As countries prepare the next round of their nationally determined contributions (NDCs), the Organisation for Economic Co-operation and Development (OECD) and the UN Development Programme (UNDP) have shared preliminary findings that demonstrate that investing in ambitious climate action fosters better growth and development for all. Their analysis reveals that enhanced NDCs could help prevent gross domestic product (GDP) losses of at least 3% by 2050 and 13% by 2100.
The study highlights that, with 87% of the global economy covered by net-zero targets and clean energy attracting twice the investment of fossil fuels, there is progress towards decoupling emissions from growth. In the period from 2015-2022, it notes, global GDP grew 22%, while emissions increased only 7%, and more than 40 countries boosted their GDP while reducing emissions.
However, the study warns, “current efforts are not keeping pace with rising risks,” calling for accelerated climate action to secure prosperity. It argues that “higher climate ambition is not only achievable, [but] also makes economic sense, even in the near term.” The paper presents the economic case for accelerated climate action, where well-designed climate policies deliver stronger economic growth than business-as-usual (BAU) scenarios, stressing that:
- Accelerated climate action does not hinder economic growth;
- A low-carbon economy is a more efficient economy;
- Investing in clean energy and energy efficiency increases productivity and innovation; and
- Policy uncertainty weakens investment and slows growth.
The findings show that in the long run, the economic case for ambitious climate action becomes even stronger, with significant economic losses prevented and global GDP increased by up to 3% by 2050 and up to 13% by 2100. Beyond GDP growth, benefits include:
- Mutually reinforcing climate action and development strategies drive sustainable growth while safeguarding the environment;
- Complemented by measures that deliver on food security, basic services, and governance reforms, investments in the energy transitions could lift 175 million additional people out of extreme poverty by 2050; and
- Stronger climate policies can deliver health benefits by reducing pollution and improving air quality.
The paper also underscores that to ensure a just and equitable transition and to build public support for climate ambition, “[p]utting people at the core of climate strategies is essential.”
The paper recommends that in developing strategic approaches for effective implementation of NDCs, governments prioritize: building high-level political ownership; aligning NDCs with national development priorities for maximum impact; bringing the private sector into NDC design and implementation to unlock investment opportunities; strengthening international and national financial and development finance institutions; and putting affected stakeholders at the center of climate strategies.
The OECD and UNDP presented these key messages during the 16th Petersberg Climate Dialogueon 25 March 2025. Complete analysis, produced with support from the German Federal Foreign Office, will be published in a report, scheduled for release in May 2025. Titled, ‘Investing in Climate for Growth and Development: The Case for Enhanced NDCs,’ the report aims to “help countries design and implement NDCs that attract investment and place people at the heart of climate action.” [Publication: Investing in Climate for Growth and Development: The Case for Enhanced NDCs: Key Messages] [Publication Landing Page]
