Ambitious climate targets that are underpinned by robust implementation and investment plans can provide economic opportunities, unlock investment, and support sustainable development and growth, while facilitating low-emission transitions, according to a new joint report by the OECD and the United Nations Development Programme (UNDP).
Investing in Climate for Growth and Development: The Case for Enhanced Nationally Determined Contributions (NDCs) shows that aligning climate policies with economic and social priorities can lead to higher global GDP, accelerated poverty reduction, improved energy security and better health outcomes. While climate action has progressed significantly over the past decade - clean energy investment has surpassed that of fossil fuels, and net-zero targets now cover almost 90% of the global economy - the report points out that further progress is needed. Global emissions reached a new high in 2024, and average temperatures exceeded 1.5°C for the first full year. Under the Paris Agreement, countries are required to submit new climate plans every five years to further reduce greenhouse gas emissions and adapt to climate impacts and risks through Nationally Determined Contributions (NDCs). The 2025 round of NDCs provides a timely opportunity to lift countries' collective ambition. By the end of May, 22 countries had submitted their new NDCs, with many more expected to be put forward ahead of the UN Climate Change Conference (COP30) in November.
The OECD-UNDP report analyses how enhanced NDCs, if well-designed and supported by strong implementation frameworks, can simultaneously accelerate inclusive economic growth and reduce emissions. Under this scenario, global GDP is projected to grow by around 60% between 2022-40 and would be 0.2% higher in 2040 compared to a continuation of the current policy scenario. The economic case for climate ambition becomes even stronger in the long run when considering avoided economic losses if the risks of climate-induced events are reduced. OECD modelling indicates that a scenario in which NDC ambition is enhanced could raise global GDP by up to 3% by 2050 and up to 13% by 2100. These projections likely still underestimate the full benefits, as current models do not account for the alternative: negative economic and social impacts of crossing critical climate tipping points - such as melting ice sheets or reversing ocean circulation patterns - that could trigger irreversible and severe changes to the climate system.
"The evidence shows that countries can support growth, development, and resilience while raising climate ambition," OECD Secretary-General Mathias Cormann said. "With the right policies in place, ambitious climate targets can help align public and private investment with a low-emissions future, reduce poverty, and promote energy security. The economic case for more ambitious, investable, and implementable climate strategies is clear."
"This report shows that the transition towards cleaner, greener economies can actually spur GDP growth - not hinder it," UNDP Administrator Achim Steiner said. "As we look to the future, it is clear that green economies will drive industry, mobility, energy systems, and more. Enhanced NDCs, helped along by UNDP's Climate Promise, are therefore a resounding commitment to the Paris Agreement and the Climate Convention to raise ambition and a smart investment in driving development, growth, and progress."
Climate action can bring other positive economic and social outcomes beyond GDP growth. The report finds that integrating climate and development strategies could help one in five people in extreme poverty move to greater financial security by 2050. Investments in clean energy, low-emission transport and better urban planning would also improve air quality, especially in low- and middle-income countries, where the health burden from fossil fuel-related pollution remains high.
To help countries realise these benefits, the report outlines a set of strategic priorities for the 2025 NDC cycle. These include building high-level political commitment across government, aligning climate and development goals at both the national and local levels, engaging the private sector from the outset, optimising and leveraging public finance and international support, strengthening public and international financial institutions, and ensuring inclusive approaches that support those most affected by the transition.
The OECD continues to support countries in strengthening the design and delivery of their climate commitments through policy analysis, capacity building, and international dialogue. As countries prepare for COP30 in Belém, Brazil, this report offers timely insights into how climate ambition can serve as a foundation for long-term prosperity and the sustainability of current and future generations.
The report will be presented at the Global NDC conference, taking place from 11-13 June in Berlin, Germany.
