Foreign Direct Investment

Achieving the goals of the Paris Agreement (2015) requires substantial financing to develop and implement the investment projects necessary to deliver the NDCs.

The successful implementation of NDCs could not only limit the hazardous effects of climate change but also lift hundreds of millions of people out of poverty and increase global gross domestic product (GDP) by up to 13 per cent by 2100.

In addition to the need to pursue decarbonization and contribute to global climate change mitigation, developing countries face the imperative of simultaneously tackling multiple challenges, including addressing urgent development needs, such as energy access, job creation and economic diversification, and strengthening resilience to the growing impact of climate change, within the broader context of the triple planetary crisis-climate change, biodiversity loss and pollution.

Foreign direct investment (FDI) can play an important role in addressing such challenges by bringing long-term capital and technological expertise and contributing to regional and global value chain integration.

When strategically directed, it can also help expand infrastructure and strengthen productive capacities in climate-strategic sectors, such as renewable energy, sustainable transport, agriculture, tourism and the blue economy. Yet, current FDI flows remain insufficient and unevenly distributed, with investment needs in the renewable energy sector alone amounting to approximately $2.2 trillion annually, more than half of the total SDG investment gap.

Drawing on UNCTAD’s expertise in international and national investment policy and promotion, this guide offers policymakers a practical roadmap to:

• Integrate investment and FDI needs into NDCs (Part I).
• Align national policy frameworks with climate objectives (Part II). 
• Strengthen promotion efforts to attract bankable climate-aligned projects (Part III).

This guide also complements other initiatives, including the Climate Investment Planning and Mobilization Framework of the NDC Partnership and the Green Climate Fund, and is available here.