About This Opportunity
Enhancing the investability of NDCs advances climate action by bridging the gap between NDC ambition and implementation.
By strategically translating NDC ambitions into tangible investments and promoting inclusive finance principles, countries could ensure that climate commitments are actionable and attractive to financiers. This will help accelerate progress toward climate goals while fostering social equity and environmental sustainability.
The following strategies could help to implement this Opportunity:
The following strategies and enablers can help to enhance investment development:
Translating NDC ambition into investments
Employ practical strategies aimed at aligning planned initiatives and leveraging private sector investment plans to raise ambition. By facilitating country-level arrangements that bring together government and public/private financing stakeholders, NDC ambitions could be translated into a pipeline of investment opportunities. Additionally, involving the private sector in structuring investments can enhance their viability and scalability.
Explore innovative financing mechanisms
Enhancement, measurement and monetization can apply across multiple areas of the NDC. For instance, the Resilience Monetization and Credits Initiative (RMCI) is designed to innovate climate-resilience financing, aligning closely with the Paris Agreement’s Global Goal on Adaptation. The RMCI proposes a novel approach by introducing resilience credits as an asset class that mobilizes public and private capital to deliver tangible resilience improvements to communities most vulnerable to climate impacts. This concept note not only aims to bridge the significant gap in available climate adaptation finance but also ensures equitable benefit-sharing among stakeholders, thereby supporting the Paris Agreement’s objectives to foster resilience and lower the impacts of climate-related hazards.
Tailor support to project proponents
The process involves identifying low-carbon and climate-resilient projects aligned with a country’s NDCs and connecting them with financiers to assess and prioritize financing opportunities. Subsequently, these projects undergo development of their bankability to attract primary finance, typically initially sourced from local capital markets. Securing primary finance often entails utilizing blended finance products to fund projects at scale. Depending on the sources of finance, project preparation or investment structuring often entails the development of concept notes undergoing (pre)feasibility assessments and ensuring project bankability.
Promote inclusive finance
Inclusive finance approaches play an important role in ensuring that climate finance considers social equity and just transition principles. By linking finance initiatives to just transition approaches, countries can promote inclusivity and address the needs of vulnerable communities. Strategies such as child-inclusive climate finance and just transition finance can help integrate social considerations into climate finance efforts, fostering a more equitable and sustainable transition to a low-carbon and climate-resilient economy.
Foster vertical integration in climate finance
Considering the different layers of governance when enhancing NDC investability could increase the impact of NDC implementation. Subnational spaces are among the worst affected by severe climate events and are the main drivers of innovative solutions to address climate change and build more sustainable, resilient environments.
Country Examples
Morocco established a Clean Technology Fund (CTF) strongly aligned with its national energy strategy, which set a goal to increase the nation’s solar and wind capacity, both by 2,000 megawatts, by the year 2020. The CTF developed an investment plan to expand national wind capacity and solar photovoltaic development, which succeeded in unlocking an investment of USD 150 million from the Climate Investment Fund (CIF). This in turn attracted over USD 2 billion in cofinancing, with USD 1.2 billion from the private sector (50%), USD 570 million from multilateral development banks (24%), USD 540 million from bilaterals and others (22%) and USD 85 million from the Moroccan government (4%). (Source: Morocco Country Profile, CIF)
Nigeria conducted a climate finance landscape mapping exercise in 2019 that identified over 200 organizations active in Nigeria, representing a well-functioning climate finance supply chain. However, in order to improve the delivery of projects from this supply chain, the exercise identified that a coordinating entity or organization was needed to facilitate the transition of “raw” projects to ones that passed the first stage of accessing primary finance. Creating an organization or forum that acted as a Climate Finance Accelerator (CFA) was agreed to be the next development required, to help catalyze the transition of “raw” to “bankable” projects as part of a functioning financeable pipeline. The resulting CFA in Nigeria received support from the Nigerian and UK governments, and key to its implementation was the establishment of relationships with all ministries in Nigeria as well as with the private sector. It identified 15 projects worth approximately USD 500 million for a range of sectors (including emission reduction technologies, solar power, hydro, biogas, energy from waste and smart agriculture), five of which prequalified to receive guarantee instruments worth USD 80 million. (Sources: Nigeria Climate Finance Pathfinder; Nigeria’s CFA, GI Hub)
Ecuador’s successful completion of the Galapagos Debt-for-Nature Swap in May 2023 demonstrates a creative approach to unlocking finance for environmental conservation while reducing national debt. The initiative involved the repurchase of USD 1.6 billion in outstanding bonds at a discount, generating USD 450 million specifically designated for conservation projects in the Galapagos National Park, the Galapagos Marine Reserve, and the newly established Hermandad Marine Reserve, encompassing a total area of 198,000 square kilometers. The Debt-for-Nature swap presents a replicable financial mechanism for achieving both economic and environmental objectives, particularly in other biodiversity-rich countries facing high national debt. (Sources: Ecuador Debt-for-Nature Swap in the Galapagos Islands Launched, GGGI; “Ecuador Seals Record Debt-for-Nature Swap with Galapagos Bond,” Reuters)
Further Resources
Country Programme Guidance: A Guide on Developing Country Programmes for the Green Climate Fund (GCF, 2021)
This report guides countries in developing national climate action plans aligned with the Green Climate Fund’s objectives, detailing strategies to effectively utilize the fund’s resources. Key aspects include integrating gender considerations, stakeholder engagement, transparency, accountability, and robust monitoring and evaluation mechanisms.
