The global climate framework: UNFCCC, Paris Agreement, NDCs and COPs

Climate change is a global problem. No single country can solve it, and no country wants to carry the cost alone. So countries negotiate rules and targets together, through a set of UN treaties and yearly meetings.

For investors, this matters for a simple reason. National climate targets turn into domestic policy: carbon markets, renewable energy targets, efficiency standards and disclosure rules. India's Carbon Credit Trading Scheme, its renewable capacity targets and RBI's climate finance rules all trace back, in part, to commitments made under this global system.

The system has three layers: a framework treaty (the UNFCCC), agreements under it (the Kyoto Protocol, then the Paris Agreement), and national plans that put the agreements into practice (Nationally Determined Contributions, or NDCs).

UNFCCC (1992)

The United Nations Framework Convention on Climate Change was adopted at the Rio Earth Summit in 1992. It set the overall goal of preventing dangerous human interference with the climate system. It also set a key principle: "common but differentiated responsibilities and respective capabilities" (CBDR-RC). In plain words, all countries share the responsibility, but richer countries that have emitted more should do more. India relies heavily on this principle in negotiations.

Kyoto Protocol (1997)

Kyoto set binding emission cuts, but only for developed countries. Developing countries such as India and China had no binding targets. Kyoto also created early carbon market tools, including the Clean Development Mechanism, under which many Indian projects earned credits.

Paris Agreement (2015)

The Paris Agreement was adopted by 197 countries in December 2015. Its main points:

• Temperature goal: keep warming well below 2°C above pre-industrial levels, and try to limit it to 1.5°C.
• NDCs: every country sets its own climate plan. Parties are legally obliged to submit these national plans every five years, with each one meant to be more ambitious than the last.
• Global stocktake: a regular review of collective progress towards the goals.
• Article 6: rules for countries to trade emission reductions and for a UN-backed carbon crediting mechanism.

Unlike Kyoto, Paris covers all countries, but the content of each NDC is set by the country itself. The agreement is binding on process (submit, report, update), not on hitting the targets.

Withdrawal

A country's withdrawal takes effect one year after it formally notifies the UN. The United States left the Paris Agreement with effect from 27 January 2026, its second exit from the pact. This does not change India's commitments, but it affects global climate finance and the politics of ESG (see The ESG Debate guide).

COP: the yearly meeting

COP stands for Conference of the Parties. It is the yearly meeting where countries negotiate how to implement the UNFCCC and the Paris Agreement. COP decisions can matter for markets. For example, COP29 in Baku agreed a framework under Article 6.4 for a UN-backed body to regulate international carbon credit trading, and a new climate finance pledge from developed countries to help developing ones.

IPCC: the science body

The Intergovernmental Panel on Climate Change assesses climate science and publishes major reports. It does not set policy, but its findings shape the targets that negotiators argue over.