To achieve the goals of the Paris Agreement, countries need to raise capital for their climate priorities from both public and private sources. At present, the main route by which countries frame their climate priorities is via their Nationally Determined Contributions (NDCs). However, for many countries, NDCs have not yet proven effective in attracting capital at the speed and scale needed. For emerging markets and developing economies (EMDEs), underlying barriers present persistent obstacles to climate-related investments, especially in climate adaptation. To bridge this gap, countries have been encouraged to translate the high-level targets into detailed National Transition Plans (NTPs), encompassing both policy frameworks and investment planning and implementation, to demonstrate the credibility to deliver their long–term climate strategies and to make their next round of climate plans – NDCs 3.0 – investable.
This paper takes a practical approach toward building a bridge between NDCs 3.0 and investment. To connect NDCs to investors, the authors propose the idea of a Climate Investment Prospectus (CIP), which would be an important element of the implementation pillar of an NTP, as related to capital planning and raising, and which builds on existing practices for investment offerings. The core idea is to frame NDC 3.0 investment opportunities and those made viable by NTP structures and support in a way that investors can recognize and respond to, providing a standardized basis for investor engagement.
The concept would seek to alleviate persistent communication and implementation barriers between NDC processes and the workings of financial institutions. It would ideally put a floor on the type and standard of information made available by countries on their investment needs, climate risks and value proposition through the climate transition. This would facilitate market efficiency and boost transition finance flows.
By framing the information contained in NTPs, underlying NDCs, and associated investment plans in the way the investment sector can recognize, respond to, and use, CIPs will support NDC delivery and countries, especially EMDEs, in their climate-aligned development goals. The process will also help countries close the gap between national climate commitments and implementation, prepare investable pipelines, and identify the policy, regulatory, and other supporting factors needed to result in actual investment.
The proposed approach can apply to any country, including developed, developing and emerging economies, seeking to raise finance for their climate transition and resilience priorities. The CIP can contribute to the ecosystem of institutional and financial support available to finance NDCs 3.0 and would be complementary to country platforms, as well as corporate transition plans.