Developing Robust Project Pipelines for Low-Carbon Infrastructure (OECD, 2018)
This report offers policymakers a detailed examination of “project pipelines” in infrastructure planning and investment, which are crucial for implementing climate commitments. It addresses defining and characterizing project pipelines, developing them, mobilizing private finance, and adapting good practices from case studies to enhance government efforts.
Climate Finance Access and Mobilization Strategy for the East African Community (2022/23 – 2031/32) (UNFCCC, 2022)
This strategy was prepared under the Needs-based Finance project, initiated in response to a mandate from the Conference of the Parties. The overall objective is to help the East African Community (EAC) better position itself to rapidly mobilize and scale up climate finance for regional priority actions.
Sharm El Sheikh Guidebook for Just Financing (UN DESA, 2023)
This guidebook raises the question of what stakeholders need to do to translate commitments into implementable projects while capturing opportunities to leverage and catalyze needed finance and investments for climate action.
Catalogue of Climate-Related Capacity Building Support from Institutional Partners for Ministries of Finance (Coalition of Finance Ministers for Climate Action, 2023)
This catalog offers countries a central source for the key and relevant information of institutional capacity-building programs that help leverage and scale up the capacity of Ministries of Finance to drive action and mainstream climate into their economic policies.
Gender Responsive Climate Budgeting Handbook (UNDP, 2021)
This handbook provides guidance on integrating gender considerations into climate budgeting processes, offering practical tools and examples to support policymakers and practitioners in Indonesia and beyond in mainstreaming gender-responsive approaches into climate finance planning and budgeting.
Development Finance for Gender and Climate Action (OECD, 2022)
This document explores the importance of integrating gender considerations into climate finance strategies to ensure more effective and equitable outcomes.
Handbook on Costing Gender Equality (European Commission and UN Women, 2015)
This handbook details methodologies for costing gender equality interventions, emphasizing investment in gender-responsive policies. It offers policymakers tools to assess the financial resources needed to achieve gender equality goals.
Guide to Strengthening Gender Integration in Climate Finance Projects (CDKN and WEDO, 2021)
This guide enhances the gender responsiveness of climate finance projects by offering practical tools for project developers and financiers. It emphasizes mainstreaming gender considerations throughout the project cycle to maximize the impact on gender equality and social inclusion.
Making NDCs Investable – The Investor Perspective (IIGCC, 2024)
NDCs can be a useful tool for investors to assess countries’ long-term climate ambition; however,
in their current form, NDCs vary significantly in quality and detail across countries, and often
lack sufficient information on policy implementation to effectively guide investment decision-making. IIGCC has worked closely with investor members of the NDC thematic working group to identify
key recommendations for countries preparing their updated NDCs.
Regional Platforms for Climate Projects: Assets to Flows II – One year on (High-Level Climate Champions, 2023)
This report looks at the outcomes and insights from the second edition of the Regional Platforms for Climate Projects initiative to accelerate climate action and advance the UN Sustainable Development Goals, and covers case studies and shortlists of investment opportunities in developing countries, across mitigation, adaptation and nature, covering 5 regions.
Time to Deliver: Business Call to Action for Ambitious and Investible NDCs (We Mean Business Coalition, 2024)
This call to action, led by the We Mean Business Coalition, urges governments to develop and implement Nationally Determined Contributions (NDCs) that are not only ambitious, but also drive accelerated private sector investment in the net zero economy.
How This Links to Other Routes
Enhancing NDC investability is important for implementing actions across all areas. Navigate to the resources below to learn more:
Route: Aligned to the Paris Agreement Temperature Goal
Enhancing investability is important for strengthening the foundation of finance mobilization, facilitating the conversion of NDC targets into tangible investment prospects to raise ambition.
Route: Aligned to Paris Agreement Global Goal on Adaptation
Enhancing investability bolsters the connections between NDCs and adaptation endeavors, ensuring the effective identification and execution of projects aimed at enhancing resilience, in line with the Loss and Damage Fund.
Route: Delivers a Just and Equitable Transition
Enhancing investability underpins the financing of Just Transition processes, prioritizing inclusivity and equity in climate finance initiatives and aligning with principles of social and economic resilience.
Route: Mobilizes All-Of-Government and All-Of-Society
Enhancing investability can support multilevel governance and foster inclusive engagement and integration in the identification and execution of climate projects, increasing finance flows, and promoting private sector collaboration.
Route: Technology and Capacity-Building as Needs and Enablers
Enhancing investability supports technology needs and uptake by incorporating innovative solutions into project proposals, leveraging diverse approaches to technology transfer to enhance project viability and scalability.
Route: Technically Sound and Transparent Documents
Enhancing investability helps to uphold technical integrity in project documentation and planning, championing transparency and accountability in funding proposal development and project implementation.
