Paris Agreement), to be reviewed at COP 31, will register Mitigation Work Programme (MWP) projects to attract international resources and technology without transferring carbon credits.
The Climate Compliance Horizon: "Naming and Shaming" NDC Laggards
Another structural movement preceding this year's COP 31 deserves special attention: the strengthening of transparency mechanisms (Art. 13) and compliance mechanisms (Art. 15) under the Paris Agreement.
Under Agreement rules, countries were expected to present the third round of their Nationally Determined Contributions (NDCs) — with updated targets through 2035 — by February 2025, in addition to submitting their first Biennial Transparency Reports (BTRs).
Although most missed the initial deadline, a large portion regularized their submissions over the final months of 2026. However, around 30 countries remain in default with their new climate targets on the eve of COP 31/2026.
Given this scenario, the Paris Agreement Implementation and Compliance Committee (PAICC) took an unprecedented step. In its annual report prepared for COP 31, after analyzing over 200 procedural cases and repeatedly attempting to contact lagging governments, the Committee explicitly named three countries — Democratic Republic of the Congo, Senegal, and North Korea — which not only failed to submit both their NDCs and transparency reports (BTRs), but systematically ignored all formal communications from the body, summoning them for meetings in early 2027.
Although the PAICC is non-punitive, facilitative, and consultative in nature — seeking to identify technical, financial, and institutional barriers rather than applying direct sanctions —, diplomatic embarrassment and the rigor of national inventory verification through technical reviews (TERs and FMCPs) raise the bar for global accountability.
What Does All This Mean for Corporate Compliance and the ESG Agenda?
Connecting the dots between expected implementation progress at COP 31, the operationalization of carbon markets, and tightening international compliance reveals a non-trivial trend: commitments undertaken by States at the multilateral level are invading the sphere of binding domestic obligations for the private sector.
As Brazil and other countries undergo UNFCCC scrutiny through their Biennial Transparency Reports (BTRs) and face pressure to translate their NDCs into reality, regulatory pressure cascades down into the real economy.
Whether through the consolidation of the regulated carbon market (Brazilian Federal Law No. 15,042/2024 and recent regulations) in line with Article 6 of the Paris Agreement, the tightening of climate financial disclosure rules (IFRS/ISSB standards, regulations by BACEN, CVM, PREVIC, and SUSEP), or the rise of corporate climate litigation discussed in the previous edition of this newsletter, the room for corporate inaction seems to be closing, or at least becoming far more complex.
At the upcoming COP 31, far less important than opening speeches will be observing how climate finance, Article 6 accounting infrastructure, and energy and forest transition roadmaps are unlocked in practice.
How is your organization preparing its projects and emissions inventory to interact with the new Article 6 rules and the Brazilian regulated market? Are your corporate governance and operational management keeping pace with the transition from the "era of promises" to the "era of implementation and climate compliance"?
Until the next edition!
Author: Bruno Teixeira Peixoto
Automatically translated text. Article originally posted on LinkedIn.
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