Investing in Climate for Growth and Development

Climate action has gained momentum over the past decade, driving real economic opportunities. However, current efforts are not keeping pace with rising risks. Slower climate action means delaying investments that are critical to ensure future climate resilience, prosperity and well-being.

In 2025 countries have a window of opportunity to regain momentum and realise the multiple benefits of strengthened climate action as they submit updated national climate plans – or Nationally Determined Contributions (NDCs). This comes as an OECD-UNDP report provides new evidence that accelerating climate action is not only feasible, it also makes economic sense – driving growth, unlocking development dividends and preventing losses from climate disasters.

Ambitious climate action goes hand-in-hand with economic growth and accelerated emission reduction in the next 15 years. Enhanced NDCs would sustain global GDP growth of 60% by 2040 compared to 2022 levels, and further boost global GDP by 0.2% compared with current policies through increased investment in clean technologies, improved energy efficiency and strategic reinvestment of carbon revenues, which can enhance efficiency, productivity and innovation. Reinvesting carbon revenues can also contribute to a just transition and secure public support for climate policies. Unclear policies would risk delaying private investments and reduce GDP by 0.75% as early as 2030.

By reducing the risk of climate-induced events, an Enhanced NDC scenario could prevent significant economic losses and increase global GDP by up to 3% by 2050 and up to 13% by 2100. Actual benefits could be even greater, as current estimates are uncertain and do not fully account for the economic and social consequences of the increased likelihood of crossing tipping points, such as melting ice sheets or reversing circulation patterns in the ocean, which would lead to irreversible and severe changes in the climate system.  

Integrating climate and development policies into NDCs helps to advance climate action while driving progress on energy security and access, health and poverty reduction. By tapping into their renewable energy potential, oil importing nations can reduce their exposure to volatile fossil fuel markets and enhance self-sufficiency. Complementing investments in the energy transitions with specific measures that deliver on food security, basic services access and governance reforms could lift 175 million people out of poverty and improve outcomes in 90% of low-human development countries by 2050.